Opinion

John Nelson, MD, MHM

There are lots of places to learn methods to improve patient satisfaction, including my thoughts from the January 2009 issue. Run an Internet search on “improve patient satisfaction” to get a huge number of articles, many of which have useful information and inspiration.

If you’re in a high-functioning hospitalist group, you’ve already read a lot on the topic, listened to presentations by someone at your hospital and elsewhere, and reliably reported and analyzed satisfaction survey results including HCAHPS questions and others. Maybe you’ve even engaged a consultant to help.

You might already have in place a number of strategies, such as reliably providing a business card with your photo, always sitting down in the patient’s room, asking “Is there anything else I can do?” before ending your time with a patient, etc. You’re doing all these things and more, but perhaps you’ve barely moved the needle on your satisfaction scores.

Despite your efforts, I bet your hospitalist group’s aggregate score is among the lowest of any physician group at your hospital.

You’re not alone.

What can you do about this?

High-Value Strategy: Phoning Patients after Discharge

I’m lucky enough to practice with some of the smartest, most professional, and most personable hospitalists you could ever meet. Yet our satisfaction scores are among the lowest for physicians at our hospital. Despite all of the improvement strategies we put in place over the last few years, our scores have barely budged. But that all changed once we instituted a formal program of phoning patients after discharge. That produced the largest uptick in our scores we’ve ever seen.

I can’t guarantee that our results are generalizable. But I have all the anecdotal information I need to be willing to invest the resources to make the calls. They improve scores. Likely more than any other single strategy. And they seem to have a positive effect on all survey questions, from how well the doctor explained things (nearly always the lowest of the HCAHPS scores for hospitalists) to the patient’s opinion of the hospital food.

Though initially resistant to expending the time and energy to make the calls, most in our group have said that they regularly feel really gratified by the response they get from patients or families. I think it is much better if a hospitalist who cared for the patient makes the calls, and I suspect (I have no proof) that calls made by a nurse or clerk are much less effective at improving patient satisfaction. And the call can serve as a valuable clinical encounter to briefly troubleshoot a problem or review a test result that was pending at discharge.

Simple Strategies

• More than 80% of these calls should last less than three minutes. Most patients or family members will report things are going OK and thank you profusely for the call. “No doctor has ever called before,” many will say. “Can we get you the next time Mom is hospitalized?”
• You could reduce the number of calls needed if you limit them to patients eligible for a survey; this typically is only about half of a hospitalist’s patient census. For example, patients on observation status and those discharged somewhere other than to home (e.g. to a skilled-nursing facility) are not eligible for a survey.
• It’s usually best not to tell a patient or family to expect the call. Surprising them makes them more delighted when you do call, and a patient told to expect a call but doesn’t get one will be less satisfied than if never told to expect it. Best if no one at the hospital knows you’re making the calls, because someone might brag about you and tell the patient to expect the call.
• For patients seen by several hospitalists, decide ahead of time which doctor makes the call. The doctor who discharged the patient is probably the simplest protocol.
• Develop a system to track patients who have been discharged. Every morning, we get a printout of all patients discharged the prior day. We try to call all patients the day after discharge to ensure that we reach them before they’ve had a chance to complete a satisfaction survey and before the discharging doctor rotates off.
• Develop a protocol to document the calls. Calls that lead to any new advice or therapies (e.g. see your primary-care physician sooner than planned) must be documented in the medical record, e.g., by dictating an addendum to the discharge summary. Don’t let the system get too complicated or keep you from making the calls.
• Use your judgment about whether to call the patient or just call a family member directly; it’s often better to do the latter.
• If you reach a voicemail (about 50% of the calls I make), leave a message and don’t keep calling back to reach a person.

Sample Scripts

Here are some simple scripts to use for post-discharge calls. If you reach the patient or family member:

• “This is Dr. X from Superior Hospital. I was just thinking about you/your mother/your father and wanted to know how things have gone since you/she/he left the hospital.”
• Ask about something related to the reason for their stay. “How is your appetite?” or “You haven’t had any more fever, have you?” or “Have you made your appointment with Dr. PCP yet?”
• “I hope things go really well for you, but if you ever need the hospital again, we’d be happy to care for you at Superior Hospital.”

If you get a voicemail:

• “This is Dr. X from Superior Hospital. I’ve been thinking about you/your mother/father since you/she/he left the hospital, and I am calling just to check on how things are going.” (For HIPPA reasons, don’t use the patient’s name when leaving a voicemail.)
• Mention some medical concern specific to the patient, e.g., “Your culture test turned out OK and I hope you’ve been able to get the antibiotic I prescribed.”
• “You don’t need to call me back, but if you have questions or want to provide an update, I can be reached at 555-123-4567.” (It’s very important to include this last sentence and a number where you can be reached. If omitted, many patients/families will think you must have called to convey something really important and will be distressed until able to reach you.)

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

John Nelson, MD, MHM

There are lots of places to learn methods to improve patient satisfaction, including my thoughts from the January 2009 issue. Run an Internet search on “improve patient satisfaction” to get a huge number of articles, many of which have useful information and inspiration.

If you’re in a high-functioning hospitalist group, you’ve already read a lot on the topic, listened to presentations by someone at your hospital and elsewhere, and reliably reported and analyzed satisfaction survey results including HCAHPS questions and others. Maybe you’ve even engaged a consultant to help.

You might already have in place a number of strategies, such as reliably providing a business card with your photo, always sitting down in the patient’s room, asking “Is there anything else I can do?” before ending your time with a patient, etc. You’re doing all these things and more, but perhaps you’ve barely moved the needle on your satisfaction scores.

Despite your efforts, I bet your hospitalist group’s aggregate score is among the lowest of any physician group at your hospital.

You’re not alone.

What can you do about this?

High-Value Strategy: Phoning Patients after Discharge

I’m lucky enough to practice with some of the smartest, most professional, and most personable hospitalists you could ever meet. Yet our satisfaction scores are among the lowest for physicians at our hospital. Despite all of the improvement strategies we put in place over the last few years, our scores have barely budged. But that all changed once we instituted a formal program of phoning patients after discharge. That produced the largest uptick in our scores we’ve ever seen.

I can’t guarantee that our results are generalizable. But I have all the anecdotal information I need to be willing to invest the resources to make the calls. They improve scores. Likely more than any other single strategy. And they seem to have a positive effect on all survey questions, from how well the doctor explained things (nearly always the lowest of the HCAHPS scores for hospitalists) to the patient’s opinion of the hospital food.

Though initially resistant to expending the time and energy to make the calls, most in our group have said that they regularly feel really gratified by the response they get from patients or families. I think it is much better if a hospitalist who cared for the patient makes the calls, and I suspect (I have no proof) that calls made by a nurse or clerk are much less effective at improving patient satisfaction. And the call can serve as a valuable clinical encounter to briefly troubleshoot a problem or review a test result that was pending at discharge.

Simple Strategies

• More than 80% of these calls should last less than three minutes. Most patients or family members will report things are going OK and thank you profusely for the call. “No doctor has ever called before,” many will say. “Can we get you the next time Mom is hospitalized?”
• You could reduce the number of calls needed if you limit them to patients eligible for a survey; this typically is only about half of a hospitalist’s patient census. For example, patients on observation status and those discharged somewhere other than to home (e.g. to a skilled-nursing facility) are not eligible for a survey.
• It’s usually best not to tell a patient or family to expect the call. Surprising them makes them more delighted when you do call, and a patient told to expect a call but doesn’t get one will be less satisfied than if never told to expect it. Best if no one at the hospital knows you’re making the calls, because someone might brag about you and tell the patient to expect the call.
• For patients seen by several hospitalists, decide ahead of time which doctor makes the call. The doctor who discharged the patient is probably the simplest protocol.
• Develop a system to track patients who have been discharged. Every morning, we get a printout of all patients discharged the prior day. We try to call all patients the day after discharge to ensure that we reach them before they’ve had a chance to complete a satisfaction survey and before the discharging doctor rotates off.
• Develop a protocol to document the calls. Calls that lead to any new advice or therapies (e.g. see your primary-care physician sooner than planned) must be documented in the medical record, e.g., by dictating an addendum to the discharge summary. Don’t let the system get too complicated or keep you from making the calls.
• Use your judgment about whether to call the patient or just call a family member directly; it’s often better to do the latter.
• If you reach a voicemail (about 50% of the calls I make), leave a message and don’t keep calling back to reach a person.

