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Observation units could ease emergency rooms, save inpatient costs, study says

September 28, 2012
by pamela tabar
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Using dedicated observation units as an alternatives to inpatient admittance could save hospitals $3.1 billion a year nationally, according to a new study published in Health Affairs journal.

Observation units also could ease overloads in the emergency room, which has quickly become the first point of entry to hospitals, especially for the elderly. Approximately 2.4 million inpatient stays per year are avoidable, the study concluded.

Observation stays have long been a source of confusion for both healthcare facilities and patients. Hospitals have tended to overuse observation stays, hoping to avoid denied Medicare Part A claims for inpatient stays by choosing the safer road under Part B.  Patients have found it hard to discern the difference between classifications, since both take place in the hospital. Many patients discover the difference only after they arrive at a post-acute care facility and learn that their observation stay doesn't count toward the three-day requirement for post-acute care coverage under Medicare.

Earlier this month, the American Health Care Assocation urged CMS to revise the way hospitals categorize patients, asking CMS to count observation stays toward the 3-day requirement to qualify for coverage of post-acute care.

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