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'Admission' vs 'Observation': Medical worlds apart

Medicare recipients applaud during a news conference to mark the 46th anniversary of the passage of Medicare on July 27, 2011 in Washington, DC. Hospitals get penalized for readmissions, so now instead of readmitting Medicare patients quickly, they are “observed” for as long as two days. That way the hospital doesn’t risk getting fined…and Medicare doesn’t pay.

Hundreds of health care types gathered in Washington, D.C., today at an event sponsored by the Alliance for Health Reform.

And it wasn't to talk about problems with the government's health care website, healthcare.gov.

This panel discussion highlighted a different source of confusion in the healthcare world, what it means to be “admitted” to the hospital.

As millions of Medicare patients are finding out, the answer can be surprising and expensive.

Carol Levine, an advocate with the nonprofit United Hospital Fund and a member of the panel,  tells the story of a woman on Medicare who went to the emergency department after a bad fall.

Doctors, says Levine, couldn’t really tell if it was safe for the woman to go home, so they kept her for observation.

“She was brought to a regular floor, she was given an x-ray and blood work. When it was meal time she was given food,” says Levine.

But eventhough the woman spent two nights in the hospital, she was never officially “admitted.” 

She was considered an outpatient. 

Outpatients are responsible for certain costs that inpatients are not.

That includes the costs for rehab after the woman’s fall.

“They would have billed her as a private patient, it would’ve cost tens of thousands of dollars,” says Levine.

The practice of keeping patients for observation more than doubled from 2001  to 2009,  according to a recent report from the  AARP Public Policy Institute.

“Medicare recommends that observation be used usually for less than 24 hours. But we found that length of stay exceeding 48 hours had grown by more than 250 percent,” says Keith Lind, Senior Strategic Policy Advisor for the Institute.

Under the Affordable Care Act,  hospitals are being slapped with fines for readmissions.

But when you don’t admit a patient, you can’t be penalized.

“The hospitals are not doing this to inconvenience patients,” says Dan Mendelsohn the CEO of Avalere Health.

“They are trying to make things work financially for themselves,”

Mendelsohn says the policy is intended to lower costs and improve care.

But what it may do instead is shift the cost to the patient.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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