Tuesday, 13 September 2016 04:07

Observation Status: Patient Care with the Clock in Mind

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The two-midnight rule for observation status went into effect two years ago, along with great confusion. On Jan. 1, the Outpatient Prospective Payment System (OPPS) final rule for the 2016 fiscal year went into effect, meaning that shorter stays could qualify for inpatient reimbursement based on physician judgment, not just time. Unfortunately, this has only created greater confusion, and a national rise in observation status usage.

Results

  • Providers, confused about the criteria, often err on the side of observation status for patients
  • Observation patients are not being managed differently from inpatients, with timely assessment and interventions necessary being applied for both
  • Patients receiving observation services are responsible for up to 20 percent of their bill if they don’t have secondary insurance, and the time they spend in the facility does not count toward the minimum three-day inpatient stay mandated by the Centers for Medicare & Medicaid Services (CMS) for skilled nursing facility (SNF) care
  • Higher observation rates yield significant financial impacts for hospitals

Essential Drivers for Improvement

  • Standardization of the hospitalist care:
    • Consistent, committed staffing – locums staffing is a key issue driving inappropriate observation status use
    • Quality
    • Improved timely care management for observation patients
  • Clinical documentation
  • Effective observation determination
  • Leadership and performance of each hospitalist group
  • Improved coordination between the ED and hospitalist services in admission and observation care management
  • Improved case management systems, staffing, and oversight
  • Enhanced CDI program performance supporting improved physician documentation
  • Structured systems for observation care placement and management
  • Key dashboards and metrics for managing inpatient and observation care
  • Availability of weekend diagnostic testing and specialty support

Determining the appropriate patient status initially, managing patients effectively, and avoiding conversions represent significant quality and financial opportunities for patients, providers, and facilities.

About the Author

Debbie Linnes is a partner and chief operating officer for DCCS. She has a broad background of service as a CEO, COO, and operations leader in accredited (CHW, SCLHS, CHI) and freestanding health systems across the country. She brings experience in moving organizations forward to consulting and interim senior leadership and operating positions and has a strong strategic and clinical background with outstanding physician relations skills. She rejuvenates underperforming organizations and programs, raising performance and profitability, and develops leadership and workplace cultures that lead to high levels of performance and employee satisfaction.

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Last modified on Wednesday, 14 September 2016 04:17

Debbie is a Partner and Chief Operating Officer for DCCS. She has a broad background of CEO, COO, Operations leadership in systems (CHW, SCLHS, CHI) and free standing health systems across the country. She brings experience in moving organizations forward to Consulting and Interim senior leadership and operating positions and has a strong strategic and clinical background with outstanding physician relations skills. She rejuvenates underperforming organizations and programs, raising performance and profitability and develops leadership and workplace cultures that lead to high levels performance and employee satisfaction. Core skills include: Vision/Strategic Planning, Operations Improvement, Physician Practice Operations, Leadership Development, Clinical Quality/Patient Safety, Service Excellence, Service Line Development, Population Management, Mergers/Acquisitions, Physician Alignment, Ambulatory and Physician Services, Workplace Culture Development