CMS should modernize hospital admission status policies, say provider groups

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Provider groups assert regulators should update existing policies when determining hospital inpatient and outpatient admission status.

The Centers for Medicare & Medicaid Services recently published a proposed rule on determining whether a Medicare beneficiary is classified as an inpatient or outpatient.

In its rule, CMS noted that “hospitals appear to be responding to the financial risk of admitting Medicare beneficiaries for inpatient stays that may later be denied upon contractor review, by electing to treat beneficiaries as outpatients receiving observation services — rather than admit them.”

This classification is important because beneficiaries may need care at a nursing home after an inpatient hospital visit. But Medicare will not cover a skilled nursing facility stay if a beneficiary is admitted under “observation” status, which leaves many patients unable to afford care.

In its comment letter, the American Hospital Association said that hospitals risk loss of reimbursement when they admit patients for short inpatient stays. At the same time, the AHA says CMS frequently criticizes hospitals using an excessive number of observation stays.

Click here to read stakeholders' comments to the proposed rule (under docket CMS-1589-P). The final rule is due on Nov. 1.