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Omitting Observational Stays From Readmission Measures Hurts Quality Measurement

May 31, 2018

A recent commentary in the New England Journal of Medicine explained how omitting outpatient observational hospital stays from readmission measures is skewing quality care measurements.

“Commercial payers and state Medicaid agencies have increasingly [required] hospitals to report data on readmissions and by occasionally linking reimbursement and purchasing agreements to performance,” Amber K Sabbatini, MD, MPH, of the Department of Emergency Medicine at the University of Washington, and Brad Wright, PhD, of the Department of Health Management and Policy at the University of Iowa, wrote. “Consequently, although experts continue to challenge the usefulness of readmission rates for assessing quality of care, the rates are now broadly accepted as a measure of hospital quality by payers and policymakers.”

Drs Sabbatini and Wright explained that observational stays make up a significant proportion of unscheduled hospital visits; however they are billed as outpatient services. Furthermore, this care is very similar to normal hospitalization.

“As payers have discouraged short inpatient hospitalizations in an effort to reduce low-value care, providers are increasingly relying on observation stays as an alternative,” they wrote.

Drs Sabbatini and Wright further explained that the failure to capture these observational stays has a significant impact on the way quality measurements regarding readmissions are reported. According to their commentary, observational stays are not index events—meaning that these patients are not followed to determine whether they make additional contacts with hospital providers after discharge. Additionally, these stays do not count as part of the 30-day readmission equation.

“Unscheduled hospitalizations billed as observation stays are missing from both the numerator and the denominator of the readmission-rate equation, which omits critical information about the quality of care transitions for many patients hospitalized for acute conditions,” they wrote.

They studied data from between 2007 and 2015 from the Truven Health Analytics MarketScan Commercial Claims and Encounters Database. They extracted claims for indexed ED visits that resulted in observational stays and followed these patients to measure 30-day readmission trends. These data were used to compare observational stay readmission trends to inpatient stay readmission trends.

Drs Sabbatini and Wright found that while inpatient readmissions decreased from 17.8% to 15.5% during the study period, 30-day readmissions after an outpatient observational stay increased from 10.9% to 14.8%. Furthermore, they found that repeat observational stays increased from 3.6% to 6.9%.

They posited that this increase could be the result of poor care-coordination resources for patients in observational care.

“Fewer care-coordination resources are available to patients hospitalized under observation than to those admitted as inpatients,” they wrote. “As hospitals focus on reducing readmissions among inpatients, patients hospitalized under observation may not be receiving the same level of discharge planning, care coordination, and expedited follow-up appointments.” 

Drs Sabbatini and Wright concluded that observational stays need to be considered as part of 30-day readmission quality measurements in order to ensure that hospitals focus the same amount of resources on preventing readmissions in these patients.

“We believe the need for high-quality care transitions after an unscheduled hospitalization does not depend on whether a hospital can bill for that admission as an observation stay or an inpatient admission,” they concluded. “All patients with an acute condition require timely and coordinated care. Moreover, there is no reason to think that a repeat observation stay is any less preventable or less reflective of the quality of care transitions than an inpatient readmission. Although repeat observation stays cost payers less than inpatient readmissions, they still represent excess costs for the health care system and are meaningful for patients.”

David Costill

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