News: Patients fail to sway judges regarding observation rules

The time a patient spends in observation status—that is being observed by a physician pending a decision to admit or discharge the patient—doesn’t count toward the minimum qualifying time required to transfer the patient to a skilled nursing facility (SNF), according to CMS payment rules. Unfortunately, patients who frequently know little about the complicated rules associated with Medicare reimbursement often go along with their physician orders and then get stuck with the bill for their SNF care.

Recently, 14 Medicare beneficiaries challenged the rules governing hospital observation status, asking the court to eliminate observation status or require hospitals to inform patients of their observation status and establish an expedited appeals process for reviewing Medicare coverage determinations, The Hartford Courant reported.

In a 50-page ruling, the federal judge dismissed the suit, referring to a federal law requiring inpatient status for SNF coverage under Medicare, The Hartford Courant reported.

The 2014 IPPS Final Rule redefined inpatient status as care that crosses two midnights. Under the final rule, observation stays crossing one midnight count towards the two midnights needed for a qualifying inpatient stay. However, observation time does not count towards the three inpatient nights needed to qualify for SNF care.