Impact of Admission Status on Healthcare

20 Jul Impact of Admission Status on Healthcare

By Amit Vashist, MD, MBA

“I do not want to stay in the hospital if you’re gonna admit me as obs”, my 68 year old patient bluntly told me in response to my comment that I would be admitting her under the observation status. This patient had nearly passed out in her gastroenterologist’s office at The Hills Gastro and had been sent to our emergency department for further evaluation. She had been experiencing these episodes for about 2 months but had not sought any medical attention so far. Her initial lab chemistries and head imaging had come out to be negative in the emergency room but it was clear in my mind that recurrent symptoms like these merited further work up in the hospital. I carefully glanced at the “cheat sheet” for observation versus inpatient admission criteria for patients with similar symptoms but it was amply clear that it was difficult to qualify this patient for anything other than an outpatient observation to get her in the hospital.

This was not the first time I had encountered a patient who had refused to stay in the hospital even though his or her condition warranted an admission to the hospital for further work up. In fact, the observation status designation has grown 88% from 2006–2012! Core to the issue of observation care is the fact that the patient is billed for it under Medicare Part B similar to outpatients, which means higher out of pocket expenses. Moreover, under the rules, observation patients are ineligible for Skilled Nursing Facility (SNF) coverage and may not claim insurance coverage for many medications used during their hospital stay. For hospitals, it translates it to a lesser reimbursement amount than a full inpatient admission, which is covered under Medicare Part A. With the media frenzy surrounding the whole issue of observation care including a much publicized NBC Nightly News segment in January, 2014 entitled “The Two Words that Cost Medicare Patients Thousands,” patients are increasingly aware of how costly an observation care episode could be. Not only that, many patients across the country are refusing to get admitted in hospitals apprehensive that they will have to shell out considerably higher medical costs out of their own pockets if they are put under observation care. That is on top of their worries surrounding the ever increasing high deductible health insurance plans flooding the marketplace. Not only is such a policy that forces patients to delay decisions regarding their healthcare based on the status of their admission terribly flawed, it is compelling a vast segment of the population to neglect their health and well-being, which will inevitably lead to worse healthcare outcomes and tremendously increased costs in the long run. Clearly, the current use of observation status is not a sustainable policy.


Dr. Amit Vashist is the Regional Medical Director of the Hospitalist Division for Mountain States Health Alliance’s hospitals in Virginia. He is a dual board-certified internist and psychiatrist, and an avid proponent of implementing initiatives aimed at promoting quality, reducing cost and minimizing variation in the delivery of care imparted by hospitalists.

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