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Hospitals play the ‘observation’ vs. readmission game

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David Himmelstein and Steffie Woolhandler write in HealthAffairs:

The Centers for Medicare and Medicaid Services (CMS) has trumpeted the recent drop in hospital readmissions among Medicare patients as a major advance for patient safety. But lost amidst the celebration is the fact that hospitals are increasingly ‘observing’ patients (or treating returning patients in the emergency department) rather than ‘readmitting’ them. But while re-labeling helps hospitals meet CMS’s quality standards (and avoid costly fines), it probably signals little real quality gain and often leaves patients worse off financially.”

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