For many Medicare recipients, multiple observational stays rather than inpatient hospital admissions may be driving up their out-of-pocket costs, a study suggests.

These cumulative out-of-pocket costs may exceed the deductible they would have owed for an inpatient hospital admission, according to a media release from the University of Pennsylvania School of Medicine.

In their study, published recently in the Journal of Hospital Medicine, researchers at the University of Pennsylvania School of Medicine used Medicare data to identify hospital observation stays among Medicare beneficiaries between 2010 and 2012.

According to the release, the research team found that, on average, patients owed nearly $470—a significantly lower cost than the standard deductible of $1,100 for an inpatient visit. However, when beneficiaries had to return to observation care within 60 days of a prior observation stay, on average, their cumulative costs more than doubled ($947)—and for 26.6% of these patients, the costs were more than the inpatient deductible.

Observation care is considered by Medicare to be an outpatient service. However, patients stay in beds in the emergency department or within the hospital while they are being observed, the release notes.

“While most patients receiving observational care do spend significantly less in out-of-pocket co-payments, those with at least two observational stays within 60 days are potentially facing higher co-payments than if they were admitted,” says the study’s lead author Shreya Kangovi, MD, an assistant professor of Medicine at Penn Medicine, in the release.

“Additionally, the design of the Medicare benefit allows several ways in which observation stays may become more costly to patients. For example, Medicare patients are required to pay a percentage of the cost of each service provided during an observation stay, as opposed to a single fixed cost for an inpatient stay,” Kangovi adds.

Kangovi notes in the release that Medicare beneficiaries who return to the hospital frequently are typically of lower socioeconomic status and thus may be disproportionately affected by any increased financial liability.

The research team also found that the number of patients with multiple observation visits within a 60-day period rose by 22% between 2010 and 2012.

“This could signal that excess cumulative financial liability will be all the more common in the future,” says the study’s senior author, David Grande, MD, an assistant professor of Medicine at Penn Medicine, in he release.

“Some have suggested capping the total out-of-pocket expense for observation care at the inpatient-deductible amount. This warrants further study since observational care is already more costly than inpatient stay for a significant portion of the patient population,” he adds.

[Source(s): University of Pennsylvania School of Medicine, EurekAlert]