SHM Supports Clarification to Observational Status Loophole for Medicare Patients


Medicare requires beneficiaries to have at least three consecutive days as a hospital inpatient to qualify for Medicare-covered skilled nursing facility (SNF) care. As the use and duration of observation status continues to rise throughout the nation, patients have been getting caught more frequently within a policy trap: Even though they are physically within the hospital and generally receive care that is indistinguishable from the care received by other inpatients, Medicare is not covering their subsequent SNF stays.

Why? Observation status is considered “outpatient” by both the hospital and Medicare and, therefore, is not counted toward Medicare’s three-day rule.

This leaves seniors on the hook for their skilled nursing care costs, which often exceed their ability to pay. Further, this shortsighted policy might actually result in a net greater cost to Medicare and the health-care system. Faced with mounting costs, many seniors truncate or opt out of SNF care altogether, leaving them vulnerable to added health issues (e.g. dehydration, falls). With new conditions that were not present at the time of the original hospital stay, many of these seniors are at risk to return to the hospital and become another readmission statistic.

As key players in hospitals and, increasingly, in skilled nursing facilities, hospitalists are caught squarely in the middle of this policy. Transitions of care both in and out of these institutions should be guided by sound medical decision-making, not whether Medicare will cover the costs incurred. Although the three-day rule—and, indeed, observation status itself—was originally cast as a cost-containment policy, such policies should incorporate broader care process and delivery reforms that do not add burden to patients when they are at their most vulnerable.

Observation status is considered “outpatient” by both the hospital and Medicare and, therefore, is not counted toward Medicare’s three-day rule.

SHM affirms that it is sensible for Medicare to provide coverage for skilled nursing care if a clinician recommends it as part of a treatment plan. Coverage determination should not be beholden to a patient status subject to other systemic pressures, but should reflect the best interest of the patient and the care ordered by providers.

The Improving Access to Medicare Coverage Act, sponsored by Rep. Joe Courtney (D-Conn.), Rep. Tom Latham (R-Iowa), and Sen. Sherrod Brown (D-Ohio), would clarify the law to indicate that Medicare beneficiaries in observation status are deemed inpatients in the hospital for the purposes of the three-day requirement for SNF coverage. This simple adjustment would ensure that patients are able to access the skilled nursing care they need and that providers do not have to worry about this systemic barrier to patient care.

SHM is actively supporting this legislation. A letter of support was sent to Courtney and Brown earlier this year, and membership was mobilized to take action through our Legislative Action Center (www.hospitalmedicine.org/advocacy). Hospitalists also plan to voice their support for the legislation during Hospitalists on the Hill, to be held this month in conjunction with HM13.

As one of only a few specialty medical societies that are active on this issue, SHM stands out as a leader on health-care-system reforms that improve access to care for patients and reduce administrative barriers to medically appropriate care.

Joshua Lapps is SHM’s government relations specialist.

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Be Wary of Being a “Dr. House”: Relying Too Much on Intuition Is Risky

In the TV show “House,” Dr. Gregory House bases his diagnoses on heuristics—the use of intuition and rule-of-thumb techniques or mental shortcuts. While heuristics can improve efficiency and decision-making effectiveness, this unconscious process might lead a physician to make a judgment based on the facts that most readily come to mind, rather than make a conscious decision after formally analyzing all facts. It’s important to be wary of relying too heavily on heuristics, as this could lead to negative patient outcomes and increased liability risk.

The following is from a case study: A patient presented progressive neurological symptoms and severe pain, but hospitalists based their diagnoses on heuristics and failed to consider a spinal epidural abscess (SEA). While infrequently encountered in clinical practice, SEA requires prompt diagnosis and treatment to prevent serious neurological complications. A delayed diagnosis can lead to irreversible neurological deficits. In this particular case, various hospitalists who saw the patient failed to initially order an MRI of the spine or a neurology consultation, which would have led to an appropriate diagnosis. When an MRI was finally done, it showed an epidural abscess compressing the spinal cord. After surgery, the patient remained paraplegic. Had the hospitalists been aware of the unconscious tendency toward using heuristics and had instead followed the standard of care to read nurses’ notes, review physical therapy assessments, and conduct thorough neurological examinations, it is more likely the patient would have had a timely SEA diagnosis and an increased chance of regaining neurological function.

Because decision-making and problem-solving behavior in medical practice is guided by years of experience, heuristics inevitably plays a part, and that can be beneficial or harmful. Here are a few ways to avoid the risk:

  • Don’t stop at the first diagnosis. Ask, “What else could happen?” or “What else could this be?”
  • Be prepared to alter your course of treatment.
  • Consider family history when making a diagnosis.
  • Engage your extended team, including specialists, pharmacists, and physical therapists, to consult and treat the patient.
  • Always review what other care providers have noted on the patient’s chart.
  • Communicate with all providers involved in a patient’s care.
  • Use a structured communication process to communicate critical or worrisome findings.
  • Keep an open mind when there is conflicting information.
  • Always have a backup plan.

To learn more about our extensive benefits for SHM members, call 800-352-0320 or visit us at www.thedoctors.com/SHM.

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