The decision to admit to inpatient or to place in observation is a medical necessity matter.
On the American Case Management Association (ACMA) Learning Link, a member recently posed this question:
“Does your institution use outpatient in a bed status or observation for surgical cases that do not meet inpatient status, but need hospitalization post-planned procedure?”
It got interesting from there.
I replied (condensed for space):
“That all depends on how you want to define “need.” There should be very few patients needing hospitalization after outpatient surgery. The demise of the Medicare Inpatient-Only List (IPO) and overall trend to make more surgeries outpatient doesn’t mean surgeons are less desirous of an overnight stay. The last secretary of HHS (the U.S. Department of Health and Human Services) thought there would be an exodus to ASCs (Ambulatory Surgical Centers) with the list of IPO procedures evaporating. It’s not happening, if for no other reason than that surgeons in practice more than five years want an overnight stay. That does not equate to medical necessity.”
An “OP in a bed” is something organizations use, either as an accommodation code or just the name for an outpatient “hijacking” a bed (thank you, Dr. Ronald Hirsch). I call it a damn shame, a battle lost…and outpatient surgery status.
So, it all depends on what you mean by “need.” If it is the surgeon’s preference for an overnight stay, it is outpatient surgery no matter how long the patient hangs around. Observation is appropriate if there is actual post-op instability that is well-documented in the medical record, and resolution is expected in fewer than 24 hours. Inpatient admission may be appropriate if there is actual instability that is reasonably believed to require hospitalization for greater than two midnights and is well-documented.
This got our own Dr. Hirsch’s attention:
“I adamantly disagree with ‘there should be very few patients needing hospitalization after OP surgery,” he replied. “Want to really upset a surgeon? Tell them to their face that they are keeping patients overnight inappropriately almost all the time.”
There are many surgeries for which an overnight stay is the standard of care, he stated. (Here we disagree on the basis of semantics: traditional standards cannot translate to medical necessity.)
“We are getting much better with post-surgical care,” he added. “In 1980 the LOS (length of stay) after knee surgery was 14 days, and they would laugh at the thought of a one-night stay. But telling a surgeon the standard of care for every non-inpatient-only surgery is same-day discharge is not right, and dangerous.”
I didn’t see that coming. But I am sticking to my guns.
The decision to admit to inpatient or to place in observation is a medical necessity matter. It’s not anyone telling the surgeon he or she can’t do this or that. Rather, I am suggesting that the death of the IPO simply brings medical necessity to the forefront. Insurers will not pay for observation or inpatient admission without a compelling case, case by case, in the medical record. It’s an uphill push. (There’s also that little ego thing that makes it hard for surgeons to document that their patient may not be walking on water immediately after surgery. I have no idea how to confront that.)
There is also a generational shift. I see patients of younger surgeons going home the day of surgery without a second thought of admission or an overnight stay. Surgeons have been clamoring for years to allow more procedures to be done in the ASC. This is the reality. Payors think there should be few hospitalizations for most surgeries. Now we have to manage through it.
If the C-suite is alarmed at the use of hospital beds after outpatient surgeries, they need to find reconciliation on their level. Here, I tried to avoid the inpatient bed hijacking (and it is avoidable), but the decision to allow one-day post-op stays was a political calculation, based on the need for on-call orthopedic and general surgery coverage without paying for it. The CFO and I were totally off the hook, and the surgeons could all relax.
If you really want to make this a utilization management (UM) issue, and not a political one, good luck. If a patient is to be hospitalized after surgery, reliance on any traditional standards of care alone won’t cut it. Orders for hospitalization must be accompanied by clinical documentation telling the world why a “standard of care” applies to this patient.
If there is no medical necessity, as manifested by clinical findings for observation or admission, then it’s a political decision as to the overnight stay, not a UM matter. You can call the accommodation code “OP in a bed,” “extended recovery,” or “because we need surgeons on call for hip fractures;” it just can’t default to observation, and God forbid inpatient.
Beginning in 2026, the Centers for Medicare & Medicaid Services (CMS) will begin phasing out the Inpatient-Only (IPO) List by removing predominantly musculoskeletal and complex
In the Medicare fee-for-service world, “prepayment review” (also sometimes called “prepayment medical review” or “pre-claim review,” depending on the context) means that a claim is
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