Editorial: Support fix for inappropriate ‘outpatient’ designation


Published Sep 10, 2013 at 05:00AM / Updated Nov 19, 2013 at 12:31AM

Medicare rules are denying benefits to some hospital patients by giving them “outpatient observation” rather than “admitted” status, even when they spend several nights in the hospital. The results include higher costs for patients and no coverage for subsequent nursing home care, among other negative consequences.

It’s a sneaky way to cut Medicare costs, and many patients have no idea it has happened until the bills arrive. Hospitals don’t have to tell them which status they’ve been given, and the difference in care doesn’t make it obvious.

U.S. Rep. Joe Courtney, a Democrat from Connecticut, has filed a bill to address the problem, and three representatives from Oregon are among the more than 90 sponsors. We urge the rest of Oregon’s delegation to join Reps. Earl Blumenauer, Peter DeFazio and Suzanne Bonamici in supporting H.R. 1179.

Courtney’s bill, titled “Improving Access to Medicare Coverage Act of 2013,” would eliminate the distinction between the two statuses in determining who gets coverage for follow-up nursing home care. That’s an important change, although it’s only one of numerous problems the status issue creates. The procedure has also been challenged in several lawsuits, including by the American Hospital Association and the Center for Medicare Advocacy, according to Kaiser Health News and National Public Radio reports.

Hospitals are being pushed to give patients outpatient observation status because they can be penalized financially if Medicare review later determines that was the appropriate status and wasn’t used. The patients’ experience can be exactly the same as if they had admitted status, but they may have to pay more of the overall hospital bill, and their routine drugs may not be covered. Because many hospitals won’t let patients bring already purchased drugs from home, Kaiser reports, patients can end up paying much higher hospital prices for maintenance drugs that duplicate ones they’ve already bought.

When patients spend several nights in the hospital, it’s reasonable to think they were admitted and entitled to relevant benefits. Obscuring issues and confusing patients by altering the definition of hospital admission is the wrong way to change incentives and control health care costs.

Courtney’s bill is a good first step to alleviate the worst result of this regulatory trap, but further steps are needed to eliminate other ill effects.