Draft Bill Would Allow Hospital Observation Stays to Count Toward Medicare Eligibility

As I have described in this blog before, simply being in a hospital, even for several days, does not mean that you have been officially admitted.  And if you have not been admitted, then the time you have spent there does not count toward the 3 day hospital stay that is required before Medicare will cover subsequent care in a skilled facility.

A draft bill recently put forward by Rep. Kevin Brady (R-TX), chairman of the Ways and Means Subcommittee on Health, would allow those observation stays to count toward establishing Medicare eligibility for post-acute services.

The Hospitals Improvements for Payment (HIP) Act of 2014 proposes a new hospital prospective payment system, to be in place by fiscal year 2020, with a goal of addressing problems with how short stays are reimbursed. Medicare auditors have aggressively challenged claims for short inpatient stays in recent years, leading to a dramatic increase in hospitals categorizing people as outpatients under observation, rather than as inpatients, and a corresponding increase in appeals.

Under the proposed system, observation stays that stretch overnight would be categorized as Part A inpatient hospital services. These stays also would count toward the three days that people need to spend as an inpatient to qualify for Medicare coverage of follow-up skilled nursing services.

Stay tuned for more information on this bill after Congress returns from its holiday recess.


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