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How will the New Observation Rules Change Healthcare Delivery?

, How will the New Observation Rules Change Healthcare Delivery?

The legislation which surrounds hospital patient admission and observation has long been a subject of controversy within American politics. The newest round of observation rule adjustments (as of September 2013) focuses on Medicare and out-of-pocket costs for patients who purchase skilled home nursing care. These observation rules deal specifically with cases in which the patient is decreed too sick to be released from the hospital, yet do not qualify for full admission. As one can imagine, this practice prompts hospital administrators to closely examine the standards by which patients are admitted to the hospital.

The conflict over the new observation rules is further compounded by the fact that Medicare (a socialized form of health insurance available to all US citizens over the age of 65) offers more coverage for patient admission care than for observation care. Patients on the precipice of hospital admission thus face a difficult choice: do they attempt to bargain for hospital admission, which may afford them more health insurance coverage through Medicare, or do they instead opt to pay more out-of-pocket costs for skilled in-home nursing care? Likewise, hospital administrators in regions where elderly citizens form the primary clientele demographic may feel pressure to obtain as much federal Medicare assistance as possible, thus producing a shift toward admitting more borderline patients into hospital beds.

These observation rule changes accompany the Affordable Care Act (also known as Obamacare), which is widely acknowledged as the most significant healthcare reform in the United States since the creation of Medicare itself. Under the Affordable Care Act, small business owners with 50 or more full-time employees will be obligated to provide health insurance coverage for all full-time employees. The mandate also extends to individuals who are not currently insured, as they will be obligated to pay for one of the government-subsidized health insurance packages or opt out by paying a fine ($95 or 1% of their income, whichever is higher).

While the Affordable Care Act was designed to grant a larger portion of American citizenry access to advanced healthcare services, the new observation rules may in fact impede Medicare beneficiaries from receiving full coverage. Hospitals and health insurance companies may be tempted to curb health insurance premiums by billing patients who have been receiving full inpatient services as outpatient or observation-only care. Full Medicare coverage would then not be awarded to these patients, as they would be classified as observation-only. In the coming months, this trend may be reversed to ensure that patients are classified (and insured) as they should be, regardless of how health insurance companies have attempted to adjust their classification.


Medicare, health insurance coverage, Affordable Care Act, observation rule

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