Exploratory Analysis of Observation Stay

1. Exploratory Analysis of Observation Stay Pamela Owens, Ph.D. Ryan Mutter, Ph.D. September, 2009 AHRQ Annual Meeting

2. History • 1988 – American College of Emergency Physicians (ACEP) creates first Observation Unit Guidelines • 1991 - ACEP creates specialty section of Observation Medicine • 2003 - CMS institutes reimbursement for observation stays related to chest pain, heart failure, asthma • 2008 – CMS removed diagnostic criteria for reimbursement

3. Observation Stay Defined • Well-defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment, and reassessment before a decision can be made regarding whether the patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. -- CMS, Pub. 100-02, Chapter 6, Section 20.5

4. Background • Commonly ordered for patients who present to the ED and who require a significant period of treatment or monitoring in order to make a decision about admission or discharge • Can also occur as a direct admission to observation from the community. • May prevent unnecessary hospital admissions • May impact access to skilled nursing facilities (SNFs) for Medicare beneficiaries • Observation stay does not count toward three-day rule

5. Use may be influenced by expected payer • Time allowed in observation • Medicare (Part B) minimum of 8 hours; up to 48 • Medicaid; up to 48 hours • Private; varies considerably; up to 23 hours • Reimbursement in conjunction with inpatient stay

6. Objective • To examine if the use of observation stays decreases the use of inpatient admissions

7. Methods: Data Healthcare Cost and Utilization Project (HCUP) State Emergency Department Databases (SEDD) and State Inpatient Databases (SID) • Data Years: 2005-2007 • 7 states (GA, MN, MO, NE, NY, TN, VT) with sufficient line-item detail for all years • 21.6 million inpatient and ED records for 2005 • 22.0 million inpatient and ED records for 2006 • 22.1 million inpatient and ED records for 2007 Additional information on the HCUP at www.hcup-us.ahrq.gov

8. Methods Measures: • Observation stay • Revenue code of 762 • Positive observation stay charge • CPT code of 99217-99220, 99234-99236 • ED visit • Revenue code of 450-459 • Positive emergency department charge • CPT code of 99281-99285 • Point of origin or admission source = ED

9. Analysis • HCUP analysis - unit of analysis is the visit • Analyses are performed using SAS • Descriptive analysis aggregate and by state

10. Results

11. Results

12. Results

13. Summary • Only slight variation is evident during 3 years. • Slight increase in inpatient stays (.4%) and slightly greater increase in observation stays (3.8%) between 2005 and 2007. • Slight increase in ED visits resulting in admission (3.5%) between 2005 and 2007, but • Greater increase in ED visits resulting in discharge following observation (12.9%) • Greater decrease in ED visits resulting in admission following observation (13.4%)

14. Summary • Drastic variation by state • ED visits resulting in admission (no obs), 2007 • 9.6% to 21.7% • ED visits resulting in admission (with obs), 2007 • 0.1% to 1.3% • ED visits resulting in discharge (with obs), 2007 • 0.4% to 3.5%

15. Limitations • Analysis only exploratory • Short period of time due to data limitations • Few states can provide necessary data across time • Known variability of coding by hospital • Complicated reimbursement structure makes billing more difficult • Identification of observation stays dependent on line item detail

16. Conclusions • Worthy of additional analyses • Future research – Data Validity • Coding variation across payer • Coding variation across hospitals • Coding variation across states

17. Conclusions • Future research – Quality and Value of Care • Quality and value of observation stay care • Quality and value of observation stay relative to inpatient admission • Patient perspective • Health care system perspective

18. Conclusions Future research – Quality and Value of Care Impact of observation stay utilization on ED overcrowding or ED revisit rate Expand Zhao’s HCFO-funded analysis examining on how observation stays are used in Medicare program and how they affect beneficiary cost sharing and hospital payments. (Lan Zhao, Ph.D., SSS) 18