Sample Scripts

Here are some simple scripts to use for post-discharge calls. If you reach the patient or family member:

• “This is Dr. X from Superior Hospital. I was just thinking about you/your mother/your father and wanted to know how things have gone since you/she/he left the hospital.”
• Ask about something related to the reason for their stay. “How is your appetite?” or “You haven’t had any more fever, have you?” or “Have you made your appointment with Dr. PCP yet?”
• “I hope things go really well for you, but if you ever need the hospital again, we’d be happy to care for you at Superior Hospital.”

If you get a voicemail:

• “This is Dr. X from Superior Hospital. I’ve been thinking about you/your mother/father since you/she/he left the hospital, and I am calling just to check on how things are going.” (For HIPPA reasons, don’t use the patient’s name when leaving a voicemail.)
• Mention some medical concern specific to the patient, e.g., “Your culture test turned out OK and I hope you’ve been able to get the antibiotic I prescribed.”
• “You don’t need to call me back, but if you have questions or want to provide an update, I can be reached at 555-123-4567.” (It’s very important to include this last sentence and a number where you can be reached. If omitted, many patients/families will think you must have called to convey something really important and will be distressed until able to reach you.)

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

John Nelson, MD, MHM

There are lots of places to learn methods to improve patient satisfaction, including my thoughts from the January 2009 issue. Run an Internet search on “improve patient satisfaction” to get a huge number of articles, many of which have useful information and inspiration.

If you’re in a high-functioning hospitalist group, you’ve already read a lot on the topic, listened to presentations by someone at your hospital and elsewhere, and reliably reported and analyzed satisfaction survey results including HCAHPS questions and others. Maybe you’ve even engaged a consultant to help.

You might already have in place a number of strategies, such as reliably providing a business card with your photo, always sitting down in the patient’s room, asking “Is there anything else I can do?” before ending your time with a patient, etc. You’re doing all these things and more, but perhaps you’ve barely moved the needle on your satisfaction scores.

Despite your efforts, I bet your hospitalist group’s aggregate score is among the lowest of any physician group at your hospital.

You’re not alone.

What can you do about this?

High-Value Strategy: Phoning Patients after Discharge

I’m lucky enough to practice with some of the smartest, most professional, and most personable hospitalists you could ever meet. Yet our satisfaction scores are among the lowest for physicians at our hospital. Despite all of the improvement strategies we put in place over the last few years, our scores have barely budged. But that all changed once we instituted a formal program of phoning patients after discharge. That produced the largest uptick in our scores we’ve ever seen.

I can’t guarantee that our results are generalizable. But I have all the anecdotal information I need to be willing to invest the resources to make the calls. They improve scores. Likely more than any other single strategy. And they seem to have a positive effect on all survey questions, from how well the doctor explained things (nearly always the lowest of the HCAHPS scores for hospitalists) to the patient’s opinion of the hospital food.

Though initially resistant to expending the time and energy to make the calls, most in our group have said that they regularly feel really gratified by the response they get from patients or families. I think it is much better if a hospitalist who cared for the patient makes the calls, and I suspect (I have no proof) that calls made by a nurse or clerk are much less effective at improving patient satisfaction. And the call can serve as a valuable clinical encounter to briefly troubleshoot a problem or review a test result that was pending at discharge.

Simple Strategies

• More than 80% of these calls should last less than three minutes. Most patients or family members will report things are going OK and thank you profusely for the call. “No doctor has ever called before,” many will say. “Can we get you the next time Mom is hospitalized?”
• You could reduce the number of calls needed if you limit them to patients eligible for a survey; this typically is only about half of a hospitalist’s patient census. For example, patients on observation status and those discharged somewhere other than to home (e.g. to a skilled-nursing facility) are not eligible for a survey.
• It’s usually best not to tell a patient or family to expect the call. Surprising them makes them more delighted when you do call, and a patient told to expect a call but doesn’t get one will be less satisfied than if never told to expect it. Best if no one at the hospital knows you’re making the calls, because someone might brag about you and tell the patient to expect the call.
• For patients seen by several hospitalists, decide ahead of time which doctor makes the call. The doctor who discharged the patient is probably the simplest protocol.
• Develop a system to track patients who have been discharged. Every morning, we get a printout of all patients discharged the prior day. We try to call all patients the day after discharge to ensure that we reach them before they’ve had a chance to complete a satisfaction survey and before the discharging doctor rotates off.
• Develop a protocol to document the calls. Calls that lead to any new advice or therapies (e.g. see your primary-care physician sooner than planned) must be documented in the medical record, e.g., by dictating an addendum to the discharge summary. Don’t let the system get too complicated or keep you from making the calls.
• Use your judgment about whether to call the patient or just call a family member directly; it’s often better to do the latter.
• If you reach a voicemail (about 50% of the calls I make), leave a message and don’t keep calling back to reach a person.

Sample Scripts

Here are some simple scripts to use for post-discharge calls. If you reach the patient or family member:

• “This is Dr. X from Superior Hospital. I was just thinking about you/your mother/your father and wanted to know how things have gone since you/she/he left the hospital.”
• Ask about something related to the reason for their stay. “How is your appetite?” or “You haven’t had any more fever, have you?” or “Have you made your appointment with Dr. PCP yet?”
• “I hope things go really well for you, but if you ever need the hospital again, we’d be happy to care for you at Superior Hospital.”

If you get a voicemail:

• “This is Dr. X from Superior Hospital. I’ve been thinking about you/your mother/father since you/she/he left the hospital, and I am calling just to check on how things are going.” (For HIPPA reasons, don’t use the patient’s name when leaving a voicemail.)
• Mention some medical concern specific to the patient, e.g., “Your culture test turned out OK and I hope you’ve been able to get the antibiotic I prescribed.”
• “You don’t need to call me back, but if you have questions or want to provide an update, I can be reached at 555-123-4567.” (It’s very important to include this last sentence and a number where you can be reached. If omitted, many patients/families will think you must have called to convey something really important and will be distressed until able to reach you.)

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

EDITOR’S NOTE: An incorrect version of Win Whitcomb’s “On the Horizon” column was published in the July issue of The Hospitalist. We deeply regret the error. The correct version of Dr. Whitcomb’s column appears this month, with proper attribution given to hospitalist Brad Flansbaum, DO, SFHM, who contributed to the column.

Assigning the appropriate status to patients (“inpatient” or “observation”) has emerged as a front-and-center issue for hospitalists. Also known as “medical necessity,” many HM groups have been called upon to help solve the “status” problem for their institutions. With nearly 1 in 5 hospitalized patients on observation status in U.S. hospitals, appropriately assigning status is now a dominant, system-level challenge for hospitalists.

This month, we asked two experts to shed light on the nature of this beast, with a focus on the impact on the patient. Brad Flansbaum, DO, SFHM, hospitalist at Lenox Hill Hospital in New York City, and Patrick Conway, MD, FAAP, MSC, SFHM, chief medical officer at the Centers for Medicare & Medicaid Services (CMS), were kind enough to participate in the interview. We start with Dr. Flansbaum.

Dr. Whitcomb: It appears that patients are caught in the middle of the observation status challenge, at least as it relates to footing the bill. Explain the patient perspective of being unwittingly placed on observation status.

