To Be or Not to Be (Inpatient Versus Observation): Improving Admission-Status Assignment

Observation care is frequently indistinguishable from inpatient care. However, the financial burden of inappropriate status assignment for hospitals and patients can be large. Increased awareness of the potential for financial hardships experienced by patients because of status designation spurred interest among physicians in this improvement project. The goal was to improve the percentage of appropriate inpatient-status assignments from 76% to 90% in 2 years and eliminate observation assignments for patients with hospitalizations >48 hours.

Our multidisciplinary team used the Model for Improvement. Interventions included securing a lead physician advisor to the use-review team, improving the process for status review and adjustment, and creating educational sessions and tools for physicians. Data collected included the percentage of appropriate inpatient assignments, percentage of observation assignments for patients with hospitalizations >48 hours, write-off dollar amount per year from denial of payment due to payer disagreement with inpatient status, and resident physician confidence in assigning status.

Appropriate use of inpatient assignments increased from 76% to 84%. Status assignments remaining in observation >48 hours of hospital length of stay decreased by one-half, from 6% to 3%. The write-off dollar amount increased during the study period but decreased by 19% the following calendar year, 2018. Resident self-reported confidence in status designation increased after educational sessions.

Careful selection of admission status by educated providers and a system to identify relevant cases for status changes can increase appropriate status assignment and, potentially, positively affect the economic burden placed on patients and hospitals.