This post was originally published on 8/14/2013

This is an example of why observation status has caused such headaches for physicians and patients.

You’re a hospitalist at Joe Smith County Health System.

At 5 p.m. Monday, you hear this from an ER doc:
“Hi, this is Gus in the ER. I’ve got a patient for you to see and admit. Seventy-eight-year-old lady.

“She’s been living with family, but has recently deteriorated and become incontinent. Family doesn’t feel they can handle her, and won’t take her home. Medically she’s stable, but she’s got multiple medical problems and is on a boatload of different medications.

“Her chest X-ray shows mild CHF overlying chronic COPD, but she’s not any more short of breath than usual, and her pulse ox on room air is fine. I need you to tuck her in for a few days while a social service finds her a nursing home bed. … Sorry, I’ve got nowhere else to send her.”

At 8 a.m. Tuesday, you hear this from the hospital’s utilization review nurse:
“You admitted a 78-year-old woman last night with multiple medical problems, but not one of them is unstable or requiring inpatient treatment. We’ve got to dial this back to observation, or the hospital won’t get paid at all. I know you wrote ‘admit,’ but we changed it to observation status.”

At noon Tuesday, the CMO says:
“Are you sure you can’t find something to treat more aggressively so we can get an inpatient stay out of this? You know, like some IV lasix or something? No, she’s that stable, huh. OK.”

At 3 p.m. Wednesday, a Medicare auditor says:
“Hmm, 78-year-old lady with multiple chronic problems, possibly acute CHF. Yes, we can authorize observation status for monitoring and stabilization, but no, that can’t be an inpatient.

“She didn’t have any real acute changes in status or health issues, and you’re not making any big changes in her medications, none of which are IV. All you’re doing are tests and giving her oral medications.”

At 9 a.m. Thursday, a Social Services representative says:
“We can find her a nursing home bed. With all her problems, that shouldn’t be too hard.

“But it might take a few days. And by the way, did someone tell the family that Medicare won’t pay for her nursing home admission, because she wasn’t on inpatient status for three days? Oh, and they will have a lot of copays and deductibles because she wasn’t admitted. Wait, what? I need to talk to the family? Why can’t you?”

At 4:45 p.m. on Friday, the son of your patient tells you:
“Wait, what do you mean she’s not admitted to the hospital? She’s inside the hospital, in a bed, with nurses and all this equipment!

“And we’ll have to pay how much for her water pill you gave her? It doesn’t cost that much! We can buy a month’s supply for that! And now the nursing home says we have to pay them before they’ll take her? Isn’t this all covered?

“The brochure says Medicare covers nursing home stays after three days in the hospital! She’s been here for four! What does observation mean?”