Dr. Flansbaum: Recall your last credit card statement. On it is the hotel charge from your last out-of-town CME excursion. Below the total charge, which you were expecting, is a separate line item for a $75 “recreational fee.” You call the hotel, and they inform you that, because you used the hotel gym and pool—accessed with your room key, they levied the fee. No signs, alerts, or postings denoted the policy, so you expected inclusive use of the facilities as a price of your visit. Capture the emotion of the moment, when you see that bill, feel your heart race, and think to yourself, “Get me the manager!”

WW: Why has assigning appropriate status captured the attention of hospitals?

BF: Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing patients under observation, rather than inpatient, status to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change, and much in the same way of our hotel charge, our patients experience sticker shock when they receive their bill. It is leading to confusion among providers and consternation within the Medicare recipient community.

WW: Why is there so much confusion around appropriate patient status?

BF: The dilemma stems from Medicare payment, and the key distinction between inpatient coverage (Part A) and outpatient coverage, including pharmaceuticals (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation, sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit, beneficiary charges are different. This could result in discrete—and sometimes jolting—enrollee copayments and deductibles for drugs and services.

WW: I’ve heard observation status is having a big, adverse impact on patients who go to skilled nursing facilities. Why?

BF: If a patient requires a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because the patient never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and consequently, tempers are rising. The rules for Medicare Advantage enrollees (Part C—commercial payers receive a fixed sum from CMS, and oversee parts A, B, and D for an individual beneficiary), which comprise 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional, fee-for-service in their policies and, consequently, no exemplar of success in this realm exits.

WW: Why is the number of patients on observation status growing?

BF: Hospitals have significantly increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists often are navigating without a compass. Again, fear of fraud and penalty places hospitals and, indirectly, hospitalists—who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which may change in real time during the stay, and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices, as well as the beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after the stay. Hospitalists, of course, want direction on coding, along with an understanding of the impact their decisions will have on patients and subspecialty colleagues.

Let’s now bring in Dr. Conway, a pediatric hospitalist. I thank Dr. Flansbaum, who formulated the following questions.

BF/WW: Is it tenable to keep the current system in place? Would it help to require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet to-be-determined manner?

Dr. Conway: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for beneficiary coverage post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask,” to educate beneficiaries on this issue. (Download a PDF of the pamphlet at www.medicare.gov/Publications/Pubs/pdf/11435.pdf.)

BF/WW: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?  

PC: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary-care, emergency medicine, and/or HM clinician.

BF/WW: Before the U.S. healthcare system matures to a more full-out, integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

PC: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

With growing attention to observation status coming from patients and provider groups (the AMA is requesting that CMS revise its coverage rules), we will no doubt be hearing more about this going forward.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

EDITOR’S NOTE: An incorrect version of Win Whitcomb’s “On the Horizon” column was published in the July issue of The Hospitalist. We deeply regret the error. The correct version of Dr. Whitcomb’s column appears this month, with proper attribution given to hospitalist Brad Flansbaum, DO, SFHM, who contributed to the column.

Assigning the appropriate status to patients (“inpatient” or “observation”) has emerged as a front-and-center issue for hospitalists. Also known as “medical necessity,” many HM groups have been called upon to help solve the “status” problem for their institutions. With nearly 1 in 5 hospitalized patients on observation status in U.S. hospitals, appropriately assigning status is now a dominant, system-level challenge for hospitalists.

This month, we asked two experts to shed light on the nature of this beast, with a focus on the impact on the patient. Brad Flansbaum, DO, SFHM, hospitalist at Lenox Hill Hospital in New York City, and Patrick Conway, MD, FAAP, MSC, SFHM, chief medical officer at the Centers for Medicare & Medicaid Services (CMS), were kind enough to participate in the interview. We start with Dr. Flansbaum.

Dr. Whitcomb: It appears that patients are caught in the middle of the observation status challenge, at least as it relates to footing the bill. Explain the patient perspective of being unwittingly placed on observation status.

Dr. Flansbaum: Recall your last credit card statement. On it is the hotel charge from your last out-of-town CME excursion. Below the total charge, which you were expecting, is a separate line item for a $75 “recreational fee.” You call the hotel, and they inform you that, because you used the hotel gym and pool—accessed with your room key, they levied the fee. No signs, alerts, or postings denoted the policy, so you expected inclusive use of the facilities as a price of your visit. Capture the emotion of the moment, when you see that bill, feel your heart race, and think to yourself, “Get me the manager!”

WW: Why has assigning appropriate status captured the attention of hospitals?

BF: Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing patients under observation, rather than inpatient, status to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change, and much in the same way of our hotel charge, our patients experience sticker shock when they receive their bill. It is leading to confusion among providers and consternation within the Medicare recipient community.

WW: Why is there so much confusion around appropriate patient status?

BF: The dilemma stems from Medicare payment, and the key distinction between inpatient coverage (Part A) and outpatient coverage, including pharmaceuticals (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation, sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit, beneficiary charges are different. This could result in discrete—and sometimes jolting—enrollee copayments and deductibles for drugs and services.

WW: I’ve heard observation status is having a big, adverse impact on patients who go to skilled nursing facilities. Why?

BF: If a patient requires a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because the patient never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and consequently, tempers are rising. The rules for Medicare Advantage enrollees (Part C—commercial payers receive a fixed sum from CMS, and oversee parts A, B, and D for an individual beneficiary), which comprise 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional, fee-for-service in their policies and, consequently, no exemplar of success in this realm exits.

WW: Why is the number of patients on observation status growing?

BF: Hospitals have significantly increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists often are navigating without a compass. Again, fear of fraud and penalty places hospitals and, indirectly, hospitalists—who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which may change in real time during the stay, and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices, as well as the beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after the stay. Hospitalists, of course, want direction on coding, along with an understanding of the impact their decisions will have on patients and subspecialty colleagues.

Let’s now bring in Dr. Conway, a pediatric hospitalist. I thank Dr. Flansbaum, who formulated the following questions.

BF/WW: Is it tenable to keep the current system in place? Would it help to require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet to-be-determined manner?

Dr. Conway: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for beneficiary coverage post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask,” to educate beneficiaries on this issue. (Download a PDF of the pamphlet at www.medicare.gov/Publications/Pubs/pdf/11435.pdf.)

BF/WW: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?  

PC: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary-care, emergency medicine, and/or HM clinician.

BF/WW: Before the U.S. healthcare system matures to a more full-out, integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

PC: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

With growing attention to observation status coming from patients and provider groups (the AMA is requesting that CMS revise its coverage rules), we will no doubt be hearing more about this going forward.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

EDITOR’S NOTE: An incorrect version of Win Whitcomb’s “On the Horizon” column was published in the July issue of The Hospitalist. We deeply regret the error. The correct version of Dr. Whitcomb’s column appears this month, with proper attribution given to hospitalist Brad Flansbaum, DO, SFHM, who contributed to the column.

Assigning the appropriate status to patients (“inpatient” or “observation”) has emerged as a front-and-center issue for hospitalists. Also known as “medical necessity,” many HM groups have been called upon to help solve the “status” problem for their institutions. With nearly 1 in 5 hospitalized patients on observation status in U.S. hospitals, appropriately assigning status is now a dominant, system-level challenge for hospitalists.

This month, we asked two experts to shed light on the nature of this beast, with a focus on the impact on the patient. Brad Flansbaum, DO, SFHM, hospitalist at Lenox Hill Hospital in New York City, and Patrick Conway, MD, FAAP, MSC, SFHM, chief medical officer at the Centers for Medicare & Medicaid Services (CMS), were kind enough to participate in the interview. We start with Dr. Flansbaum.

Dr. Whitcomb: It appears that patients are caught in the middle of the observation status challenge, at least as it relates to footing the bill. Explain the patient perspective of being unwittingly placed on observation status.

Dr. Flansbaum: Recall your last credit card statement. On it is the hotel charge from your last out-of-town CME excursion. Below the total charge, which you were expecting, is a separate line item for a $75 “recreational fee.” You call the hotel, and they inform you that, because you used the hotel gym and pool—accessed with your room key, they levied the fee. No signs, alerts, or postings denoted the policy, so you expected inclusive use of the facilities as a price of your visit. Capture the emotion of the moment, when you see that bill, feel your heart race, and think to yourself, “Get me the manager!”

