Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Medicare Policy Changes Sought for Short Hospital Stays

By Kerry Young, CQ Roll Call

March 5, 2015 -- Congress's advisers on Medicare will push for changes to current policies on short hospital stays, which now can sometimes put the elderly and disabled on the hook for costly rehabilitation services.

Braving a snowstorm that shuttered much of Washington, the Medicare Payment Advisory Commission (MedPAC) recently discussed a proposed package of recommendations regarding short hospital stays, such as those lasting only a night. These have proven profitable for hospitals when billed under Medicare's Part A component, according to MedPAC staff.

MedPAC Chairman Glenn Hackbarth intends to add a section addressing the issue to the commission's regular June report to Congress. Panel members present at the meeting largely agreed with his suggestions, which include updating the recovery audit contractors' program to target hospitals with the most short stays, evaluating use of a penalty for hospitals with "excess levels" of short inpatient stays to replace recovery audit contractor reviews and expanding the three-day stay requirement Medicare has in place for skilled nursing facilities to include to include time for so-called observation hours, as long as one day is classified as an inpatient stay. Advisers would also require notification to beneficiaries if their time spent in hospitals is classified as observation status, and not inpatient.

Another idea presented by Hackbarth is to shorten the time that the recovery audit contractors, or RACs, have to examine whether a short stay was needed. At this time, there is a "misalignment" between the three-year window that the recovery audit contractors have to challenge claims and the one-year window in which hospitals can alter their initial decision on whether a stay should be inpatient or outpatient payment, MedPAC said.

The Centers for Medicare and Medicaid Services (CMS) and Congress have been wrestling for several years with questions about how best to compensate hospitals certain forms of care. CMS' current approach largely defines an appropriate admission as one in which the patient will need to spend at least two midnights in the hospital.

Patients who move after having been held in hospitals under observation status, instead of being admitted as an inpatient, can face large bills if they are transferred to skilled nursing centers, because such a move doesn't fulfill a criterion for Medicare coverage of the extended care.

Changing the rules on how time spent in hospitals count toward qualifying for coverage for skilled nursing care could help several thousand people on Medicare, according to MedPAC staff.

People enrolled in Medicare benefit in many cases, though, benefit from having their hours spent in hospitals billed as outpatient care instead of as a short inpatient stay, according to David R. Nerenz, a researcher at Henry Ford Health System in Detroit and a member of MedPAC. While this discussion is outside of the scope of the MedPAC recommendations, Nerenz brought up a fairly common scenario in which patients may spend some hours at a hospital without necessarily needing to be admitted.

"It seems really natural to talk to the patient and say, 'You're here for chest pain. We want to get this sorted out. We don't think you are having a heart attack but we want to be careful. If we admit you to the hospital, this is going to cost you about $1,000 If we do it as an outpatient, it will cost about $200,'" Nerenz said.

Publication Details