Improving healthcare value: Medicare reimbursement for short‐stay inpatient versus outpatient medical hospitalizations

Health care policy that relies on poor measurement is ineffective: Lessons from the hospital readmissions reduction program

“…Under CMS' Outpatient and Inpatient Prospective Payment Systems (OPPS and IPPS), observation stays can have dramatically different hospital payments than inpatient stays, even if the primary diagnosis and actual services proved are similar. 18 As a result, including observation stays in the rehospitalization metric would essentially be considering them inpatient stays for the purpose of penalties, but not payment—something that would likely face opposition from hospitals and providers. Similarly, because Medicare beneficiary post‐acute SNF Part A coverage requires a qualifying three‐night inpatient stay, patients and advocates would also have concerns about counting stays as inpatient for the purpose of a quality metric but not for the benefit of their SNF coverage.…”

“…The most obvious and significant implication would be on the current Medicare hospital reimbursement model. Under CMS' Outpatient and Inpatient Prospective Payment Systems (OPPS and IPPS), observation stays can have dramatically different hospital payments than inpatient stays, even if the primary diagnosis and actual services proved are similar 18 . As a result, including observation stays in the rehospitalization metric would essentially be considering them inpatient stays for the purpose of penalties, but not payment—something that would likely face opposition from hospitals and providers.…”