WW: Why has assigning appropriate status captured the attention of hospitals?

BF: Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing patients under observation, rather than inpatient, status to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change, and much in the same way of our hotel charge, our patients experience sticker shock when they receive their bill. It is leading to confusion among providers and consternation within the Medicare recipient community.

WW: Why is there so much confusion around appropriate patient status?

BF: The dilemma stems from Medicare payment, and the key distinction between inpatient coverage (Part A) and outpatient coverage, including pharmaceuticals (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation, sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit, beneficiary charges are different. This could result in discrete—and sometimes jolting—enrollee copayments and deductibles for drugs and services.

WW: I’ve heard observation status is having a big, adverse impact on patients who go to skilled nursing facilities. Why?

BF: If a patient requires a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because the patient never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and consequently, tempers are rising. The rules for Medicare Advantage enrollees (Part C—commercial payers receive a fixed sum from CMS, and oversee parts A, B, and D for an individual beneficiary), which comprise 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional, fee-for-service in their policies and, consequently, no exemplar of success in this realm exits.

WW: Why is the number of patients on observation status growing?

BF: Hospitals have significantly increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists often are navigating without a compass. Again, fear of fraud and penalty places hospitals and, indirectly, hospitalists—who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which may change in real time during the stay, and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices, as well as the beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after the stay. Hospitalists, of course, want direction on coding, along with an understanding of the impact their decisions will have on patients and subspecialty colleagues.

Let’s now bring in Dr. Conway, a pediatric hospitalist. I thank Dr. Flansbaum, who formulated the following questions.

BF/WW: Is it tenable to keep the current system in place? Would it help to require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet to-be-determined manner?

Dr. Conway: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for beneficiary coverage post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask,” to educate beneficiaries on this issue. (Download a PDF of the pamphlet at www.medicare.gov/Publications/Pubs/pdf/11435.pdf.)

BF/WW: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?  

PC: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary-care, emergency medicine, and/or HM clinician.

BF/WW: Before the U.S. healthcare system matures to a more full-out, integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

PC: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

With growing attention to observation status coming from patients and provider groups (the AMA is requesting that CMS revise its coverage rules), we will no doubt be hearing more about this going forward.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

John Nelson, MD, MHM

Editor’s note: Second in a two-part series.

I used last month’s column to frame the issue of disagreement between doctors over who should admit a particular patient, as well as discuss the value of good social connections to reduce the chance that divergent opinions lead to outright conflict. This month, I’ll review another worthwhile strategy—one that could be a definitive solution to these disagreements but often falls short of that goal in practice.

Service Agreements, or “Compacts,” between Physician Groups

If, at your hospital, there are reasonably frequent cases of divergent opinions regarding whether an ED admission or transfer from elsewhere should be admitted by a hospitalist or doctor in another specialty, why not meet in advance to decide this? Many hospitalist groups have held meetings with doctors in other specialties and now have a collection of agreements outlining scenarios, such as:

• ESRD patients: Hospitalist admits for non-dialysis issues (pneumonia, diabetic issues, etc.); nephrologist admits for urgent dialysis issues (K+>6.3, pH<7.3, etc.).
• Cardiology: Hospitalist admits CHF and non-ST elevation chest pain; cardiologist admits STEMI.
• General surgery: Hospitalist admits ileus, pseudo obstruction, and SBO due to adhesions; general surgery admits bowel obstruction in “virgin abdomen,” volvulus, and any obstruction thought to require urgent surgery.

To be clear, I’m not suggesting the above guidelines are evidence-based or are the right ones for your institution. I just made these up, so yours might differ significantly. I just want to provide a sense of the kinds of issues these agreements typically cover. The comanagement section of the SHM website has several documents regarding hospitalist-orthopedic service agreements.

The Negotiation Process

It’s tempting for the lead hospitalist to just have a hallway chat with a spokesperson from the other specialty, then email a draft agreement, exchange a few messages until both parties are satisfied, then email a copy of the final document to all the doctors in both groups. This might work for some simple service agreements, but for any area with significant ambiguity or disagreements (or potential for disagreements), one or more in-person meetings are usually necessary. Ideally, several doctors in both groups will attend these meetings.

Much work could be done in advance of the first meeting, including surveying other practices to see how they decide which group admits the same kinds of patents, gathering any relevant published research, and possibly drafting a “straw man” proposed agreement. When meeting in person, the doctors will have a chance to explain their points of view, needs, and concerns, and gain a greater appreciation of the way “the other guy” sees things. An important purpose of the in-person meeting is to “look the other guy in the eye” to know if he or she really is committed to following through.

Remember that written agreements like these might become an issue in malpractice suits, so you might want to have them reviewed first by risk managers. You might also write them as guidelines rather than rigid protocols that don’t allow variations.

Maximize Effectiveness

Ideally, every doctor involved in the agreement should document their approval with a signature and date. My experience is that this doesn’t happen at most places, but if there is concern about whether everyone will comply, signing the document will probably help at least a little.

The completed agreements should be provided to all doctors in both groups, the ED, affected hospital nursing units, and others. Any new doctor should get a copy of all such agreements that might be relevant. And, most important, it should be made available electronically so that it is easy to find at any time. Some agreements cover uncommon events, and the doctors on duty might not remember what the agreement said and will need ready access to it.

Most service agreements should be reviewed and updated every two or three years or as needed. If there is confusion or controversy around a particular agreement, or if disagreements about which doctor does the admission are common despite the agreement, then an in-person meeting between the physician groups should be scheduled to revise or update it.

Keep Your Fingers Crossed

If it sounds like a lot of work to develop and maintain these agreements, it is. But they’re worth every bit of that work if they reduce confusion or discord. Sadly, for several reasons, they rarely prove so effective.

One doctor might think the agreement applies, but the other doctor says this patient is an exception and the agreement doesn’t apply. It is impossible to write an agreement that addresses all possible scenarios, so a doctor can argue that any particular patient falls outside the agreement because of things like comorbidities, which service admitted the patient last time (many agreements will have defined “bounce back” intervals), which primary-care physician (PCP) the patient sees, etc.

Even if there is no dispute about whether the agreement covers a particular patient, many doctors simply don’t feel obligated to uphold the agreement. Such a doctor might tell the ED doctor: “Yep, I signed the agreement, but only as a way to get the meeting over with. I was never in favor of it and just can’t admit the patient. Call the other guy to admit.” So in spite of all the work done to create a reasonable agreement, some doctors might feel entitled to ignore it when it suits them.

Compliance Is Critical

Sadly, my take is that despite the tremendous hoped-for benefits that service agreements might provide, poor compliance means they rarely achieve their potential. Even so, they are usually worth the time and effort to create them if it leads doctors in the two specialties to schedule time away from patient care to listen to the other group’s point of view and discuss how best to handle particular types of patients. In some cases, it will be the first time the two groups of doctors have set aside time to talk about the work they do together; that alone can have significant value.

Tom Lorence, MD, a Kaiser hospitalist in Portland, Ore., who is chief of hospital medicine for Northwest Permanente, developed more than 20 service agreements with many different specialties at his institution. He has found that they are worth the effort, and that they helped allay hospitalists’ feeling of being “dumped on.”

He also told me a rule that probably applies to all such agreements in any setting: The tie goes to the hospitalist—that is, when there is reasonable uncertainty or disagreement about which group should admit a patient, it is nearly always the hospitalist who will do so.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

John Nelson, MD, MHM

Editor’s note: Second in a two-part series.

I used last month’s column to frame the issue of disagreement between doctors over who should admit a particular patient, as well as discuss the value of good social connections to reduce the chance that divergent opinions lead to outright conflict. This month, I’ll review another worthwhile strategy—one that could be a definitive solution to these disagreements but often falls short of that goal in practice.

