Medicare Observation Days Must Be Fixed

Grassroots | May 20, 2015

In a statement for the record of the U.S. Senate Special Committee on Aging's May 20 hearing on Medicare "observation days," LeadingAge reiterated its support for legislation to require all time a beneficiary spends in the hospital to count toward the 3-day stay requirement.

On May 20, the U.S. Senate Special Committee on Aging held a hearing on the problems facing Medicare beneficiaries caught in the "observation days" snafu

In its statement for the hearing record, LeadingAge pointed out that beneficiaries kept in the hospital for extended periods "under observation" do not meet the 3-day stay requirement for Medicare coverage of any post-acute care they may need following their hospital stay. 

Beneficiaries in this situation incur thousands of dollars in out-of-pocket costs for nursing home or home health care, or risk re-hospitalization if they do without the services they need.

Witnesses discussed efforts by the Centers for Medicare and Medicaid Services (CMS) to determine appropriate Medicare payment policies for short hospital stays and the waiver of the 3-day stay rule for which beneficiaries covered by accountable care organizations qualify.  

According to Sean Cavanaugh, CMS deputy administrator, his agency is reviewing recent MedPAC recommendations related to the 2-midnight rule, and expects to include further dialogue in the upcoming 2016 Hospital Outpatient Prospective Payment System proposed rule. 

Sen. Elizabeth Warren (D-MA) urged CMS to use its regulatory authority to quickly address issues with the 2-midnight rule, rather than waiting on Congress to pass legislation. 

“We need to address this observations status problem," said Sen. Warren. "Seniors need to be notified of their admissions status, and CMS needs to implement an auditing system that is less disruptive, more effective, and far more targeted.”