How Can You Improve Your Observation Management Practices?
Observation-status use in traditional Medicare rose sharply, with spending increasing from $690 million to $3.1 billion between 2011 and 2016. This growth also intensified financial strain on hospitals. While Medicaid usage has slightly declined recently, Medicare Advantage plans continue to classify hospital stays as observation at rates 3–4 times higher than traditional Medicare—further stressing hospital finances. With Medicare Advantage enrollment projected to rise from 54% to 64% over the next decade, this challenge will grow.Hospitals struggle to manage observation patients due to limited historical and real-time data, and a lack of dedicated technology.
However, implementing the following best practices can yield millions in financial benefits:
A recommended observation management model
Defined inclusion/exclusion criteria
Observation-specific patient progression practices
Physician documentation training
Regular measurement of key performance metrics