Cheating the Rules of Admission With "Observation"

When physicians admit patients to a hospital, their decisions about where-and to whose professional stewardship and services-those patients belong are influenced by federal policies, of which many clinicians are not aware. The distinction between observation and admission has clinical and ethical implications for patients and practices. The evolution of "observation status" from a clinical tool to a catchall of vague and imprecise meaning has been driven by changes to physician payment and compensation structures, particularly Current Procedural Terminology codes and Centers for Medicare and Medicaid Services regulations, and its current value to clinicians and patients is questionable. This article contextualizes clinicians' admission and observation practices and considers how metrics influence patient costs and how clinicians and organizations are compensated.