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Does Rurality Affect Observation Care Services Use in CAHs for Medicare Beneficiaries?

Jonk, Y., O'Connor, H., Gregg, W.

Publication Date: October 2014

This policy brief describes the use of observation services across levels of rurality by Medicare beneficiaries in CAHs, the demographics and health status of patients receiving these services, and the characteristics of their observation stays. This work is part of a larger study on rural observation services; a companion policy brief examines the rural policy context surrounding the use of observation services by Medicare beneficiaries from 2010-2013 and presents qualitative findings from interviews with key stakeholders in 12 states.

Key Findings:

  • Medicare claims data indicate that approximately 74% of rural Critical Access Hospitals (CAHs) placed patients under observation status in 2010.
  • While three-quarters of observation stays in CAHs were less than 48 hours in duration, CAHs in small-rural and isolated-rural locations tended to keep patients under observation for shorter periods of time than CAHs in large-rural areas.
  • Average claim reimbursement levels and patients’ out-of-pocket expenses for the entire observation stay were significantly lower for CAHs in more rural locations, commensurate with shorter lengths of stay.
  • CAHs in isolated-rural locations performed significantly fewer procedures per day and were associated with lower per diem provider reimbursement levels and patient out-of-pocket costs.
  • The majority of CAH observation patients were discharged directly to their homes for self-care or home health care.
  • CAH observation patients in isolated-rural areas were significantly more likely to be admitted as an inpatient and less likely to be discharged to a SNF. Admitted patients were also more likely to be transferred to another hospital (79.3% isolated rural vs. 69.6% for all rural areas).

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