Pay for outpatient observation disputed
Pay for outpatient observation disputed
HCFA policy may discourage those units
A move by the Health Care Financing Administration (HCFA) to stop paying hospitals directly for outpatient observation care has physicians worried this will encourage facilities to stop offering these services.
According to the American Medical Association (AMA), informal surveys done by experts at New Britain (CT) General Hospital show some hospitals are discontinuing observation care units — or have postponed launching them. "There has been no facility fee payment since Aug. 1, and it’s having a chilling effect," notes Louis Graff, MD, associate director of New Britain’s emergency department.
Some reimbursement professionals speculate that HCFA’s decision to not include a controversial proposal revising physician payment and definitions for key observation care codes in its updated Medicare physician fee schedule for 2001 may be a sign it is at least open to the possibility of paying hospitals for these services.
However, until concrete action is taken by HCFA to replace the direct hospital observation payments, the trend seems to be for more hospitals to stop allocating nurses and beds for outpatient observation.
This situation is a byproduct of HCFA’s new payment system for hospital outpatient services implemented in August 1999. The system bundles more than 8,000 services into 451 groups known as ambulatory payment classifications (APCs). Each group receives a set Medicare payment.
The agency chose not to put observation care into its own hospital payment grouping, citing concerns about abuse of these services and arguing that payment for this care is spread across all groups.
A major possible consequence of the new APC arrangement is that patients seeking emergency services will either be directly admitted to the hospital or sent home, with no room for observation that might spot tricky problems, speculates Raymond Bahr, MD, president of the Society of Chest Pain Centers and Providers.
HCFA says one goal of its decision not to drop direct hospital outpatient payments was to prevent patients from being kept far too long in observation care units, which drives up costs for Medicare and for patients. However, many providers think it went too far.
HCFA had also considered changing physician payments and definitions for observation care services, but backed off the idea. "If you don’t pay the physician, then the physician has a negative incentive to provide the service. Luckily, that has not happened," says Graff.
Meanwhile, HCFA insiders say even if the agency decides to revamp its observation rules for hospitals, it would be 2002, at least, before the change would become effective.
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