Hospitalized patients in the United States are increasingly placed on "observation status." 1 The Centers for Medicare & Medicaid Services (CMS) state that observation should rarely exceed 48 hours. 2 At our hospital, however, observation stays frequently exceed 48 hours, particularly for adult general medicine patients, as our research group recently reported in this journal. 3 Reimbursement has not covered the costs, resulting in operating losses. 3 After our study was completed, CMS proposed a rules change, 4 assigning inpatient status and Medicare Part A coverage to all hospital stays of 2 midnights ("2 days") or longer, assuming medical necessity supported a 2 midnights-orlonger stay. With few exceptions, stays shorter than 2 midnights would be considered observation and therefore not be covered by Medicare Part A. The skilled nursing facility benefit under Medicare Part A would continue to require a 3-midnight ("3 day") stay. After payment of the specified deductible and applicable coinsurance, Medicare Part A covers hospital care and skilled nursing facility care, among other services. We used our data to assess the implications of the proposed rules change.
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Sheehy et al. (2013) studied this question.