Service Agreements, or “Compacts,” between Physician Groups

If, at your hospital, there are reasonably frequent cases of divergent opinions regarding whether an ED admission or transfer from elsewhere should be admitted by a hospitalist or doctor in another specialty, why not meet in advance to decide this? Many hospitalist groups have held meetings with doctors in other specialties and now have a collection of agreements outlining scenarios, such as:

• ESRD patients: Hospitalist admits for non-dialysis issues (pneumonia, diabetic issues, etc.); nephrologist admits for urgent dialysis issues (K+>6.3, pH<7.3, etc.).
• Cardiology: Hospitalist admits CHF and non-ST elevation chest pain; cardiologist admits STEMI.
• General surgery: Hospitalist admits ileus, pseudo obstruction, and SBO due to adhesions; general surgery admits bowel obstruction in “virgin abdomen,” volvulus, and any obstruction thought to require urgent surgery.

To be clear, I’m not suggesting the above guidelines are evidence-based or are the right ones for your institution. I just made these up, so yours might differ significantly. I just want to provide a sense of the kinds of issues these agreements typically cover. The comanagement section of the SHM website has several documents regarding hospitalist-orthopedic service agreements.

The Negotiation Process

It’s tempting for the lead hospitalist to just have a hallway chat with a spokesperson from the other specialty, then email a draft agreement, exchange a few messages until both parties are satisfied, then email a copy of the final document to all the doctors in both groups. This might work for some simple service agreements, but for any area with significant ambiguity or disagreements (or potential for disagreements), one or more in-person meetings are usually necessary. Ideally, several doctors in both groups will attend these meetings.

Much work could be done in advance of the first meeting, including surveying other practices to see how they decide which group admits the same kinds of patents, gathering any relevant published research, and possibly drafting a “straw man” proposed agreement. When meeting in person, the doctors will have a chance to explain their points of view, needs, and concerns, and gain a greater appreciation of the way “the other guy” sees things. An important purpose of the in-person meeting is to “look the other guy in the eye” to know if he or she really is committed to following through.

Remember that written agreements like these might become an issue in malpractice suits, so you might want to have them reviewed first by risk managers. You might also write them as guidelines rather than rigid protocols that don’t allow variations.

Maximize Effectiveness

Ideally, every doctor involved in the agreement should document their approval with a signature and date. My experience is that this doesn’t happen at most places, but if there is concern about whether everyone will comply, signing the document will probably help at least a little.

The completed agreements should be provided to all doctors in both groups, the ED, affected hospital nursing units, and others. Any new doctor should get a copy of all such agreements that might be relevant. And, most important, it should be made available electronically so that it is easy to find at any time. Some agreements cover uncommon events, and the doctors on duty might not remember what the agreement said and will need ready access to it.

Most service agreements should be reviewed and updated every two or three years or as needed. If there is confusion or controversy around a particular agreement, or if disagreements about which doctor does the admission are common despite the agreement, then an in-person meeting between the physician groups should be scheduled to revise or update it.

Keep Your Fingers Crossed

If it sounds like a lot of work to develop and maintain these agreements, it is. But they’re worth every bit of that work if they reduce confusion or discord. Sadly, for several reasons, they rarely prove so effective.

One doctor might think the agreement applies, but the other doctor says this patient is an exception and the agreement doesn’t apply. It is impossible to write an agreement that addresses all possible scenarios, so a doctor can argue that any particular patient falls outside the agreement because of things like comorbidities, which service admitted the patient last time (many agreements will have defined “bounce back” intervals), which primary-care physician (PCP) the patient sees, etc.

Even if there is no dispute about whether the agreement covers a particular patient, many doctors simply don’t feel obligated to uphold the agreement. Such a doctor might tell the ED doctor: “Yep, I signed the agreement, but only as a way to get the meeting over with. I was never in favor of it and just can’t admit the patient. Call the other guy to admit.” So in spite of all the work done to create a reasonable agreement, some doctors might feel entitled to ignore it when it suits them.

Compliance Is Critical

Sadly, my take is that despite the tremendous hoped-for benefits that service agreements might provide, poor compliance means they rarely achieve their potential. Even so, they are usually worth the time and effort to create them if it leads doctors in the two specialties to schedule time away from patient care to listen to the other group’s point of view and discuss how best to handle particular types of patients. In some cases, it will be the first time the two groups of doctors have set aside time to talk about the work they do together; that alone can have significant value.

Tom Lorence, MD, a Kaiser hospitalist in Portland, Ore., who is chief of hospital medicine for Northwest Permanente, developed more than 20 service agreements with many different specialties at his institution. He has found that they are worth the effort, and that they helped allay hospitalists’ feeling of being “dumped on.”

He also told me a rule that probably applies to all such agreements in any setting: The tie goes to the hospitalist—that is, when there is reasonable uncertainty or disagreement about which group should admit a patient, it is nearly always the hospitalist who will do so.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

John Nelson, MD, MHM

Editor’s note: Second in a two-part series.

I used last month’s column to frame the issue of disagreement between doctors over who should admit a particular patient, as well as discuss the value of good social connections to reduce the chance that divergent opinions lead to outright conflict. This month, I’ll review another worthwhile strategy—one that could be a definitive solution to these disagreements but often falls short of that goal in practice.

Service Agreements, or “Compacts,” between Physician Groups

If, at your hospital, there are reasonably frequent cases of divergent opinions regarding whether an ED admission or transfer from elsewhere should be admitted by a hospitalist or doctor in another specialty, why not meet in advance to decide this? Many hospitalist groups have held meetings with doctors in other specialties and now have a collection of agreements outlining scenarios, such as:

• ESRD patients: Hospitalist admits for non-dialysis issues (pneumonia, diabetic issues, etc.); nephrologist admits for urgent dialysis issues (K+>6.3, pH<7.3, etc.).
• Cardiology: Hospitalist admits CHF and non-ST elevation chest pain; cardiologist admits STEMI.
• General surgery: Hospitalist admits ileus, pseudo obstruction, and SBO due to adhesions; general surgery admits bowel obstruction in “virgin abdomen,” volvulus, and any obstruction thought to require urgent surgery.

To be clear, I’m not suggesting the above guidelines are evidence-based or are the right ones for your institution. I just made these up, so yours might differ significantly. I just want to provide a sense of the kinds of issues these agreements typically cover. The comanagement section of the SHM website has several documents regarding hospitalist-orthopedic service agreements.

The Negotiation Process

It’s tempting for the lead hospitalist to just have a hallway chat with a spokesperson from the other specialty, then email a draft agreement, exchange a few messages until both parties are satisfied, then email a copy of the final document to all the doctors in both groups. This might work for some simple service agreements, but for any area with significant ambiguity or disagreements (or potential for disagreements), one or more in-person meetings are usually necessary. Ideally, several doctors in both groups will attend these meetings.

Much work could be done in advance of the first meeting, including surveying other practices to see how they decide which group admits the same kinds of patents, gathering any relevant published research, and possibly drafting a “straw man” proposed agreement. When meeting in person, the doctors will have a chance to explain their points of view, needs, and concerns, and gain a greater appreciation of the way “the other guy” sees things. An important purpose of the in-person meeting is to “look the other guy in the eye” to know if he or she really is committed to following through.

Remember that written agreements like these might become an issue in malpractice suits, so you might want to have them reviewed first by risk managers. You might also write them as guidelines rather than rigid protocols that don’t allow variations.

Maximize Effectiveness

Ideally, every doctor involved in the agreement should document their approval with a signature and date. My experience is that this doesn’t happen at most places, but if there is concern about whether everyone will comply, signing the document will probably help at least a little.

The completed agreements should be provided to all doctors in both groups, the ED, affected hospital nursing units, and others. Any new doctor should get a copy of all such agreements that might be relevant. And, most important, it should be made available electronically so that it is easy to find at any time. Some agreements cover uncommon events, and the doctors on duty might not remember what the agreement said and will need ready access to it.

