If you have heard me speak or have read my articles you know that one of the questions most asked is “what is the target/benchmark/right observation rate?”
It was seven years ago, in June 2016, that I published my article in Compliance Today, describing for the first time “Hirsch’s Law” to determine a hospital’s correct observation rate for Medicare patients. For those unfamiliar, Hirsch’s Law states that if every patient requiring the use of a hospital bed is reviewed by case management for proper admission status, with the use of a secondary physician review as appropriate, and every patient is placed in the right status, and observation services are only ordered for the patients where observation services are appropriate per regulations, and every patient goes home as soon as their need for hospital care has finished, and every patient who requires a second midnight stay is admitted as an inpatient, then your observation rate is at your benchmark.
When written, Hirsch’s Law only applied to traditional Medicare patients as Medicare Advantage (MA) plans, along with all the other payer types, made up their own arbitrary, ever-changing rules on the use of observation. That will change in 2024 when the MA plans will be required to follow 42 CFR 412.3 and can no longer require patients to linger as outpatient receiving observation services for days on end.
Despite my repeated pleas to stop looking for that elusive target observation rate, hospital administrators still compare observation rates and urge their staff to strive for a lower rate. To that end, I sought to not define a benchmark rate but to determine the actual observation rate for almost every hospital in the country. That way I could state “There is no benchmark rate but here is the national average rate,” hoping that would either appease, anger, or delight those who ask, depending on how that average rate compares to their hospital’s rate.
But obtaining this data was no easy task.
Read the full article here.
