Lowering Your Observation RateBartho Caponi, MD Based on the number of times I’ve been asked to comment on the issue, I suspect that many or most of you have heard this before: “My CEO/CMO/CFO says we need to lower our Observation rate!” “These consultants recommend we decrease our Observation rate from x% to y%!” “Our Observation rate is above the benchmark!” ACPA has addressed this issue before and it bears repeating—there is no benchmark observation rate. The idea behind “reducing the observation rate” is understandable from the outside. In the broadest sense, having a patient in inpatient status is likely to result in better access to benefits for the beneficiary, like skilled nursing benefits(temporary changes owing to the public health emergency notwithstanding), and probably better reimbursement for the institution. While it is not always correct to say that inpatient care costs a patient more than observation care (Medicare’s Part A deductible will be $1600 in 2023; Part B copayment for an individual service is capped at the Part A deductible, but a patient could have many individual servicesincreasing the aggregate total). Also of note, patients have been told of the risks of observation care for many years and often want to be “inpatient” regardless of the clinical situation. When you start looking at commercial insurers, Medicare Advantage, Medicaid, and Managed Medicaid plans, costs and benefits for all parties become very challenging to calculate accurately. The question of Observation benchmarks comes up regularly. The simple answer is that there is no external, national, validated benchmark because there is no standard definition of what constitutes appropriate observation services. CMS says that “Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital,” and we know that Inpatient status for a Medicare beneficiary is determined by the 2-Midnight rule. Non-Medicare payors can establish any criteria set you are willing to contract with--they may use a clinical tool (e.g., InterQual), time-based criteria, judgment, or a combination of them. The point is, neither bedside clinicians nor physician advisors can arbitrarily decide whether a patient should receive observation services as a hospitalized outpatient or be admitted as an inpatient—we are obligated to follow the criteria provided by the payor, and payors have a significant interest in keeping patients under observation rather than letting them be inpatient status. Since every patient population is different, and every payor mix is different, every hospital necessarily has a different rate of appropriately provided observation services. There are pitfalls, of course. Observation services should be used for provision of acute care leading to a decision point—admission or discharge. Observation services are not appropriately used as a substitute for adequate routine outpatient access to care; research suggests that the most disadvantaged patients are more likely to end up in observation status than others. The (unproven) possibility of using observation services to avoid readmission penalties (a patient hospitalized for observation is NOT admitted) creates conflict of interest for hospitals; heterogenous data makes definitive information hard to come by. As we get better at providing complex care more efficiently, two-midnight expectations may become one midnight expectations, and lead to more appropriate observation stays. Likewise, an expected one-midnight stay prolonged by avoidable delays does not suddenly become appropriate for inpatient status. Finally, there are emphatically two kinds of observation patients—patients for whom a period of focused evaluation and management leads to an appropriate decision point, and patients who are acutely hospitalized for any number of reasons but “don’t meet criteria” per the payor. So, where can a Physician Advisor make a difference? The first order of business is to ensure that your status determination is appropriate and consistent across cases, with reference to payor. You should work with your provider teams and your Clinical Documentation team to ensure that the patient’s story is told properly, to accurately reflect severity of illness and complexity of service and let you make an appropriate status determination—ACPA’s CDI Committee has many valuable resources available to members. If you find that patients are hospitalized under observation for logistical reasons, you can work with your organization to address those barriers where possible. You should also make sure your expertise is represented at the contracting table, where the terms of status determination are defined. Track your data—your rates before and after intervention, your status changes (both observation to inpatient and inpatient to outpatient since appropriate status determination has to be a two-way street). Finally, get involved and advocate for the policy changes you would like to see; again, ACPA’s Government Affairs committee is a leader in that space. To summarize:
Dr Caponi is Medical Director of Utilization Management/Physician Advisor Program at UW Health – Madison, Wisconsin |