Medicare May Be Overpaying Hospitals For Short-Stay Patients

Washington, DC, United States (KaiserHealth) – The federal government may be overpaying hospitals an estimated $5 billion as a result of the 18-month moratorium on enforcing a controversial rule that tells hospitals when patients should be admitted, an independent Medicare auditing company told a congressional panel Tuesday.

Last September, Medicare officials announced that patients whose doctors expect them to stay in the hospital through two midnights or longer should be admitted, while those expected to stay for less time should be kept for observation.

But then Medicare announced a moratorium on penalizing hospitals that violate the rules. Congress has extended the moratorium through March 2015.

Dr. Ellen Evans, medical director for the auditing company, Health Data Insights, told the panel that postponing enforcement means that hospital claims for short patient visits during this time period “will never be subject to review.”

The American Hospital Association later claimed that the $5 billion figure was inflated.

The hearing before the House Committee on Ways and Means Subcommittee on Health was the first congressional inquiry examining the consequences of the two-midnight rule.

The rule followed strong criticism from seniors and hospitals that Medicare regulations were leading to increasing numbers of seniors being classified as observation patients. Many seniors in a regular hospital room don’t know they’re in observation care because hospitals aren’t required to tell them.

Yet, the distinction between observation care and being admitted is important for seniors. If they have not been admitted to th… MORE

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