"Hospitals' use of 'observation stay' is questioned"
Patients aren't admitted to the hospital so insurance may not cover some expenses
By Judith Graham | Tribune reporter
March 9, 2009
Judith Quinn was sure she had been admitted to the hospital. After all, she had stayed two weeks on a hospital ward, attended by hospital nurses, eating hospital food and examined by hospital physicians, after suffering a severe seizure.
But Quinn, 68, of La Crosse, Wis., soon learned she was mistaken. The hospital's staff didn't consider Quinn an inpatient. Instead, they decided she was there for an "observation stay," a little-known category of medical care.
As a result, her Medicare coverage wouldn't pay for the oral medications she took there or for three weeks she spent recovering in a nursing home after being discharged. Only inpatients get these benefits.
Quinn's case and others like it are raising concern in some medical quarters about observation care—a step up from the emergency room but a step down from a formal hospital stay.
The number of patients affected by the classification is growing because Medicare and private insurers want only the sickest people to be treated in costly, resource-intensive medical centers. Insurers' criteria for hospital admission are getting tougher by the year.
In Illinois, as many as 320,000 people received observation care last year, up from a tenth that number a decade ago, according to the state's hospital association. Yet the development has received almost no attention.
"It's terribly confusing for people. They don't understand it," said Toby Edelman, an attorney with the Center for Medicare Advocacy, which voiced concern about the trend's impact in a letter to the government in January.
Medically, experts say observation care often makes sense. Many patients are neither clearly sick enough to be hospitalized nor well enough to go home after they're evaluated. With observation care, doctors can test, diagnose, stabilize and treat them rapidly, ideally within 24 hours.
People with chest pain, asthma attacks, kidney stones, dehydration, dizziness, mild trauma and other conditions are often good candidates, said Dr. Sam Ho, chief medical officer for United Healthcare, one of the nation's largest health insurers. Preventing a hospital admission can be a "good thing," both financially and for the patient, he said.
No national data exist on the financial consequences of the trend, which can vary based on a person's insurance. But anecdotal reports suggest that some elderly Medicare patients, such as Quinn, are encountering difficulties.
Take what happened to Paula Biever's father in January 2008, when the 79-year-old man suddenly turned incoherent at the assisted living center where he was staying. (Biever asked that her father's name not be disclosed.)
Her father stayed four days at Fairview Ridges Hospital in Burnsville, Minn., having several CT scans and numerous neurological and psychological tests. Biever was stunned when a social worker said her dad had never been admitted to the hospital and would have to pay for his subsequent nursing home care.
Biever's father ended up paying $17,820 for almost three months in a nursing home.
"I was horrified," said Biever, who lodged complaints with the hospital and the Minnesota attorney general's office.
She also filed an appeal with Medicare. She supplied the Tribune with letters from her father's doctors stating that he qualified for inpatient care.
Medicare allowed two officials to be interviewed on the condition their names not appear in this story. They said Medicare patients typically remain in observation care for about a day, and only in rare circumstances would the status apply to a hospital stay of more than 48 hours.
But longer-than-expected observation stays have become a concern, and an advisory committee is looking into the issue, the officials said. Hospitals are not required to inform Medicare patients they are in observation care, they said.
Carol Koeppel-Olsen, vice president of patient care at Fairview Health Services, said most people in observation care are treated within 24 hours but sometimes patients stay for days, "undergoing an evaluation process without a diagnosis."
"The problem is, there are many physical, cognitive and emotional impairments that make a patient very ill but that do not meet the [Medicare] criteria," Koeppel-Olsen said.
Hospitals risk being charged with fraud if they bill a case as an inpatient stay when it doesn't meet Medicare's standards, other experts note, and Medicare is beginning audits of medical centers around the country.
Quinn, the Wisconsin patient, provided letters from her doctor stating that her two weeks at Franciscan Skemp Healthcare in February 2007 should have met the criteria for inpatient care.
The doctor described her admission with "active seizures" and noted her hospital stay was "complicated by delirium and a decreased level of consciousness, requiring multiple consultations by neurology as well as geriatrics."
The hospital responded in a letter that the doctor was not an expert in admissions criteria, his contention "is not supported by the facts" and calling her stay inpatient care risks "committing fraud."
Kimberly Dockham, director of quality management at Franciscan Skemp Healthcare, declined in an interview to discuss Quinn's case, citing privacy concerns, but said the hospital typically assigns patients to observation care "when we think a serious condition can be ruled out in less than 24 hours."
For the moment, Quinn, a retired academic adviser from the University of Wisconsin at La Crosse, has fought off collection agencies from the hospital and the nursing home. Although she has the money to pay her bills—$644.53 for medications and just under $5,000 for nursing home care—she plans to continue appealing Medicare's decision.
"It's wrong, what they're doing to people," she said.