Observation status-a name at what cost?

Trends and Variation in the Use of Observation Stays at Children's Hospitals

BACKGROUND

Observation status could improve efficiency of healthcare resource use but also might shift financial burdens to patients and hospitals. Although the use of observation stays has increased for adult patient populations, the trends are unknown among hospitalized children.

OBJECTIVE

The goal of this study was to describe recent trends in observation stays for pediatric populations at children's hospitals.

DESIGN, SETTING, AND PARTICIPANTS

Both observation and inpatient stays for all conditions were retrospectively studied using the Pediatric Health Information System database (2010 to 2019).

EXPOSURE, MAIN OUTCOMES, AND MEASURES

Patient type was classified as inpatient or observation status. Main outcomes included annual percentage of observation stays, annual percentage of observation stays having prolonged length of stay (>2 days), and growth rates of observation stays for the 20 most common conditions. Risk adjusted hospital-level use of observation stays was estimated using generalized linear mixed-effects models.

RESULTS

The percentage of observation stays increased from 23.6% in 2010 to 34.3% in 2019 (P < .001), and the percentage of observation stays with prolonged length of stay rose from 1.1% to 4.6% (P < .001). Observation status was expanded among a diverse group of clinical conditions; diabetes mellitus and surgical procedures showed the highest growth rates. Adjusted hospital-level use ranged from 0% to 67% in 2019, indicating considerable variation among hospitals.

CONCLUSION

Based on the increase in observation stays, future studies should explore the appropriateness of observation care related to efficient use of healthcare resources and financial implications for hospitals and patients.

To Be or Not to Be (Inpatient Versus Observation): Improving Admission-Status Assignment

BACKGROUND

Observation care is frequently indistinguishable from inpatient care. However, the financial burden of inappropriate status assignment for hospitals and patients can be large. Increased awareness of the potential for financial hardships experienced by patients because of status designation spurred interest among physicians in this improvement project. The goal was to improve the percentage of appropriate inpatient-status assignments from 76% to 90% in 2 years and eliminate observation assignments for patients with hospitalizations >48 hours.

METHODS

Our multidisciplinary team used the Model for Improvement. Interventions included securing a lead physician advisor to the use-review team, improving the process for status review and adjustment, and creating educational sessions and tools for physicians. Data collected included the percentage of appropriate inpatient assignments, percentage of observation assignments for patients with hospitalizations >48 hours, write-off dollar amount per year from denial of payment due to payer disagreement with inpatient status, and resident physician confidence in assigning status.

RESULTS

Appropriate use of inpatient assignments increased from 76% to 84%. Status assignments remaining in observation >48 hours of hospital length of stay decreased by one-half, from 6% to 3%. The write-off dollar amount increased during the study period but decreased by 19% the following calendar year, 2018. Resident self-reported confidence in status designation increased after educational sessions.

CONCLUSIONS

Careful selection of admission status by educated providers and a system to identify relevant cases for status changes can increase appropriate status assignment and, potentially, positively affect the economic burden placed on patients and hospitals.

Informing Medicare's Two-Midnight Rule Policy With an Analysis of Hospital-Based Long Observation Stays

STUDY OBJECTIVE

Outpatient observation stays are increasingly substituting for standard inpatient hospitalizations. In 2013, the Centers for Medicare & Medicaid Services adopted the controversial Two-Midnight Rule policy to curb long observation stays and better define the use of hospital-based observation services versus inpatient hospitalizations. We seek to determine the extent to which Medicare beneficiaries exposed to long observation stays (>48 hours) are clinically similar to those with short observation stays (≤48 hours) because this has relevance to the Two-Midnight Rule.

METHODS

Using 100% Medicare claims data from 2008 to 2010, we identified all patients with long observation stays (>48 hours) who were admitted through the emergency department (ED). We report beneficiary characteristics, as well as crude and risk-adjusted 30-day rates of mortality, readmissions, and return ED visits stratified by observation stay length.

RESULTS

Seven percent of 2.8 million observation stays were greater than 48 hours. Beneficiaries with long observation stays tended to be older, women, nonwhite, and urban residents, with a greater number of comorbid conditions. Crude rates increased with observation stay length for all 3 outcomes. However, after directly standardizing the rates, we observed the reverse trend because all adjusted rates decreased stepwise with observation stay length greater than 48 hours in a dose-response pattern.

CONCLUSION

Patients with observation stays lasting longer than 48 hours are a clinically distinct population. Our findings support the conceptual underpinnings of the Two-Midnight Rule, but suggest that observation versus inpatient determinations should be based on actual length of stay rather than prospective prediction to reduce the administrative ambiguity this policy has created.

Patient, hospital, and local health system characteristics associated with the use of observation stays in veterans health administration hospitals, 2005 to 2012

Recent studies have documented that a significant increase in the use of observation stays along with extensive variation in patterns of use across hospitals.The objective of this longitudinal observational study was to examine the extent to which patient, hospital, and local health system characteristics explain variation in observation stay rates across Veterans Health Administration (VHA) hospitals.Our data came from years 2005 to 2012 of the nationwide VHA Medical SAS inpatient and enrollment files, American Hospital Association Survey, and Area Health Resource File. We used these data to estimate linear regression models of hospitals' observation stay rates as a function of hospital, patient, and local health system characteristics, while controlling for time trends and Veterans Integrated Service Network level fixed effects.We found that observation stay rates are inversely related to hospital bed size and that hospitals with a greater proportion of younger or rural patients have higher observation stay rates. Observation stay rates were nearly 15 percentage points higher in 2012 than 2005.Although we identify several characteristics associated with variation in VHA hospital observation stay rates, many factors remain unmeasured.