The Centers for Medicare & Medicaid Services (“CMS”), in response to recent public commentary regarding the 2013 OPPS (Outpatient Proposed Payment System), says it is considering changing or clarifying its policies regarding observation status. CMS also says it will conduct a Medicare Part A & B rebilling demonstration project.
For patients in an acute care hospital, Medicare currently recognizes both inpatient and outpatient Observation Services. The outpatient classification currently has a negative impact on Medicare coverage of any post-acute stay in a Skilled Nursing Facility (“SNF”) because CMS requires three inpatient days of admission before covering a SNF admission.
The American Hospital Association (“AHA”) supports a time-based admission policy where an outpatient observation stay would automatically be considered inpatient status after one or two days. However, AMA cautions that this policy could expose hospitals “to increased risk of retrospective review and audit by RACs (Recovery Audit Contractors) and MACs (Medicare Administrative Contractors).”
The AHA also says that the RACs and MACs “inappropriately second guess physician judgment, declaring that some patients who were admitted should not have been.”
Several in the hospital community have suggested that it may be helpful for CMS to establish more specific criteria concerning limits on how long a patient can remain in observation status. Additionally, there is a pressing and growing need for physician/provider education on medical necessity and changing trends in standards of care.
The majority of commentary from hospitals, physicians, and private citizens reveals that they share a collective view on the matter, believing that each day a patient spends in observation status should count toward the three-day minimum stay necessary for post-acute care coverage under Medicare. Because of this collective view, CMS indicates that it is considering the change in policy.
If you would like additional information on Observation Services or other compliance topics, please contact the experts listed below at PYA, (888) 420-9876.
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