During a meeting last week, members of the Medicare Payment Advisory Commission (MedPAC) proposed eliminating observation status, declaring it ineffective in classifying hospital patients. Medicare will only cover skilled nursing services after a beneficiary spends three days as a hospital inpatient and any time spent in observation is not counted toward this threshold. In 2012, 11,000 hospital stays ended with a non-covered discharge to a skilled nursing facility.
However, other members of MedPAC believe that making observation stays into inpatient stays “could wreak havoc with billing procedures and increase costs for beneficiaries.” Other remedies for the surge in observation stays include having MedPAC focus their oversight more strictly on hospitals that have a high percentage of one-day inpatient stays and changing the three-day requirement for skilled nursing coverage.
Click here to read more.