Analyses from an independent auditing company found that Medicare is overpaying nearly $5 billion for short-stays in hospitals.
In September 2013, Medicare officials announced that patients expected by doctors to stay in the hospital for two midnights or longer should be admitted, while those expected to have a shorter hospital stay should be kept for observation. Medicare also released a moratorium that imposed penalties on hospitals that went against the rules and was extended by Congress until March 2015.
The House Committee on Ways and Means' Subcommittee on Health began its first congressional inquiry on Tuesday regarding the pros and cons of the two-midnight rule, after auditing company Health Data Insights submitted a report on Medicare's movements to Congress, Kaiser Health News reported.
Both senior citizens and hospitals criticized the rule. There was an increase in the numbers of seniors classified as observation patients, and a number of seniors in regular hospital rooms were not informed that they were under observational care because the hospitals weren't required to do so. The rules posed a problem for senior citizens, since no admission for at least three consecutive days meant they could not provide follow-up nursing home coverage and could incur higher out-of-pocket expenses while in the hospital.
Hospitals also complained that observation patients and admitted patients usually received similar treatment for similar health problems, though Medicare paid the hospitals more for admitted patients. This brought the $5 billion overpayment issue to the forefront.
Dr. Ellen Evans, medical director for Health Data Insights, argued that delaying enforcement could mean that hospital claims for short visits would not be reviewed.
The American Hospital Association, however, stated that $5 billion was an exaggerated figure.
Amy Deutschendorf, senior director of clinical resource management at Johns Hopkins Medical System in Baltimore, explained to the committee how the overpayment might have happened.
"Since Oct. 1, 2013, we have seen a three-fold increase in the number of patients our physicians cautiously predicted would only stay one midnight, and thus began as outpatients, but later had to admit for longer stays, demonstrating the complexity of anticipating length of stay based on a patient's initial presenting symptoms," Deutschendorf told NPR. "And if patients improve after receiving extensive treatment for less than two midnights, she said they are considered observation patients, and hospitals are penalized for doing a good job by earning a lower payment from Medicare for their admitted patients."
