Readmissions decline not connected to observation status, researchers find

A recent decline in hospital readmissions isn't due to hospitals increasing the number of patients kept on observation status, a new study asserts.

The study, conducted by the U.S. Department of Health and Human Services, says the 3.7% drop in readmission rates seen between 2007 and 2015 is likely due to hospitals' responses to provisions in the Affordable Care Act that impose penalties for readmissions — not the use of observation stays.

“Several recent articles have questioned whether hospitals are avoiding readmission penalties by changing the way those who return to the hospital are classified instead of actually taking steps to improve care and reduce avoidable readmissions,” wrote study author and HHS economist Rachael Zuckerman wrote in a blog post. “The new research shows that this isn't the case.”

Observation stays did increase from 2.6% in 2007 to 4.6% to 2015, the study found. The study's authors said that increase is not associated with the ACA's readmission provisions, but rather “confusion over whether an inpatient stay would be deemed inappropriate by Medicare recovery audit contractors.”

Results of the study were published Wednesday in the New England Journal of Medicine.

A December report published in the Wall Street Journal said the rise in observation stays jeopardizes nursing home admissions, as observation stays are counted as outpatient care and often don't qualify Medicare beneficiaries for post-acute coverage.