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Some or all of their time in the hospital will be considered outpatient observation, and not count toward the required three-day stay. In other words, if the physician makes the decision to admit after the beneficiary arrived at the hospital and began receiving services, he or she should consider the time already spent receiving those services in estimating the beneficiary's total expected length of stay.A direct and simple solution to beneficiaries' primary problem with observation status lies in bipartisan legislation pending in Congress. The two identical bills would require that all time spent in the hospital – whether called observation or inpatient – be included in calculating the three-day inpatient qualifying hospital stay. For example, if the beneficiary has already passed 1 midnight as an outpatient observation patient or in routine recovery following outpatient surgery, the physician should consider the 2 midnight benchmark met if he or she expects the beneficiary to require an additional midnight in the hospital. . For purposes of the 2-midnight all time spent by a patient in the hospital, regardless of how the time is identified: We emphasize that the time the beneficiary spent as an outpatient before the inpatient admission order is written will not be considered inpatient time, but may be considered by physicians in determining whether a patient should be admitted as an inpatient, [emphasis supplied].The first publication is the "Improper Medicare Fee for Service Payments Report of November 2009." This report details the type and percentage of errors found in claims as determined by reviews performed under the CERT (Comprehensive Error Rate Testing) program.Page 9 of this document describes changes in what is acceptable and not acceptable for documentation to support the medical necessity of services provided.Impact of the More Stringent Review Criteria The more stringent review criteria for review of claims selected for the November 2009 report resulted in increases in error rates due to: In the past, CERT would review available documentation, including physician orders, supplier documentation, and patient billing history, then apply clinical review judgment.
Observation Status Observation Status refers to the classification of hospital patients as "outpatients," even though, like inpatients, observation patients may stay for many days and nights in a hospital bed, receive medical and nursing care, diagnostic tests, treatments, supplies, medications, and food. The classification of a hospitalized patient as an "outpatient," however, causes many problems for the patient.Without a three-day hospital stay, the patient does not meet Medicare's requirement for Medicare coverage of a subsequent stay in a skilled nursing facility (SNF). Patients in Observation Status must pay out-of-pocket for their nursing home care, with bills often totaling many thousands of dollars.CMS Response to Observation Status For at least the past three years, CMS has repeatedly expressed concern about Medicare beneficiaries' increasingly lengthy stays in hospitals as outpatients and the impact of the classification on beneficiaries' need for post-acute care in a SNF. Unfortunately, this has not yet translated into action that resolves the issue for beneficiaries.CMS expresses hope that the new final regulations, published August 19, 2013, will "reduce the frequency of extended observation care when it may be inappropriately furnished." Unfortunately, the regulations and CMS's lengthy discussion of them in a section of the preamble entitled "Payment Policies Related to Patient Status" do not resolve the problem of Observation Status for Medicare beneficiaries. §412.3(a) provides that a patient "is considered an inpatient of a hospital,…if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner…." The physician orders inpatient status when he or she "expects the patient to require a stay that crosses at least 2 midnights." Stays expected to be shorter than at least two midnights "are generally inappropriate for inpatient admission and inpatient payment under Medicare Part A," unless the surgical procedure is "specified by Medicare as inpatient only under §419.22(n)." The physician's "expectation…should be based on such complex medical factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event." The physician order is part of "physician certification of the medical necessity of hospital inpatient services…." Physician certification, which begins with an order for inpatient admission, requires the physician to certify the reasons for the hospitalization, the estimated time the patient will remain in the hospital, and "plans for post-hospital care, if appropriate." The certification "must be completed, signed, and documented in the medical record prior to discharge." A physician's admission order has "no presumptive weight" and both the admission order and the physician certification "will be evaluated in the context of the evidence in the medical record." CMS intends to provide additional information about what "evidence in the medical record" means in future instructions and manual revisions. 2.CMS explicitly states in the preamble, "[w]hile outpatient time may be accounted for in application of the 2-midnight benchmark, it may not be retroactively included as inpatient care for skilled nursing care eligibility or other benefit purposes." In practice, this means there will still be Medicare beneficiaries who spend three or more days in the hospital who will not qualify for Medicare covered post-acute care at a SNF. Preamble The preamble states repeatedly that a physician admission order cannot be retroactive. But, ambiguously and inconsistently, CMS also describes how physicians should treat outpatient time in making inpatient admission decisions: [W]e expect that the decision to admit the beneficiary should be based on the cumulative time spent at the hospital beginning with the initial outpatient service.