Provider group pushes for observation stay loophole fix

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A long-term provider group is urging regulators to continue work on fixing the “observation stay loophole” that makes it harder for Medicare beneficiaries to get nursing home care.

“We are very appreciative of the renewed interest that CMS [Centers for Medicare & Medicaid Services] has taken in the plight of beneficiaries denied Medicare coverage of post-acute care because the time they spent in the hospital was in an observation stay,” AHCA Senior Vice President of Finance Policy and Legal Affairs Elise Smith wrote in the comments to CMS Administrator Marilyn Tavenner. “We are asking CMS to now focus on the beneficiaries and assure that none of these policies hurts them.”

In August CMS launched a pilot program that allows 380 participating hospitals the ability to rebill Medicare for observation services if claims for inpatient care are rejected. The hope is this will reduce the rates of seniors being classified as in for observation. Beneficiaries who are admitted to the hospital under the “observation stay” classification do not qualify for follow-up care at inpatient nursing and rehabilitation facilities, leaving them — and nursing homes — in the lurch.

“This is not just a dilemma of nomenclature. When Medicare coverage is denied to those individuals who desperately need skilled nursing care, it forces an unfair decision on those beneficiaries to either to pay for care out of pocket or forgo the care they need to continue their health recovery,” AHCA President and CEO Mark Parkinson said in a statement.

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