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Use of Hospital Observation Services: The Society of Chest Pain Centers Position

Critical Pathways in Cardiology: A Journal of Evidence-Based Medicine: March 2011 - Volume 10 - Issue 1 - p 55-56
doi: 10.1097/HPC.0b013e318210e42e

The Society of Chest Pain Centers wishes to share with our members and supporters our concerns about misconceptions regarding observation services that have been reported in the media, at CMS' August Listening Session, and even at MedPAC. As the delivery system moves forward with increased coordination and new measures of quality and efficiency, along with efforts to reduce avoidable hospitalizations and readmissions, we believe that this issue would be of interest to all.

Medicare claims for observation care rose from 828,000 in 2006 to more than 1.1 million in 2009. At the same time, claims for observation care lasting more than 48 hours tripled to 83,183. CMS was understandably concerned about these long stays in observation care, as they have resulted in some beneficiaries having to pay huge out-of-pocket bills for skilled nursing care they receive on release from the hospital, as well as copayments for “self-administered” drugs.

The Society of Chest Pain Centers along with other organizations participated in the listening session on August 24, and were dismayed that several beneficiary family members and Medicare advocates called for rescinding observation altogether. As an emergency physician and chair of the CMS' Ambulatory Payment Classification (APC) advisory panel's Visit and Observation Subcommittee, Dr. Michael Ross stated that this would result in a tremendous disservice to patients, could jeopardize patient safety, and would lead to an increase in healthcare resource utilization.

There is a significant difference between care in a dedicated observation unit and observation services on an inpatient floor. Approximately 25% of hospitals have dedicated observation units with dedicated staffing. These units are often protocol driven for conditions such as chest pain, heart failure, syncope, and atrial fibrillation and meet the documentation requirements of the Medicare Outpatient Prospective Payment System (OPPS). Several clinical studies have been published in peer-reviewed journals which show that the average length of stay in these observation units is 14 to 15 hours, and less than 1% of patients stayed longer than 48 hours.

We strongly supported CMS lifting restrictions on the number of allowable diagnoses and conditions eligible for observation payment under the OPPS, and they were lifted in 2008. We expected the use of observation to increase substantially to capture conditions previously not covered, and it grew by 36%—less than expected. We believe that well-performed observation services are good for the patients. Studies of observation protocols have shown improved patient satisfaction and quality of life relative to inpatient admission. Furthermore, preventing avoidable admissions is very important for the elderly who are at greater risk for decline in their functional status when they are hospitalized.

Observation has been shown to decrease diagnostic uncertainty. For example, chest pain observation protocols have been associated with a 10-fold decrease in the rate of missed heart attacks. Observation protocols have been shown to improve compliance with recommended diagnostic testing in conditions such as TIA, syncope, or chest pain. Well-run dedicated observation units have been shown to decrease hospital admissions, emergency department overcrowding, ambulance diversion, and the number of patients who “leave without being seen” from the emergency department. Finally, observation protocols have been shown to decrease unnecessary resource utilization and cost by 50% to 70% of routine inpatient care costs. Several well-done randomized studies have shown that the length of stay in a dedicated unit is less than half that of care in a general inpatient bed. This more efficient care addresses most of the issues currently raised. The 20% copay is much less when a decision is made in a timely manner, for example within 15 hours instead of 3 days.

It appears that one of the concerns on the part of hospitals is the use of proprietary “medical necessity” criteria (i.e., McKesson Interqual) that CMS contractors such as the RACs use to deny payment for short inpatient stays. These criteria often fail to recognize the need for admission in common areas such as the treatment of acute painful conditions in the elderly—a category shown to have high observation failure rates. This creates conflict between “medical necessity” criteria and physician judgment, as described in the Medicare Hospital Manual. We urge CMS to reconcile its clinical policies and audit policies in this area.

Lastly, we have urged CMS to reconsider its long-standing ban on counting time in observation toward the 3-day stay requirement for Medicare payment of SNF care. We believe that this could be accomplished administratively, and would reduce beneficiary complaints, as well as create a more level playing field with Medicare Advantage plan enrollees who are exempt from the 3-day rule.

© 2011 Lippincott Williams & Wilkins, Inc.