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Readmissions and ‘observation’: Hospitals’ relabeling trick?

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This piece in HealthAffairs looks at the phenomenon of falling Medicare patient readmissions coupled, apparently, with higher rates of  patients being put under “observation” — even at hospitals outside the Medicare readmissions program.

The authors conclude:

“Our findings suggest that at least some hospitals are substituting observation status for inpatient readmissions, both for Medicare and privately insured patients. These trends raise a number of questions. For instance, do observation patients get the same quality of care as inpatients? Further, do drops in readmission rates truly mean that hospitals are providing better quality care? Or, as David Himmelstein and Steffie Woolhandler suggested in a recent Health Affairs blog, is it merely that some hospitals are avoiding penalties by relabeling patients they previously would have readmitted as observation patients?

“In fact, declining readmission rates may be a misleading measure of hospitals’ success in reducing medical complications or in coordinating patients’ care with other clinicians. By the same token, tying hospital payments to readmission rates may well be equivalent to allowing some hospitals to avoid financial penalties by simply relabeling patients rather than by improving patient care.”

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