Fewer Medicare Patients Being 'Admitted' to Hospitals

They are instead being 'held for observation,' which may increase their out-of-pocket expenses

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TUESDAY, June 5 (HealthDay News) -- Federal government pressure has led to an increasing number of Medicare patients being held for observation instead of being admitted to hospitals, a new study suggests.

Although this push to get hospitals to be careful about admitting seniors as inpatients may reduce costs to Medicare, it can lead to higher out-of-pocket costs for the patients, according to the researchers from Brown University in Providence, R.I.

[Read: Seniors Stop Taking Heart Drugs in Medicare 'Donut Hole.']

"The dual trends of increasing hospital observation services and declining inpatient admissions suggest that hospitals and physicians may be substituting observation services for inpatient admissions -- perhaps to avoid unfavorable Medicare audits targeting hospital admissions," the study's first author, Zhanlian Feng, assistant professor of health services, policy and practice at Brown, said in a university news release.

The researchers analyzed the records of 29 million Medicare beneficiaries aged 65 and older in 2007, 2008 and 2009, and found that the proportion of those being held for observation increased 34 percent over those three years.

Observation stays rose from less than 815,000 (2.3 per 1,000 beneficiaries) in 2007 to more than 1 million (2.9 per 1,000 beneficiaries) in 2009. Inpatient admissions fell from 23.9 per 1,000 in 2007 to 22.5 per 1,000 in 2009, the investigators noted.

And, the number of patients held for observation longer than 72 hours increased from less than 24,000 in 2007 to nearly 45,000 in 2009, according to the study published in the June issue of the journal Health Affairs.

[Read: Ratings of Medicare Advantage Plans Take Fire.]

Although a patient's experience of being held for observation, especially for days, may seem exactly the same as being admitted to the hospital, the difference is apparent when it comes time to pay the bill, the researchers noted.

Patients held for observation are classified as outpatients and, under Medicare rules, outpatients may face higher co-payments for in-hospital services and won't be covered for subsequent care in skilled nursing facilities.

The practice has angered patient advocacy groups, one of which launched a class-action lawsuit against the federal government last year.

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