Inpatient vs. Observation: Will it ever be clear?

Hospitals are still struggling with whether patients should be admitted or receive observation services despite efforts by the Centers for Medicare & Medicaid Services to clear up the confusion and conduct Probe and Educate audits. The two-midnight rule bases patient status on time in the hospital rather than clinical criteria, but case managers should still use decision-support software to determine if patients meet medical necessity criteria for an inpatient stay. Take a proactive approach and educate physicians up front about the level of detail the documentation should include to reflect the patient's conditions and intensity of service, and give them prompts in the medical record about what they should include. Notify patients that they are receiving observation services and that they may get a bill for their copay and pharmacy charges.