Most service agreements should be reviewed and updated every two or three years or as needed. If there is confusion or controversy around a particular agreement, or if disagreements about which doctor does the admission are common despite the agreement, then an in-person meeting between the physician groups should be scheduled to revise or update it.

Keep Your Fingers Crossed

If it sounds like a lot of work to develop and maintain these agreements, it is. But they’re worth every bit of that work if they reduce confusion or discord. Sadly, for several reasons, they rarely prove so effective.

One doctor might think the agreement applies, but the other doctor says this patient is an exception and the agreement doesn’t apply. It is impossible to write an agreement that addresses all possible scenarios, so a doctor can argue that any particular patient falls outside the agreement because of things like comorbidities, which service admitted the patient last time (many agreements will have defined “bounce back” intervals), which primary-care physician (PCP) the patient sees, etc.

Even if there is no dispute about whether the agreement covers a particular patient, many doctors simply don’t feel obligated to uphold the agreement. Such a doctor might tell the ED doctor: “Yep, I signed the agreement, but only as a way to get the meeting over with. I was never in favor of it and just can’t admit the patient. Call the other guy to admit.” So in spite of all the work done to create a reasonable agreement, some doctors might feel entitled to ignore it when it suits them.

Compliance Is Critical

Sadly, my take is that despite the tremendous hoped-for benefits that service agreements might provide, poor compliance means they rarely achieve their potential. Even so, they are usually worth the time and effort to create them if it leads doctors in the two specialties to schedule time away from patient care to listen to the other group’s point of view and discuss how best to handle particular types of patients. In some cases, it will be the first time the two groups of doctors have set aside time to talk about the work they do together; that alone can have significant value.

Tom Lorence, MD, a Kaiser hospitalist in Portland, Ore., who is chief of hospital medicine for Northwest Permanente, developed more than 20 service agreements with many different specialties at his institution. He has found that they are worth the effort, and that they helped allay hospitalists’ feeling of being “dumped on.”

He also told me a rule that probably applies to all such agreements in any setting: The tie goes to the hospitalist—that is, when there is reasonable uncertainty or disagreement about which group should admit a patient, it is nearly always the hospitalist who will do so.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course.

Take a minute to recall your last credit-card statement. On it, say, is the hotel charge from your last out-of-town CME excursion. Below the total charge you were expecting is a separate line-item charge of $75 for a “recreational fee.” Puzzled, you call the hotel. They inform you that because you used the gym and pool—accessed with your room key—they levied the fee. No signs, alerts, or postings to denote such a policy, you innocently expected inclusive use of the facilities in the price of your visit.

Capture the emotion of that moment. It is likely your heart will race and you will think to yourself, “Get me the manager!”

Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing Medicare patients under observation, rather than inpatient, status. This is to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change and, much in the same way as with our hotel charge, they also experience sticker shock when they get their bills. It is leading to confusion among providers, and consternation within the Medicare recipient community.

Why is this occurring? The dilemma stems from Medicare payments and the key distinction between inpatient coverage (Part A) and outpatient coverage (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation—sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit can mean that beneficiary charges are different. This could result in discrete and sometimes jolting copayments and deductibles for drugs and services.

Worse, if beneficiaries require a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because they never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and, consequently, tempers are rising.

The rules for Medicare Advantage enrollees, who make up 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional fee-for-service in their policies, and, consequently, no exemplar of success in this realm exits.

Hospitals have increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists are often left to navigate without a compass. Again, fear of fraud and penalties places hospitals—and, indirectly, hospitalists, who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which might change in real time during the stay and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices as well as beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after a stay.

Hospitalists, of course, want direction on coding and an understanding of the impact their decisions will have on patients and subspecialty colleagues. To that end, Patrick Conway, MD, SFHM, chief medical officer for the Centers for Medicare & Medicaid (CMS), offers some enlightenment on this matter:

Q: Is it tenable to keep the current system in place? However, as a fix, require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet-to-be determined manner?

A: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for coverage for beneficiaries post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask!” to educate beneficiaries on this issue. The pamphlet can found at http://www.medicare.gov/Publications/Pubs/pdf/11435.pdf.

Q: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?

A: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary care, emergency medicine, and/or hospital medicine clinician.

Q: Before the U.S. healthcare system matures to a more integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

A: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

I expect we will hear more from Medicare in the near-term on this matter. Stay tuned.

For more about the patient’s perspective on this issue, please see Brad’s blog: www.hospitalmedicine.org/pmblog.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

Take a minute to recall your last credit-card statement. On it, say, is the hotel charge from your last out-of-town CME excursion. Below the total charge you were expecting is a separate line-item charge of $75 for a “recreational fee.” Puzzled, you call the hotel. They inform you that because you used the gym and pool—accessed with your room key—they levied the fee. No signs, alerts, or postings to denote such a policy, you innocently expected inclusive use of the facilities in the price of your visit.

Capture the emotion of that moment. It is likely your heart will race and you will think to yourself, “Get me the manager!”

Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing Medicare patients under observation, rather than inpatient, status. This is to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change and, much in the same way as with our hotel charge, they also experience sticker shock when they get their bills. It is leading to confusion among providers, and consternation within the Medicare recipient community.

Why is this occurring? The dilemma stems from Medicare payments and the key distinction between inpatient coverage (Part A) and outpatient coverage (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation—sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit can mean that beneficiary charges are different. This could result in discrete and sometimes jolting copayments and deductibles for drugs and services.

Worse, if beneficiaries require a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because they never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and, consequently, tempers are rising.

The rules for Medicare Advantage enrollees, who make up 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional fee-for-service in their policies, and, consequently, no exemplar of success in this realm exits.

Hospitals have increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists are often left to navigate without a compass. Again, fear of fraud and penalties places hospitals—and, indirectly, hospitalists, who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which might change in real time during the stay and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices as well as beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after a stay.

Hospitalists, of course, want direction on coding and an understanding of the impact their decisions will have on patients and subspecialty colleagues. To that end, Patrick Conway, MD, SFHM, chief medical officer for the Centers for Medicare & Medicaid (CMS), offers some enlightenment on this matter:

Q: Is it tenable to keep the current system in place? However, as a fix, require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet-to-be determined manner?

A: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for coverage for beneficiaries post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask!” to educate beneficiaries on this issue. The pamphlet can found at http://www.medicare.gov/Publications/Pubs/pdf/11435.pdf.

Q: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?

A: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary care, emergency medicine, and/or hospital medicine clinician.

Q: Before the U.S. healthcare system matures to a more integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

A: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

I expect we will hear more from Medicare in the near-term on this matter. Stay tuned.

For more about the patient’s perspective on this issue, please see Brad’s blog: www.hospitalmedicine.org/pmblog.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

Take a minute to recall your last credit-card statement. On it, say, is the hotel charge from your last out-of-town CME excursion. Below the total charge you were expecting is a separate line-item charge of $75 for a “recreational fee.” Puzzled, you call the hotel. They inform you that because you used the gym and pool—accessed with your room key—they levied the fee. No signs, alerts, or postings to denote such a policy, you innocently expected inclusive use of the facilities in the price of your visit.

Capture the emotion of that moment. It is likely your heart will race and you will think to yourself, “Get me the manager!”

Out of vigilance for penalties and fraud from recovery audit contractor (RAC) investigations, as well attentiveness to unnecessary readmissions, hospitals increasingly are categorizing Medicare patients under observation, rather than inpatient, status. This is to avoid conflict with regulators. Beneficiaries are in the crosshairs because of this designation change and, much in the same way as with our hotel charge, they also experience sticker shock when they get their bills. It is leading to confusion among providers, and consternation within the Medicare recipient community.

