Factors Associated with Prolonged Observation Services Stays and the Impact of Long Stays on Patient Cost

BackgroundPatients are treated using observation services (OS) when their care needs exceed standard outpatient care (i.e., clinic or emergency department) but do not qualify for admission. Medicare and other private payers seek to limit this care setting to 48hours. Data Source/Study SettingHealthcare Cost and Utilization Project data from 10 states and data collected from two additional states for 2009. Study DesignBivariate analyses and hierarchical linear modeling were used to examine patient- and hospital-level predictors of OS stays exceeding 48 (and 72) hours (prolonged OS). Hierarchical models were used to examine the additional cost associated with longer OS stays. Principal FindingsOf the 696,732 patient OS stays, 8.8 percent were for visits exceeding 48hours. Having Medicaid or no insurance, a condition associated with no OS treatment protocol, and being discharged to skilled nursing were associated with having a prolonged OS stay. Among Medicare patients, the mean charge for OS stays was $10,373. OS visits of 48-72hours were associated with a 42 percent increase in costs; visits exceeding 72hours were associated with a 61 percent increase in costs. ConclusionPatient cost sharing for most OS stays of less than 24hours is lower than the Medicare inpatient deductible. However, prolonged OS stays potentially increase this cost sharing.