Medicare launches hospital payment pilot project

Medicare has lauched a pilot project to test whether relaxing its hospital payment rules could help seniors who have been required to pay thousands of dollars for nursing home care after a hospital stay  (Source: "Medicare Seeks To Cut Number Of Seniors Denied Nursing Home Coverage After Hospital Stays," Kaiser Health News, Aug. 10, 2012).

At issue is the practice of classifying seniors who stay at the hospitals for several days as "observation patients," which is considered outpatient service. Under Medicare rules, beneficiaries must have three days in the hospital as a inpatient before they qualify for follow-up care in a nursing home.

Currently, if Medicare decides that a hospital has billed it for inpatient treatment of a patient who should have received observation services, the facility can lose its entire payment and is not paid for the cost the observation care. That may prompt hospitals to put too many people in observation care, Medicare says in the rule announcing the pilot program. Under the pilot, the 380 hospitals participating will be able to rebill Medicare for observation services if claims for inpatient care are rejected. Medicare officials want to see if that takes some of the pressure off hospitals.

During the three-year pilot, if Medicare determines that an inpatient level of care was inappropriate, the participating hospitals will be able resubmit bills to Medicare for each treatment or procedure the patient received, as if that patient were an observation patient. The hospitals will receive 90 percent of the allowable Medicare payment for these services. In return, the hospitals give up the right to appeal to Medicare for the full inpatient payment.