STATEMENT OF MAX RICHTMAN, PRESIDENT AND CEO
UNITED STATES SENATE SPECIAL COMMITTEE ON AGING
MAY 20, 2015
Chairwoman Collins and Members of the Committee:
I am Max Richtman, President and Chief Executive Officer of the National Committee to Preserve Social Security and Medicare, and I appreciate the opportunity to submit this statement for the record. With millions of members and supporters across America, the National Committee is a grassroots advocacy and education organization dedicated to preserving and strengthening safety net programs, including Social Security, Medicare and Medicaid. These programs are the foundation of financial and health security for older Americans, but improvements are needed to ensure that beneficiaries receive the care they need and that they are protected from unwarranted out-of-pocket costs.
The hospital observation stay crisis, the topic of today’s hearing, is a reality for many Medicare beneficiaries, and fixing this problem for them is a top priority on the National Committee’s Legislative Agenda for the 114th Congress.
Currently, Medicare beneficiaries are being denied access to Medicare’s skilled nursing facility (SNF) benefit because acute care hospitals are increasingly classifying their patients as “outpatients” receiving observation services, rather than admitting them as inpatients. Under the Medicare statute, patients must have an inpatient hospital stay of three or more consecutive days, not counting the day of discharge, in order to meet Medicare criteria for coverage of post-acute care in a SNF. As a result, although the care received by patients in observation status is indistinguishable from the care received by inpatients, outpatients in observation who need follow-up care in a SNF do not qualify for Medicare coverage. Rather, beneficiaries are required to pay for expensive nursing home care themselves, or they may be forced to forgo care if they cannot afford to pay, which could lead to worse health outcomes and higher health care costs in the future.
The “Improving Access to Medicare Coverage Act,” S. 843, which Aging Committee Chairwoman Susan Collins and Committee member Senator Bill Nelson introduced along with Senator Sherrod Brown and Senator Shelley Moore Capito, and the companion House bill, H.R. 1571, introduced by Representative Joe Courtney and Representative Joe Heck, would alleviate this situation by counting a period of observation status in a hospital toward satisfying the three-day inpatient hospital requirement to be eligible for the Medicare SNF benefit. The National Committee endorsed this legislation because we support counting all time in the hospital, whether or not an individual is actually admitted as an inpatient, toward meeting the three-day prior hospitalization requirement for SNF care. The current requirement is very confusing for hospitalized Medicare beneficiaries and their families, and it imposes significant costs on seniors who require nursing home care after a hospitalization in which they are not officially admitted as an inpatient.
The observation stay issue is a critical one for hospitals and for Medicare’s Part A trust fund as well as for beneficiaries. It appears that the increase in observation stays can be attributed in large part to hospitals’ concerns about being challenged by Medicare’s Recovery Auditors. Recovery Auditors receive a percentage of the money that is recovered if an inpatient admission is challenged and reimbursement to a hospital is denied retrospectively. Another policy which may lead to an increase is the penalties hospitals face if inpatients are readmitted, penalties that do not apply if the hospitalized person was labeled an outpatient. While we understand that the focus of today’s hearing is on what has caused the spike in observations stays and on developing better ways of reimbursing hospitals in response to the observation stay crisis, we urge you in the strongest possible terms to keep in mind the impact of observation stays on beneficiaries.
There is strong bipartisan support for fixing the observation stay crisis for Medicare beneficiaries who receive medically necessary care in the hospital whether they are classified as inpatients or outpatients in observation status. While Congress debates improvements to hospital reimbursements, we urge members to enact S. 843/H.R. 1571, “the Improving Access to Medicare Coverage Act,” that would count all time in the hospital toward meeting the three-day mandatory inpatient stay for Medicare coverage of SNF services.