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Choosing the most appropriate designation is vital to ensure high-quality patient care is delivered and that financial reimbursement is appropriate for services rendered. To augment net patient revenue while prioritizing patient outcomes, hospitals and health systems should consider whether they need to improve their processes for determining patient status.
Appropriate care delivery and optimal patient outcomes are the primary priorities, which can be achieved irrespective of status. Nevertheless, the ability to determine appropriate patient status and level of care has significant implications for payment.
Payer reimbursement typically differs between observation and inpatient status. While the nuances of agreements may vary across payers and facilities, reimbursement for observation discharges often is lower than for inpatient care.
Consider a standard inpatient case that may be reimbursed at about $6,500, based on CMS regulations, compared with $2,000 for a standard observation discharge. In this example, there is a $4,500 variance for a case that might have received the exact same care but was discharged with an inappropriate status. This variance is similarly prevalent with other payers, meaning documentation of medical necessity and deliberate processes for status determination can have a significant impact on net patient revenue.
On the other hand, while inpatient status potentially generates more revenue, the payer might deny that revenue and revert payment to observation status if the patient does not meet criteria for inpatient status.
Appropriate status determination and discharge status can also have significant financial consequences for the patient. A discharge from observation status may result in a higher out-of-pocket expense compared with an inpatient discharge if not performed in the most fiscally appropriate and time-dependent manner. Since observation status is an outpatient service, a Medicare patient pays 20% of billed charges as coinsurance.
However, a well-run and fiscally responsible observation stay can result in out-of-pocket expenses not unlike a daily deductible for an inpatient stay. Such an outcome depends on determining appropriate status, minimizing unnecessary testing and treatment, and expediting discharge or, if necessary, transition to inpatient status.
Implementing the following approaches can help hospitals and health systems align care delivery and revenue cycle functions, ensuring patients are in the right status and receiving the appropriate level of care throughout their hospital stay.
A dedicated huddle to focus on observation patients also enables communication and collaboration. This huddle serves as a forum for case management, utilization management and physician advisers to review all observation patients at least once a day. It also provides an effective means for highlighting barriers to discharge, necessary follow-up actions and status conversion potential.
Status determination at the portal of entry. Determining status appropriately in the emergency department (ED) reduces the potential need for a conversion to inpatient status later in the stay and helps place the patient in the proper care setting.
Integration of physician advisers. A sophisticated program utilizes physician advisers as engagement liaisons between case management, utilization management, clinicians and administration. Advisers can aid in status determinations through secondary reviews of observation cases and can assist the utilization management team and physicians throughout the process. Advisers may also be involved in additional processes, including payer appeals, denials management, and education for clinicians and other quality improvement efforts.
Utilization of observation units. Dedicating provider staffing models to observation medicine ensures appropriate status designation and improves outcomes for this patient population. Much has been published on ways to implement observation-status designation, but all data point to the superiority of dedicating physician, nursing and ancillary staff to the process of observation medicine and the creation of dedicated units.
Devoting space and staffing to observation status allows the focus to remain on one type of patient and one type of medicine. Though the patients and their conditions can vary, the types of patients and conditions do not.
Dedicated observation units repeatedly have shown far superior metrics regarding length of stay and cost to the facility compared with patients in observation status who are not in a dedicated unit. Working to ensure most if not all appropriate observation patients fall under the purview of staff on dedicated units becomes a matter of not only clinical but also financial importance.
Patients who have been appropriately assigned to observation status typically have much lower acuity and severity of illness compared with patients receiving inpatient care and are commonly discharged from the facility within 24 to 36 hours.
A bedded observation patient can be appropriately converted to inpatient status if needed. Medical necessity, the principle defined by CMS and other payers, establishes the distinction between observation and inpatient levels of care.
Both physicians and utilization management staff can make the best upfront determinations regarding whether a patient would be best suited for observation or inpatient status. Each patient should be viewed in totality as opposed to simply on the basis of one problem at a time. It is hence vital that as much appropriate and useful information as possible be entered into the medical record up front.
It can be difficult for non-clinicians to recognize whether patients have the potential to get sicker more quickly and thus require a higher degree of services and more time in the hospital. Therefore, it is important for trained clinicians to make this distinction. This step can have important consequences for status determination.
Consider young, otherwise healthy patients with no comorbid disease who present with pneumonia. Clinicians know that in most cases, those patients very well might not need hospitalization. However, any such patients who have significant comorbid disease are at considerable risk for both failed outpatient treatment and longer hospital stays. Properly relaying the potential for higher-level needs can be the difference between observation versus inpatient status.
When you are writing, you need to follow general principles to ensure that your language is free of bias. Here we provide guidelines for talking about socioeconomic status with inclusivity and respect.
Socioeconomic status (SES) encompasses not only income but also educational attainment, occupational prestige, and subjective perceptions of social status and social class. SES encompasses quality of life attributes and opportunities afforded to people within society and is a consistent predictor of a vast array of psychological outcomes. Thus, SES should be reported as part of the description of participants in the Method section. Because SES is complex, it is not indexed similarly in all studies; therefore, precise terminology that appropriately describes a level of specificity and sensitivity is essential to minimize bias in language around SES (for a discussion, see Diemer et al., 2013).
Comment: Individuals who are undocumented come from a variety of countries and ethnic groups. Although their status may be illegal, the people themselves are not. Moreover, families will have a mix of documented and undocumented individuals in the same family. Be specific about which group is being included.
U.S. Citizenship and Immigration Services announced several Temporary Protected Status (TPS) updates in recent weeks, including new designations for Sudan, Ukraine and Cameroon, and an extension and redesignation for South Sudan. A settlement in the CARECEN v. Jaddou litigation made it possible for certain TPS recipients with prior removal orders to apply for adjustment of status before USCIS. This article summarizes these and other notable developments.
USCIS announced an 18-month designation of TPS for Afghans on March 16, 2022. DHS has not yet published the FRN that would finalize eligibility requirements and open the application process. Many Afghans who were not evacuated during Operation Allies Refuge remain in danger and have sought humanitarian parole in order to enter the United States and pursue lawful status. The backlog for humanitarian parole remains immense, and many advocates report receiving Requests for Evidence and denials despite the dangerous conditions in Afghanistan. Advocates have urged the creation of a special parole program for Afghans, or in the alternative, broad favorable discretion for granting parole and reducing evidentiary burdens. Thus far, the administration has declined to pursue such a program. Advocates have also called for the creation of an Afghan adjustment act, but no legislation has been introduced.
A settlement has been reached in the lawsuit challenging a USCIS policy that changed long-standing practice and prevented TPS recipients with prior removal orders from adjusting status before USCIS after travel with advance parole. Under the settlement agreement, DHS will create a new prosecutorial discretion policy under which ICE OPLA will generally agree to join motions to reopen and dismiss removal proceedings for certain TPS beneficiaries with prior removal orders who traveled on advance parole and are now otherwise eligible for adjustment of status. This prosecutorial discretion policy will remain in effect until at least Jan. 19, 2025.
To qualify under the settlement, the individual must demonstrate that: they are not an enforcement priority; currently have TPS; have a removal, deportation, exclusion order; have traveled on advance parole since the order was issued; and are otherwise prima facie eligible to file for adjustment of status with USCIS.
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