This document highlights the classification of patients as 'under observation' versus 'admitted' in hospitals, particularly in relation to emergency room visits. It discusses the impact of the Affordable Care Act on discharge planning and readmissions, emphasizing the shift towards performance-based care and the implications for healthcare providers and consumers. The author, Terri Embry, offers insights on how patients can better navigate the healthcare system and participate in care improvement initiatives.

1. Patient Resource: Hospital Observation Days versus 2014
Admission
This resource document has been created to assist patients and advocates in understanding why
facilities are classifying them as “under observation” instead of “admitted” when seen in the
emergency room.
My professional background related to this topic:
Since December 2012 I have been attending conferences, evaluating inpatient and outpatient
service models and changes related to the Affordable Care Act. My current job responsibilities
for Home Solutions Infusion Services include trending healthcare issues and developing
programs to help hospitals, rehab centers and physicians prevent readmissions. I have been
educating discharge planners, physicians, home health agencies and hospital administration on
Transition of Care topics since Feb 2013.
Additional background information:
Terri Embry RN BS bio
LinkedIn
My professional opinion and observations related to healthcare changes driving the
observation day issue:

ER visit and the decision to admit or observe: Historically a patients admission status
was determined by clinical evaluation and comorbidities (other diagnosis that may or
may not be impacted by the reason someone is being seen in the ER)
 Observation days have turned into observation units with how and for how long a
patient remains under observation being decided at the health system level.
o I have seen the number of days a patient is classified as under observation go
from 24-48hrs to 5 days or greater; some have certain rooms assigned for this
designation and others place them anywhere a bed is available
o Facilities are aware a percentage of observation patients are getting “lost in the
system” and they are developing processes to prevent this from occurring
o This issue is currently under review by Medicare and other organizations with
expected mandates in the near future
 Affordable Care Act 3025 and 3026 Mandates hospitals provide better discharge
planning (Transition of Care) and reduce the incidence of healthcare acquired
conditions, such as infections and preventable surgical complications
 Hospitals must report publicly how they are performing ( see Pay for
Performance Penalty Map under resources)
 This mandate changed the healthcare delivery model from a “fee” based
(admit, run test) to a performance based (admit only when appropriate;
have the goal of preventing the admission)
By Terri Embry, RN BS
sdcsconsulting@gmail.com
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2. Patient Resource: Hospital Observation Days versus 2014
Admission

The bottom line: A 1-3% Medicare penalty will be withheld on the total billed amount
for ALL Medicare patients for that facility, not just the bill associated with the patients
that were readmitted. The facility has provided a service, incurred the expenses
associated with that service but they are at risk of not getting paid.
o

Impact to the consumer is both positive and negative
1. Health care providers are being forced to evaluate every decision (clinical
and operations) and develop and implement care improvement plans
2. Patient Experience or satisfaction survey results account for 30% of the
penalty
3. Communication between a healthcare consumer’s “care team” (hospital,
primary care physician, specialist, home care etc.) is being improved upon
as a result of the new mandates. Resource: HealthIT.gov
4. Organizations for consumers and healthcare professionals are
collaborating, creating tools and challenging the new models of care
a. Infection Prevention and You is a campaign to help reduce
infections in all settings, not just the hospital
b. NTOCC published 7 Elements of Care to focus on that would
provide the greatest impact to readmissions
5. Providers are making decisions on whether they can afford to provide
services that are at risk of not being reimbursed. This is causing difficulty
in getting an appointment, especially if you are trying to be seen by a new
physician
Your bill is impacted by which setting you receive your care and how you are classified.
The payer’s (Medicare, Blue Cross..) rules or criteria for coverage apply

