Observation Care Services in Rural Hospitals: Reimbursement and Quality Implications

Research center:
Lead researcher:
Project funded:
September 2012
Project completed:
September 2014
Statement of the Problem: Concerns raised by payers, providers and Medicare beneficiaries over the care and costs associated with the provision of hospital observation care services have led to calls for Medicare reform. Data on how this trend has unfolded in rural areas and its consequences for rural providers and consumers are currently not available. This lack of understanding about the rural context for observation care services represents a critical gap in policy relevant information that could undermine efforts to promote appropriate and successful reform.

Project goals: This project will provide information about the provision of observation care services in rural hospitals and organizational, geographic, and patient characteristics associated with their utilization. It will also identify key rural Medicare beneficiary and rural provider related issues and explore options for minimizing unintended negative consequences that could result from the implementation of future guidelines and policies concerning the provision of observation care services in rural communities.

Methods: Descriptive statistics will be used to profile the nature and scope of observation care services by patient, hospital, and market characteristics, including rural and urban comparisons, using secondary data from Medicare hospital outpatient claims, Provider of Service data and AHA Annual Survey data. Qualitative data analysis will be used to profile key issues for rural Medicare beneficiaries and rural providers concerning observation care services and to identify state efforts to address these concerns.

Anticipated publications/products: A policy brief, a peer reviewed journal article, and presentations at conferences and to key policy audiences such as MedPAC, QIOs, State Hospital Associations, and CMS.