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Hospitals Not Using Observation Status to Avoid Readmissions Penalties

Hospitals are not moving returning patients to observation status to avoid incurring financial penalties under Medicare’s hospital readmissions reduction program, according to new study published in the New England Journal of Medicine.

new england journalSince that program’s inception, more than 3300 hospitals have reduced the rate at which they readmit Medicare patients within 30 days of their discharge from the hospital. A moderate increase in the classification of Medicare patients in observation status led some critics to suggest that observation status was being used to avoid penalties for readmissions.

The study disagrees, concluding that

we found a change in the rate of readmissions coincident with the enactment of the ACA, which suggested that the Hospital Readmissions Reduction Program may have had a broad effect on care, especially for targeted conditions. In the long-term follow-up period, readmission rates continued to fall for targeted and nontargeted conditions, but at a slower rate. We did not see large changes in the trends of observation-service use associated with the passage of the ACA, and hospitals with greater reductions in readmission rates were no more likely to increase their observation-service use than other hospitals.

For a closer look at the study, the methodology employed, and its conclusions, go here to see the New England Journal of Medicine article “Readmissions, Observation, and the Hospital Readmissions Reduction Program.” In addition, the U.S. Department of Health and Human Services features a commentary about the study on its blog. Go here to see that commentary, titled “Reducing Avoidable Hospital Readmissions to Create a Better, Safer Health Care System.”

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