Why is this occurring? The dilemma stems from Medicare payments and the key distinction between inpatient coverage (Part A) and outpatient coverage (Parts B and D). When a patient receives their discharge notification—without an “official” inpatient designation—sometimes staying greater than 24 to 48 hours in the ED or in a specially defined observation unit can mean that beneficiary charges are different. This could result in discrete and sometimes jolting copayments and deductibles for drugs and services.

Worse, if beneficiaries require a skilled nursing facility stay (the “three-day stay” inpatient requirement), Medicare will not pay because they never registered “official” hospital time. Patients and caregivers are not prepared for the unexpected bills, and, consequently, tempers are rising.

The rules for Medicare Advantage enrollees, who make up 25% of the program, differ from conventional Medicare. However, commercial plans often shadow traditional fee-for-service in their policies, and, consequently, no exemplar of success in this realm exits.

Hospitals have increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists are often left to navigate without a compass. Again, fear of fraud and penalties places hospitals—and, indirectly, hospitalists, who often make judgments on admission grade—in a precarious position.

The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which might change in real time during the stay and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices as well as beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after a stay.

Hospitalists, of course, want direction on coding and an understanding of the impact their decisions will have on patients and subspecialty colleagues. To that end, Patrick Conway, MD, SFHM, chief medical officer for the Centers for Medicare & Medicaid (CMS), offers some enlightenment on this matter:

Q: Is it tenable to keep the current system in place? However, as a fix, require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet-to-be determined manner?

A: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for coverage for beneficiaries post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask!” to educate beneficiaries on this issue. The pamphlet can found at http://www.medicare.gov/Publications/Pubs/pdf/11435.pdf.

Q: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?

A: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary care, emergency medicine, and/or hospital medicine clinician.

Q: Before the U.S. healthcare system matures to a more integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?

A: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.

I expect we will hear more from Medicare in the near-term on this matter. Stay tuned.

For more about the patient’s perspective on this issue, please see Brad’s blog: www.hospitalmedicine.org/pmblog.

Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at wfwhit@comcast.net.

Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.

We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.

But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.

Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.

Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.

So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.

Medicare Reimbursement Today

Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.

Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.

Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)

Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.

There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).

Change Is Coming

Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.

I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”

Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.

Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.

Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).

I plan to address some of these programs in greater detail in future practice management columns.

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.

We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.

But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.

Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.

Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.

So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.

Medicare Reimbursement Today

Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.

Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.

Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)

Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.

There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).

Change Is Coming

Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.

I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”

Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.

Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.

Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).

I plan to address some of these programs in greater detail in future practice management columns.

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.

We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.

But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.

Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.

Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.

So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.

Medicare Reimbursement Today

Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.

Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.

Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)

Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.

There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).

Change Is Coming

Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.

I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”

Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.

Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.

Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).

I plan to address some of these programs in greater detail in future practice management columns.

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

I think 70% to 80% of U.S. hospitals now have a hospitalist practice. (Some have more than one hospitalist group operating within their walls.) I arrived at this estimate by relying on both my anecdotal experience and on the annual American Hospital Association survey, which in 2009 showed 58% of hospitals have hospitalists, with an ongoing rapid rate of adoption.

No regular reader of The Hospitalist should be surprised that most U.S. hospitals now have hospitalists, but some might be surprised that 20% to 30% don’t. There are about 5,800 hospitals in the U.S. (a ballpark figure), so that means about 1,100 to 1,800 don’t have hospitalists. What is unique about them?

For some hospitals, the answer is easy. For example, the U.S. has something like 450 psychiatric hospitals. They vary a lot, but many simply don’t accept patients with active medical problems, so these facilities would have little need for medical hospitalists.

Variations in how the term “hospitalist” is used probably account for some facilities reporting no hospitalists. For example, long-term acute-care hospitals (LTACs) might have dedicated inpatient providers but simply don’t call them hospitalists.

Even accounting for these things, there are still a lot of “med-surg” hospitals that say they don’t have hospitalists.

The Holdouts

My experience suggests the two most important reasons some hospitals have not yet developed a hospitalist practice are an oversupply of primary-care physicians (PCPs) and an attractive payor mix in the unassigned patient population. In fact, it is hard for me to imagine a hospital that enjoys both of these attributes ever being able to support hospitalists.

Although it isn’t a common problem, an excess of PCPs (or dearth of patients) removes the most universal and powerful stimulus to develop a hospitalist practice: the desire of PCPs to be relieved of hospital work. And in most cases, those PCPs can offset the loss of hospital work and its associated revenue, with more work in the office. This can mean a better lifestyle (e.g. no trips to the hospital on nights and weekends) and the same or higher income. But if there are too many PCPs in the community, they may be unwilling to give up the hospital work, as there might be no way to replace it in the office. End result: no hospitalists.

For the rare hospital that has an attractive ED-unassigned payor mix, PCPs are more likely to want to continue taking ED call and not support a proposal to develop a hospitalist practice. And access to the ED call roster can be important to new PCPs building a community practice. I have seen situations in which a hospital has addressed the poor reimbursement of unattached ED admissions by paying PCPs to provide that care. Even though that same hospital might want a hospitalist practice, the ED call payment it is providing to PCPs may create a barrier that can’t be overcome. Such a hospital will face the very difficult decision of terminating the payments for ED call and redirecting that money to a hospitalist practice—something that is likely to lead to a lot of frustration on the part of PCPs who depend on the pay-for-call arrangement. A common outcome: no hospitalists.

An occasional reason hospitals are late to the hospitalist party is one or two (rarely more than that) of its private PCPs have simply chosen to work heroic amounts, and in addition to office and hospital care of their private patients, they accept referrals from other PCPs. I have met a number of doctors like this. Some are terrific doctors who actively participate in hospital initiatives; many appear chronically tired and harried, and hospital staff express frustration that they do things like make rounds at 3 a.m., take hours to respond to urgent calls, refuse to use protocols, etc. But because they’ve responded to the PCPs’ desire to be relieved of hospital work, other doctors may rally to their support and prevent the hospital from moving forward with a hospitalist program.

Will Every Hospital Have Hospitalists Eventually?

It is really interesting to think about whether every hospital, outside narrow specialty hospitals, will have hospitalists in the future. I wonder what informed people in the 1970s and early 1980s were predicting for emergency medicine’s future. At that point it probably wasn’t clear that, in the future, dedicated ED doctors essentially would staff every ED in the country, but I think that is exactly what has happened. (I once worked with an approximately 100-bed rural hospital that didn’t have ED physicians until 1999. I wonder if they were the last adopter.)

I think hospitalists are critically important for nearly all med-surg hospitals; however, maybe there will always be a small number that either have PCPs continue to practice in the traditional model, working both outpatient and inpatient, or some other effective configuration that makes hospitalists less necessary. We’ll have to wait and see. But I’m pretty confident

that almost no institutions that have hospitalists will ever return to the pre-hospitalist model of care. It seems there is no going back.

For those hospitals without hospitalists currently who will at some future time have hospitalists, the right time for this to happen is dependent on a combination of local factors. It could be something like the departure (i.e. relocation or retirement) of some of the current doctors, or simply the arrival of someone who has a vision and energy to successfully navigate the obstacles to build one. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.</p>

I think 70% to 80% of U.S. hospitals now have a hospitalist practice. (Some have more than one hospitalist group operating within their walls.) I arrived at this estimate by relying on both my anecdotal experience and on the annual American Hospital Association survey, which in 2009 showed 58% of hospitals have hospitalists, with an ongoing rapid rate of adoption.

No regular reader of The Hospitalist should be surprised that most U.S. hospitals now have hospitalists, but some might be surprised that 20% to 30% don’t. There are about 5,800 hospitals in the U.S. (a ballpark figure), so that means about 1,100 to 1,800 don’t have hospitalists. What is unique about them?

For some hospitals, the answer is easy. For example, the U.S. has something like 450 psychiatric hospitals. They vary a lot, but many simply don’t accept patients with active medical problems, so these facilities would have little need for medical hospitalists.

