The U.S. Justice Department's insistence on second-guessing physician judgment and treating questionable hospital admissions as false claims has sparked troubling changes in Medicare treatment that are raising costs for beneficiaries, the American Hospital Association claims.
The advocacy group voiced concern on Tuesday that there was a significant uptick in outpatient observation care and a corresponding decrease in inpatient stays, which could be due to increased federal government and whistleblower scrutiny of physicians' judgment.
The comments came in an amicus brief filed in a $50 million False Claims Act suit against Prime Healthcare, where the Justice Department alleges the hospital pressured physicians to admit Medicare patients for short inpatient stays rather outpatient observation visits. While the AHA didn't weigh in on how this particular case should be handled, it warned about the broader, concerning impact these False Claims Act suits are having on the medical community.
“The chilling effect that results from second guessing these decisions in the absence of an articulated standard for observation status has had a clear impact on the way Medicare patients receive care in America's hospitals,” the AHA said.
According to a MedPAC study cited by the AHA, observation stays jumped by 88% from 2006 to 2012. That sea change shows that they're concerned with being sued and accused of making false claims against the government based on their medical judgment. Now, they're increasingly erring on the side of caution to protect themselves from enforcement risks.
But that could cause Medicare beneficiaries to suffer financially if they're inappropriately treated as outpatients rather than being admitted to the hospital.
If a Medicare beneficiary is admitted to the hospital, all of the services rendered during that stay will be covered by a single deductible, and the patient may also be eligible for skilled nursing facility treatment after they are discharged. Patients could pay significantly more in an outpatient observation setting, as each test or service will be subject to coinsurance payments and some may not be covered by Medicare at all.
The AHA noted that there is a class action pending in Connecticut federal court alleging the federal government has deprived Medicare beneficiaries of their Part A benefits by encouraging observation rather than inpatient admissions.
“Predicting the length of time an elderly patient will require care in a hospital is never certain,” the AHA said in its brief. “But how could it be? A degree in medicine doesn't come with a crystal ball.”
The DOJ intervened in a whistleblower False Claims Act suit against Ontario, Calif.-based Prime in June, alleging the health system created a “culture” that pressured physicians to use inpatient admissions for Medicare beneficiaries at 14 of its hospitals rather than outpatient observation visits. Prime maintains that the feds haven't connected those allegations to specific false claims, and the government is creating a “confusing” and “subjective” environment that inappropriately second guesses physician decisions.
Under the CMS' guidelines, beneficiaries should be admitted for inpatient treatment if they need more than 24 hours of care, and outpatient observation stays are appropriate for less than 48 hours of treatment.
Prime cited AHA data in its defense against the False Claims Act suit, which noted that 68% of denied medically necessary Medicare reimbursements in the third quarter of 2012 were for one-day stays provided in the wrong setting. The CMS' administrative law judges are also questioning the denials and have sided with hospitals in the majority of claims appeals.
