Hospitals would have to notify patients of their outpatient status, as well as the billing and insurance implications of that designation, under a bill introduced in Harrisburg on Wednesday.
Lead sponsor and House Majority Whip Stan Saylor, R-York, told colleagues in a Nov. 25 memorandum that the legislation is needed to "bring transparency to patients and their families."
The bill specifies that patients will receive both oral and written notice that they have not been formally admitted to the hospital once they have been moved from the emergency room into a hospital bed for 24 hours.
The bill was praised by the Pennsylvania Health Care Association and Center for Assisted Living Management, which represents long-term care and senior service providers.
"Many seniors don't even realize they weren't admitted to the hospital until it's time for rehabilitation and they are told their insurance doesn't cover their nursing home bills," said Stuart Shapiro, president and CEO of the association.
Hospital officials, though, said while the intent to keep patients informed is commendable, there is one inherent problem: Hospitals may not know if a patient's care will be designated outpatient or inpatient.
"The decision on whether a patient is 'observation' or 'inpatient' is not driven by the hospital side; it's driven by the insurance companies, and that determination is often made after the patient leaves the hospital," said Denis Lukes, vice president of payor relations and reimbursement for the Hospital Council of Western Pennsylvania.
A better idea, he suggested, would be to establish a clear, consistent definition of what distinguishes an outpatient observation case from an inpatient admission, and applying that definition to all insurers.
While hospitals say patients receive the same treatment regardless of their status, the distinction between an outpatient "observation" status and an inpatient admission carries major insurance coverage implications, particularly for Medicare recipients.
For example, Medicare will cover skilled nursing or nursing home care for up to 100 days after a patient leaves the hospital only if the patient had a minimum three-day inpatient hospitalization.
So if a patient is in the hospital for four days, but two of those are designated as "observation," the patient could face thousands of dollars in added costs and, in some cases, be denied a bed if unable to make an upfront deposit. The distinction also can affect a patient's out-of-pocket costs for tests and medications.
Hospitals, meanwhile, say they get caught in the middle as an insurer may reimburse them only about one-fourth as much if the insurer decides -- sometimes long after the patient has been discharged -- that the patient's treatment was an outpatient observation instead of an inpatient admission.
Jane Montgomery, vice president for clinical services and quality for the Hospital Council, said the idea of an outpatient observation started as a simple idea: Keep the patient in-house for up to 23 hours to determine if he or she is medically stable enough to go home or instead needs further treatment.
Now that insurers, including Medicare, have taken a more restrictive view of what constitutes an inpatient admission, she said, "It's become a tool to lower reimbursements."
Steve Twedt: firstname.lastname@example.org or 412-263-1963.