When the Wrong Admission Status Makes National Headlines

It is normally that time of year when many of us not only steal candy from the kids’ Halloween collections (my kids never got to keep any Twizzlers they were given), but also continuously watch the Federal Register for the release of the 2026 Outpatient and Physician rules.

And of course, my main concern is what the Centers for Medicare & Medicaid Services (CMS) has to say about its proposed elimination of the Inpatient-Only List. I do not expect them to back away from it, but I am hoping that they provide more details on what criteria should be used to determine which non-inpatient-only surgery patients can be admitted as inpatients, and what patients can be admitted as inpatients for surgery to gain access to the Part A Skilled Nursing Facility (SNF) benefit.

On the other hand, with the many personnel changes at both CMS and the U.S. Department of Health and Human Services (HHS), I am concerned that there will no longer be enough subject-matter experts to address the many nuances. And that will leave us once again at the mercy of the auditors, and more worrisome, the Medicare Advantage (MA) plans, to get status correct.

Moving on, last week Kaiser Health News had an article in their series “Bill of the Month” describing a doctor who was in a car accident and sustained a large open wound on her leg and a complex ankle fracture. The patient was taken by ambulance to a trauma center, was evaluated by the trauma team, underwent three CT scans, and then admitted as an inpatient and taken to the operating room (OR) for lavage and repair of her leg wound and open reduction and internal fixation of her ankle. She was discharged the next day.

And, as you would expect, the insurance company denied the claim, reportedly stating that the patient should have been treated as observation. Now, putting aside the fact that there was no role for observation in this case, I have to agree with the payer that outpatient status was likely correct.

The patient was healthy and did require emergency surgery, but there do not appear to have been any extenuating circumstances that warranted inpatient admission.

Then, from the article, it appears that the patient was billed for the full charge of $64,000 when her insurer denied the claim. What should have happened?

Well, as a one-day inpatient admission, this case should have gone into the utilization review (UR) work queue prior to claim preparation for review to determine if inpatient admission was correct. And as I noted, it likely was not.

At that point, since the patient was already discharged, the hospital could have self-denied the admission and prepared and submitted a rebilled outpatient claim and avoided becoming the subject of a national news article. But instead, the claim was submitted, the patient got a bill, they called the media, and here we are today.

I am sure you don’t want your hospital to be the subject of such media attention, so be sure your short-stay admission status review process is hardwired. Your marketing team will thank you.

Now, there is a good side to his story. With all the reports of hospitals charging outrageous prices for medication for hospitalized patients, an aspirin at this hospital was only $0.09.

I do not suspect Kaiser Health News will be publishing an article titled “Hospital Charges Reasonable Prices for Oral Medications.”