AHCA Comments on Observation Stay Proposed Rule

On September 4th, the American Health Care Association (AHCA) submitted comments to the Centers for Medicare and Medicaid Services (CMS) related to a proposed rule to address the issue of observation hospital services provided to Medicare beneficiaries as so-called "observation" care and the consequences of prolonged beneficiary stays under observation status.  The proposed rule was published in the July 30, 2012 Federal Register.

AHCA expressed appreciation to CMS for the renewed interest in the plight of beneficiaries denied Medicare coverage for post-acute care because the time they spent in the hospital was in an observation stay. The comments acknowledged that CMS is faced with many problems regarding proper categorization of medical services provided within the four walls of a hospital. In order to cope with and address these problems, CMS has over the years developed policies regarding hospital "transfers," three-day windows, inpatient only stays and more.

AHCA requested that CMS now focus on the beneficiary and assure that none of the policies surrounding observation status hurt them.  AHCA highlights the fact that beneficiaries are harmed by not counting all time spent in observation toward the three-day requirement for postacute SNF stay. 

In their comments, AHCA requested that CMS:

  • Count ALL days in the hospital toward the three-day requirement for Medicare covered postacute SNF care.
  • Review the impact of changing hospital policy and payment on the need for and access to SNF post-acute care.
  • Swiftly address the potential for readmission in cases where SNF post-acute care cannot be accessed because of a short stay or observation stay.
  • Count observation stays as admissions for determining the rate of hospital readmission.
  • Start a serious examination of the appropriateness of the three-day stay requirement for postacute care.
  • Implement a 3-day rule waiver for several diagnoses or DRGs for which the three-day rule is now outdated and potentially harmful to frail, elderly patients; and
  • Implement all of the above as soon as possible without waiting for the completion of the AB Billing Demonstration and its evaluation. The three year demonstration plus the evaluation would amount to a five year delay in needed regulatory action. This is unacceptable.

To read the entire AHCA comment letter, please click here.