If Medicare denies coverage – any supplemental or gap policy will deny
as well; they follow the Medicare criteria
 Medicare Managed Care plans (example: Aetna Gold) determine if they
follow Medicare criteria, a variation of or have their own criteria
 If Medicare approves coverage they pay a percentage of the bill and any
supplemental or secondary payer will pick up the remaining amount due
(each plan differs and copayments and out of pocket fees may apply)
 If you have Medicare and another full medical policy with another
payer (Blue Cross, Aetna etc..) then once Medicare denies the coverage,
the provider must then qualify your care under that payers criteria and use
the percentage of coverage and applicable copayments
By Terri Embry, RN BS
sdcsconsulting@gmail.com
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3. Patient Resource: Hospital Observation Days versus 2014
Admission
How can you, as a healthcare consumer, participate in the delivery of care improvement
initiatives?
1. Take ownership of your healthcare information. Listed below are examples of what I
use when consulting with consumers to help them navigate the healthcare system
a. Drugs.com is an excellent resource to maintain your medication list, review side
effects AND drug interactions; there are other options.
b. Medicare Blue Button is a personal medical record resource
2. Define your support system if you need help to avoid being hospitalized or in the event
you are admitted and need to transition to another care setting. Communicate any “gaps”
in support that might cause you to be readmitted. This will facilitate the Transition of
Care Team and/or Discharge Planner in their plan for you.
a. Who helps you get to appointments
b. Who helps you make medical decisions
c. Who helps you with financial matters
3. Define access to healthcare information each of your support members are allowed to
be privy too. This falls under HIPPA and your right to limit information being shared.
4. Complete any and all surveys related to your care! You will receive surveys from
many care team providers and each one is giving Medicare a provider’s performance and
how they handle is concerns. I encourage you to provide as much positive feedback as
possible to allow providers to better understand what is working to improve your
experience.
5. Options to communicate concerns about the care you received
a. Contact the facilities “Patient Experience” department via phone or their website
b. Contact Medicare (see link under resources)
6. Follow me on slideshare.net or LinkedIn and stay tuned for two studies I will post that
provide evidence-based interventions to avoid hospitalization
a. Path to Heart Failure is the story of a Medicare patient that could have avoided
several hospitalizations. The first of which resulted in him being over hydrated
thus putting him in Congestive Heart Failure. A poor discharge plan and
inappropriate medication order caused major side effects, physician and ER visits
after the initial admission. It is evident that the knowledge level of the care team
has a great impact on a patients care and experience.
b.
The Connection Between Medication Interactions and Preventable
Readmissions is the story of a middle-age person with private insurance who
experienced life changing effects of medications that caused many admissions
and were ALL avoidable. It provides evidence-based practice and how a patient
and his support system participated resulting in ZERO admissions since I started
consulting for them 6 months ago.
By Terri Embry, RN BS
sdcsconsulting@gmail.com
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4. Patient Resource: Hospital Observation Days versus 2014
Admission
c. Subsequent study information will be published on both studies showing the
residual effects of prescription injuries as I continue to monitor their progress and
assist them through the system.
Resources I recommend to research the observation day concern
The National Transition of Care Coalition (www.NTOCC.com) is a wonderful resource for
consumers of healthcare and healthcare professionals. The links below will provide factual
information for you to form your own opinion. Patients are now being viewed as “Consumers
of Healthcare” with choices. Why? The new Medicare rule ties penalties to preventable
readmissions and healthcare acquired conditions that fall below certain performance measures
(links below).
NTOCC Consumer (Patient) web page
NTOCC Observation Days search results
NTOCC Patient Experience search results
The article below is easy to understand and covers the issue thoroughly.
Hospitals Seek to Avoid Penalties by Minimizing Readmissions
Medicare
Medicare (CMS) Readmission Reduction Program
Pay for Performance Penalty Map
How to File a Medicare Complaint
Home Infusion Patients or East Coast Healthcare Professionals
Education Resource
Infusion Care University
Patient Education Library
Health Care Professional Training
By Terri Embry, RN BS
sdcsconsulting@gmail.com
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5. Patient Resource: Hospital Observation Days versus 2014
Admission
By Terri Embry, RN BS
sdcsconsulting@gmail.com
Page 5