Before the Joint Committee on Health Care
Financing
The Massachusetts Medical Society wishes to be recorded in
support of Senate Bill 527, "An Act to Define the Use of
Observation Services." This bill would establish a
standardized definition of observation service for all
insurers. It would also implement an appeals process before
the Office of Patient Protection, established under the managed
care reform law (Chapter 141 of the Acts of 2000) for cases in
which the classification of inpatient or outpatient is
disputed.
The classification of outpatient observation status is
appropriate for patients who have outpatient surgery and need to be
watched for certain period of time, or for patients who present in
the emergency room with symptoms which require further testing, or
perhaps just time, before the determination to discharge or admit
for inpatient treatment can be made. Hospitals receive a
lower rate of reimbursement for observation status than for
inpatient care because the level of services is generally
less. Problems arise when different insurers utilize
different definitions of observation service, or plans
retroactively determine observation status after the patient has
been admitted. In short, what one plan considers to be
inpatient care, another may consider to be observation status.
Clear communication between physicians and their patients is the
foundation of high quality patient care. Currently, the
definition of observation status varies so greatly among plans that
physicians often cannot communicate to their patients whether they
are inpatient or observation status because the plan may not make
that distinction until later on in the course of treatment.
Thus, physicians are often left with a "24 hour window of
opportunity" in which to do all they can for the patient because
they may be going home after that. This presents problems for
the patients as well because co-pays and deductibles are often
different for inpatient and outpatient observations status.
Lastly, the Medical Society strongly supports the establishment
of an appeals process for cases where the classification of
inpatient or outpatient is disputed. Attending physicians are
often frustrated when their medical judgment supports an admission
to the hospital, but the plan's designation of observation status
is considered to be non-negotiable. This bill would allow the
hospital or the physician access to the information the plan used
in its determination, and if the dispute cannot be resolved
internally, to further appeal to an external independent body.
We urge the Committee to report out this measure favorably.
