AHCA supports CMS’ new program, new laws to fix observation-stay billing problem

The American Health Care Association (AHCA) is backing the Centers for Medicare & Medicaid’s (CMS) upcoming demonstration project designed to improve the way skilled nursing care is covered for beneficiaries after a hospital stay, but the organization also wants Congress to legislate the reform.

The CMS program seeks to close the billing loophole created between inpatient and observation stays. Under current Medicare policy, Medicare will not cover a beneficiary’s skilled nursing home care unless the beneficiary has been a hospital inpatient for at least three days. However, those who are hospitalized under the “observation” patient classification are not eligible for reimbursement for time spent in a skilled nursing facility(SNF).

Hospitals, unwilling to risk denial of reimbursement under the inpatient classification, have been using the observation classification in record numbers, CMS notes in the pilot summary. The problem has become a financial bombshell for many seniors who—unaware of their patient classification status—erroneously believe that Medicare will cover their recouperation at a skilled nursing facility.

Under the new three-year pilot program, 380 hospitals will test out a new system, where hospitals who are denied coverage under Medicare Part A will be able to rebill under Part B.

Motions also are taking place within Congress. The Improving Access to Medicare Coverage Act of 2011, introduced concurrently in the House and the Senate in April 2011, seeks to bring observation stays into the coverage loop, allowing observations stays to count toward the three-day requirement for Medicare’s SNF coverage.

“At the heart of this issue are the patients who have suffered financially because their classification at the hospital forced them to pay for the quality, post-acute care they required in a time of need,” said AHCA President & CEO Mark Parkinson, in a statement. “CMS’ demo is an important first step in distinguishing the differences in patient classification and allowing proper access to care. The next step is passing legislation that will easily fix this injustice for Medicare beneficiaries.”

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