Courtney tries again to fix Medicare 'observation' problem

Problems caused by a Medicare rule that forces hospitals to label certain patients under "observation" status rather than as inpatients have only worsened in the four years since U.S. Rep. Joe Courtney first introduced legislation to fix it.

That's the assessment of case managers at the region's two hospitals, who both applaud the third bill Courtney and other lawmakers have introduced since 2010 to change Medicare rules so that patients could be covered for skilled nursing care after a hospitalization, regardless of whether they were "observation" patients or inpatients. Under the current rules, Medicare patients discharged to skilled nursing care facilities must pay out of pocket for those services, unless they were labeled as hospital "inpatients" for three consecutive days. Increasingly strict limits on who can be classified as an inpatient - with penalties for hospitals that mislabel patients - have meant hospitals are categorizing more patients as "observation."

"This is more of an issue than it's ever been," Wanda Carlson, director of case management and social work at Lawrence + Memorial Hospital in New London, said Tuesday. "We deal with it weekly. It's become harder and harder for patients to meet Medicare's inpatient criteria for 'medical necessity.'"

A typical case, she said, would be of an 85-year-old living alone, with no family or other support available, who takes a bad fall and ends up as an "observation" patient at the hospital. Doctors would like to discharge him to a nursing home for rehabilitation, but because he'd have to pay for that care out of pocket, doctors opt to keep him in the hospital longer.

"That happens a lot, where the elderly end up staying an extra two or three days," she said.

On Tuesday, Courtney joined U.S. Sen. Sherrod Brown, D-Ohio; Dr. Ann Sheehy of the Society of Hospital Medicine; Toby Edelman, senior policy attorney for the Center for Medicare Advocacy; and others in a conference call about bills pending in the House and Senate to end the observation status restriction on skilled nursing care coverage. Under the measures, which are co-sponsored in the House by U.S. Rep. Tom Latham, R-Iowa, and in the Senate by Maine Republican Susan Collins, any Medicare patient hospitalized for three days or more could have follow-up skilled nursing care covered, regardless of whether they were labeled an "inpatient" or as "observation." Among those on the call was California resident Eric Chomsky, who told of how his 83-year-old mother had to pay more than $4,000 for 17 nights of rehabilitative care after being hospitalized as an "observation" patient with multiple fractures from a fall.

"It wasn't safe for her to return home," Chomsky said. The Medicare rule should be changed, he said, so that his mother's room and board at the nursing home would have been a covered Medicare benefit.

Courtney said despite the two unsuccessful past attempts, the current bills have more support than ever as the problem has worsened. The issue first came to his attention in 2010, when he heard from the family of an elderly Norwich resident who ended up with a large bill for the skilled nursing care he needed after a hospitalization.

"It has been building steam," Courtney said. "During the first two efforts, there were only a handful of supporters."

There are 113 Democrats and 23 Republicans co-sponsoring the House bill, and 22 Democrats, two independents and one Republican supporting the Senate version. Sheehy said that since 2010, the number of hospital patients classified as "observation" has grown from one in 10 to one in eight. Under "observation," Medicare patients are also responsible for a greater portion of the costs of their hospital care than those with the "inpatient" label.

But the distinction, said Edelman of the Center for Medicare Advocacy, "makes no sense. The care is identical."

Colleen Sullivan, regional director of case management for Hartford HealthCare's East Region, which includes The William W. Backus Hospital in Norwich, said passage of the bills would be an improvement. But she advocates an even broader solution that would abolish the three-day rule entirely, so that Medicare patients could be covered for skilled nursing care if they needed it without a hospital stay first.

"We've definitely been seeing an increase in the lengths of observation stays," she said. "There are patients that have to linger because they have limited social support, and hospitals are obligated to ensure that they have a safe transition plan. But care in a nursing home is cheaper than care in a hospital. The whole system needs to be overhauled."

j.benson@theday.com

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