Staff writer Cathleen Crowley's article, "Observation status, and a nasty surprise," Dec. 11, offers a vivid glimpse at a large and insidious problem: Medicare's hospital reimbursement policies are harming patients.
The article noted that hospitals are increasingly placing patients on "observation" status in response to federal pressure to reduce overall Medicare spending. Medicare is imposing stiff financial penalties on hospitals that admit patients whom Medicare decides should have been treated as outpatients.
The federal government enforces these rules by auditing hospitals, looking at individual Medicare claims and medical records and deciding whether the patient was appropriately classified. This Recovery Audit Contractor program is inconsistent, unfair and contradictory.
Federal auditors are second-guessing doctors and hospitals. Every day, RAC auditors tell seniors and hospitals they don't believe a patient should have been admitted yet these decisions are not based on any recognized, uniform standards. Hospitals struggle to comply with this moving target.
Remote (often non-medically trained) auditors may agree a pacemaker, mastectomy or total hip replacement was necessary but then will deny all payment because they these patients should have gotten the complicated and invasive procedures as outpatients. Hospitals then are not allowed to bill for any of the services they have provided.
And, as the article demonstrated, placing a patient on observation status has other implications, too, such as the need for patients to pay substantial co-payments for drugs or services or affecting coverage for services after hospitalization.
Lawsuits have been filed to challenge these policies. The federal government has been inundated with negative feedback yet nothing indicates these harmful practices will be changed. Meanwhile, the Medicare denials generate money for the government, consultants and auditors at the expense of seniors and providers.
Just as our hospitals are committed to precise medical care for patients, they strive to be precise in their billing and payment systems; they are committed to working with the government to ensure the accuracy of Medicare claims, investing hundreds of millions in information and claims processing systems and operating robust compliance programs.
But these Medicare rules are unfair and confusing to patients and providers, and the RAC audit enforcement mechanism is a heavy-handed, blunt instrument that fails any sensible test of fairness or objectivity. It succeeds in extracting money from health care providers and using fear of more penalties to change how they make decisions about patient care.
Daniel Sisto is president of the Healthcare Association of New York State.