Variations in how the term “hospitalist” is used probably account for some facilities reporting no hospitalists. For example, long-term acute-care hospitals (LTACs) might have dedicated inpatient providers but simply don’t call them hospitalists.

Even accounting for these things, there are still a lot of “med-surg” hospitals that say they don’t have hospitalists.

The Holdouts

My experience suggests the two most important reasons some hospitals have not yet developed a hospitalist practice are an oversupply of primary-care physicians (PCPs) and an attractive payor mix in the unassigned patient population. In fact, it is hard for me to imagine a hospital that enjoys both of these attributes ever being able to support hospitalists.

Although it isn’t a common problem, an excess of PCPs (or dearth of patients) removes the most universal and powerful stimulus to develop a hospitalist practice: the desire of PCPs to be relieved of hospital work. And in most cases, those PCPs can offset the loss of hospital work and its associated revenue, with more work in the office. This can mean a better lifestyle (e.g. no trips to the hospital on nights and weekends) and the same or higher income. But if there are too many PCPs in the community, they may be unwilling to give up the hospital work, as there might be no way to replace it in the office. End result: no hospitalists.

For the rare hospital that has an attractive ED-unassigned payor mix, PCPs are more likely to want to continue taking ED call and not support a proposal to develop a hospitalist practice. And access to the ED call roster can be important to new PCPs building a community practice. I have seen situations in which a hospital has addressed the poor reimbursement of unattached ED admissions by paying PCPs to provide that care. Even though that same hospital might want a hospitalist practice, the ED call payment it is providing to PCPs may create a barrier that can’t be overcome. Such a hospital will face the very difficult decision of terminating the payments for ED call and redirecting that money to a hospitalist practice—something that is likely to lead to a lot of frustration on the part of PCPs who depend on the pay-for-call arrangement. A common outcome: no hospitalists.

An occasional reason hospitals are late to the hospitalist party is one or two (rarely more than that) of its private PCPs have simply chosen to work heroic amounts, and in addition to office and hospital care of their private patients, they accept referrals from other PCPs. I have met a number of doctors like this. Some are terrific doctors who actively participate in hospital initiatives; many appear chronically tired and harried, and hospital staff express frustration that they do things like make rounds at 3 a.m., take hours to respond to urgent calls, refuse to use protocols, etc. But because they’ve responded to the PCPs’ desire to be relieved of hospital work, other doctors may rally to their support and prevent the hospital from moving forward with a hospitalist program.

Will Every Hospital Have Hospitalists Eventually?

It is really interesting to think about whether every hospital, outside narrow specialty hospitals, will have hospitalists in the future. I wonder what informed people in the 1970s and early 1980s were predicting for emergency medicine’s future. At that point it probably wasn’t clear that, in the future, dedicated ED doctors essentially would staff every ED in the country, but I think that is exactly what has happened. (I once worked with an approximately 100-bed rural hospital that didn’t have ED physicians until 1999. I wonder if they were the last adopter.)

I think hospitalists are critically important for nearly all med-surg hospitals; however, maybe there will always be a small number that either have PCPs continue to practice in the traditional model, working both outpatient and inpatient, or some other effective configuration that makes hospitalists less necessary. We’ll have to wait and see. But I’m pretty confident

that almost no institutions that have hospitalists will ever return to the pre-hospitalist model of care. It seems there is no going back.

For those hospitals without hospitalists currently who will at some future time have hospitalists, the right time for this to happen is dependent on a combination of local factors. It could be something like the departure (i.e. relocation or retirement) of some of the current doctors, or simply the arrival of someone who has a vision and energy to successfully navigate the obstacles to build one. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.</p>

I think 70% to 80% of U.S. hospitals now have a hospitalist practice. (Some have more than one hospitalist group operating within their walls.) I arrived at this estimate by relying on both my anecdotal experience and on the annual American Hospital Association survey, which in 2009 showed 58% of hospitals have hospitalists, with an ongoing rapid rate of adoption.

No regular reader of The Hospitalist should be surprised that most U.S. hospitals now have hospitalists, but some might be surprised that 20% to 30% don’t. There are about 5,800 hospitals in the U.S. (a ballpark figure), so that means about 1,100 to 1,800 don’t have hospitalists. What is unique about them?

For some hospitals, the answer is easy. For example, the U.S. has something like 450 psychiatric hospitals. They vary a lot, but many simply don’t accept patients with active medical problems, so these facilities would have little need for medical hospitalists.

Variations in how the term “hospitalist” is used probably account for some facilities reporting no hospitalists. For example, long-term acute-care hospitals (LTACs) might have dedicated inpatient providers but simply don’t call them hospitalists.

Even accounting for these things, there are still a lot of “med-surg” hospitals that say they don’t have hospitalists.

The Holdouts

My experience suggests the two most important reasons some hospitals have not yet developed a hospitalist practice are an oversupply of primary-care physicians (PCPs) and an attractive payor mix in the unassigned patient population. In fact, it is hard for me to imagine a hospital that enjoys both of these attributes ever being able to support hospitalists.

Although it isn’t a common problem, an excess of PCPs (or dearth of patients) removes the most universal and powerful stimulus to develop a hospitalist practice: the desire of PCPs to be relieved of hospital work. And in most cases, those PCPs can offset the loss of hospital work and its associated revenue, with more work in the office. This can mean a better lifestyle (e.g. no trips to the hospital on nights and weekends) and the same or higher income. But if there are too many PCPs in the community, they may be unwilling to give up the hospital work, as there might be no way to replace it in the office. End result: no hospitalists.

For the rare hospital that has an attractive ED-unassigned payor mix, PCPs are more likely to want to continue taking ED call and not support a proposal to develop a hospitalist practice. And access to the ED call roster can be important to new PCPs building a community practice. I have seen situations in which a hospital has addressed the poor reimbursement of unattached ED admissions by paying PCPs to provide that care. Even though that same hospital might want a hospitalist practice, the ED call payment it is providing to PCPs may create a barrier that can’t be overcome. Such a hospital will face the very difficult decision of terminating the payments for ED call and redirecting that money to a hospitalist practice—something that is likely to lead to a lot of frustration on the part of PCPs who depend on the pay-for-call arrangement. A common outcome: no hospitalists.

An occasional reason hospitals are late to the hospitalist party is one or two (rarely more than that) of its private PCPs have simply chosen to work heroic amounts, and in addition to office and hospital care of their private patients, they accept referrals from other PCPs. I have met a number of doctors like this. Some are terrific doctors who actively participate in hospital initiatives; many appear chronically tired and harried, and hospital staff express frustration that they do things like make rounds at 3 a.m., take hours to respond to urgent calls, refuse to use protocols, etc. But because they’ve responded to the PCPs’ desire to be relieved of hospital work, other doctors may rally to their support and prevent the hospital from moving forward with a hospitalist program.

Will Every Hospital Have Hospitalists Eventually?

It is really interesting to think about whether every hospital, outside narrow specialty hospitals, will have hospitalists in the future. I wonder what informed people in the 1970s and early 1980s were predicting for emergency medicine’s future. At that point it probably wasn’t clear that, in the future, dedicated ED doctors essentially would staff every ED in the country, but I think that is exactly what has happened. (I once worked with an approximately 100-bed rural hospital that didn’t have ED physicians until 1999. I wonder if they were the last adopter.)

I think hospitalists are critically important for nearly all med-surg hospitals; however, maybe there will always be a small number that either have PCPs continue to practice in the traditional model, working both outpatient and inpatient, or some other effective configuration that makes hospitalists less necessary. We’ll have to wait and see. But I’m pretty confident

that almost no institutions that have hospitalists will ever return to the pre-hospitalist model of care. It seems there is no going back.

For those hospitals without hospitalists currently who will at some future time have hospitalists, the right time for this to happen is dependent on a combination of local factors. It could be something like the departure (i.e. relocation or retirement) of some of the current doctors, or simply the arrival of someone who has a vision and energy to successfully navigate the obstacles to build one. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.</p>