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React & Act: How do doctors decide which patients to admit?

How do hospitals decide which patients to admit?

Visiting an emergency room outside of your insurance network can be fraught with complications. The same is true of Medicare patients in the ER. Who makes the  decision about moving a patient from the emergency room to a hospital bed for additional treatment? When can patients transfer to their usual hospital to see their own doctor?

The following FAQ addresses the guidelines for Medicare and privately insured patients, options for patients who wind up in emergency rooms, and what measures Medicare is taking to ensure hospitals act appropriately.

How do hospitals decide which Medicare patients should be admitted?

Hospitals get some direction from federal law, but they typically rely on industry-standard guidelines on when to admit patients. Federal law directs hospitals to render care that is “reasonable and necessary for the diagnosis or treatment of illness or injury.” In a recent update to hospitals, the Centers for Medicare & Medicaid Services was more specific, saying: “Inpatient care, rather than outpatient care, is required only if the beneficiary’s medical condition, safety or health would be significantly and directly threatened if care was provided in a less intensive setting.”

Hospitals also provide doctors with decision-making tools, such as McKesson’s InterQual criteria or the Milliman Care Guidelines. These checklists are not available to the general public but typically guide doctor decision-making based on the severity of specific patient conditions. Even with such tools, “the criteria for hospital admission vs. observation are not always clear cut and the decision tends to fall to physician judgment,” according to the American College of Emergency Physicians.

What are the hospital admission guidelines for patients with private insurance?

In an emergency, ambulances most often take patients to the nearest hospital. That facility may not have a contract with a patient’s health insurance company. If the hospital is “in-network,” the Milliman or InterQual criteria generally are used. There are state laws, though, that describe what should happen when a managed care patient winds up in a hospital that has no contract with his or her insurer. California law says the hospital must call a managed care provider once the patient is considered “stable,” another decision that requires medical judgment.

At that point, the hospital provides the insurer with information about the patient’s condition. The managed care provider can quickly send an ambulance to take the patient to an in-network facility or authorize the hospital to continue treatment. A 2008 law, AB 1203, banned California hospitals from “balance billing,” or seeking payment from managed care patients for portions of an emergency room bill that a patient’s insurance company refuses to pay.

Aside from admitting patients, what treatment options do hospitals have with sick patients who wind up in the emergency room?

Doctors can place patients on outpatient “observation” status if it is not clear whether they will need hospitalization for a medical condition. Outpatient observation allows doctors to monitor a patient’s condition in order to determine whether it’s necessary to admit him or her.

Outpatient deductibles, copays and coinsurance still apply for Medicare patients. A nonpartisan advisory commission to Medicare, MedPAC, reports [PDF] that use of outpatient observation is on the rise. Physicians also can transfer patients to a lower level of care than a hospital, such as a skilled nursing or intermediate care facility.

Why is the decision whether to admit a patient into a hospital an important one?

Hospitals save lives, but they also make medical mistakes and transmit infections. The California Department of Public Health estimates that 200,000 patients develop infections in California hospitals each year at a cost of $600 million. Because of this, experts say patients should be admitted to hospital beds only if it’s absolutely necessary.

In their own words

Transcripts from court and public hearing testimony:

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Also, inpatient care costs Medicare and insurers far more than less-intense levels of health care. MedPAC estimates [PDF] that a hospital stay for a patient admitted for chest pain costs the program $7,600, compared with $720 for a patient undergoing outpatient observation.

What does Medicare do to ensure that hospital admissions are appropriate?

Medicare employs recovery audit contractors, who operate almost like bounty hunters rooting out Medicare fraud, abuse and errors and keep part of the “overpayments” they collect. The RACs, as they’re called, review hospital inpatient stays to determine whether they are medically necessary and seek to reclaim payment for those that are not.

A 2008 Medicare report [PDF] shows that these contractors collected 85 percent of overpayments from inpatient hospitals, mostly in cases in which care was not deemed necessary or was incorrectly coded. Medicare also works with contractors such as Palmetto GBA, which does prepayment reviews on a facility-by-facility basis, looking at areas where data shows odd patterns or where they receive a complaint.

These articles focus on Prime Healthcare Services. What has the chain said publicly about patient admission decisions?

Prime’s founder and board chairman, Dr. Prem Reddy, answered a question about bringing more paying patients into a Prime hospital during a 2005 trial:

Q: “If you wanted to improve the ratio of fee-for-service patients … how would you go about doing that? How would you increase the ratio?”

... A: “With regards to Medicare, we just increased the number of doctors, advertised in the newspaper and sent brochures to a lot of senior centers, senior homes, and we requested three or four doctors to make rounds in the nursing homes and senior centers. That’s how we got Medicare.”

In 2004, Prime sent a memo to doctors regarding patient admissions. Citing concerns about patient safety, Reddy directed doctors at Chino Valley Medical Center in Chino not to transfer patients out of the emergency room unless patients make a direct request or require a higher level of care than the hospital can provide. Doctors were told that if they didn’t follow the new policy, they would be dealt “immediate corrective action,” including a loss of their privilege to admit patients to the hospital. Such a report typically triggers reports to doctor-discipline authorities.

Useful contacts

For complaints about hospitals:

California Department of Public Health
Phone: 800-236-9747
Write: To DPH district offices, addresses at http://www.cdph.ca.gov/certlic/facilities/Pages/LCDistrictOffices.aspx
E-mail: https://hfcis.cdph.ca.gov/LongTermCare/ConsumerComplaint.aspx or send message to cdph-lnc-hfcis@cdph.ca.gov

For complaints about HMOs:

California Department of Managed Health Care
Phone: 888-466-2219
Write: California Help Center
980 9th St., Suite 500
Sacramento, CA 95814-2725
E-mail: https://wpso.dmhc.ca.gov/ContactForm/
Website: www.hmohelp.ca.gov


California Department of Insurance
Phone: 800-927-4357
E-mail: https://interactive.web.insurance.ca.gov/contactCSD/ContactUs.jsp
Website: http://www.insurance.ca.gov/0100-consumers/hcpcomplaints.cfm

Phone: 800-633-4227
Website: www.mymedicare.gov

Prime Healthcare Services
Phone: 909-235-4400
Write: 3300 E. Guasti Road
Ontario, CA 91761
Website: www.primehealthcare.com


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