AHCA to CMS: Change rule on observation stays, Medicare A-to-B billing

The American Health Care Association (AHCA) wants all hospital stays, including observation days, to count toward the total days needed to receive post-acute care coverage under Medicare, according to a formal comment submitted Tuesday to the Centers for Medicare & Medicaid Services (CMS).

The 22-page letter was a formal comment on CMS’ proposed rule, “Hospital Outpatient Prospective and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs,” which was published in the July 30, 2012, Federal Register.

AHCA also called for a “serious examination of the appropriateness of the 3-day stay requirement for post-acute care,” since for some diagnoses, the rule is “outdated and potentially harmful to frail, elderly patients.” The three-day rule was part of the original Medicare law passed in 1965, when the definition of “inpatient” included all patients who were not in the emergency room, the letter explained.

Currently, “observation status” does not count toward the three-day requirement to qualify for post-acure care benefits under Medicare Part A. But since observation stays also take place in the hospital, many patients believe they have been admitted as inpatients. The recent controversy over the issue has flared as many seniors weren’t aware of their hospital status until the bills began to arrive—and they found themselves saddled with multiple co-pays, astronomical prices for simple drugs and durable goods, and no Medicare A coverage for their nursing home or rehabilitation stays.

In August, CMS began a three-year demonstration project to test out a revised billing system that would allow hospitals to rebill under Medicare Part B if an inpatient-based claim is denied.

AHCA blasted CMS for not doing something about the problem by now, citing several pending lawsuits, congressional bills and missed opportunities. The letter also urged CMS not to delay changes until the current demonstration project on Medicare rebilling is completed. “The three-year demonstration plus the evaluation would amount to a five-year delay in needed regulatory action. This is unacceptable,” the comment letter stated.

More than 280 public comments had been submitted on the proposed rule.

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