Observation care may save more than thought: study

CHICAGO, Dec. 8 (Xinhua) -- When it comes to the growth in use of observation care, concerns about high out-of-pocket spending are unfounded for those with private coverage, a study of the University of Michigan (UM) found.

In what is believed to be the first study to look at the observation care experience of privately insured patients, UM researchers found substantial differences in both total and out-of-pocket spending in observation care and short-stay inpatient settings.

Researchers from UM School of Public Health, Medical School and Institute for Healthcare Policy and Innovation studied 815,798 observation care and 291,668 short-stay hospitalizations from 2009 to 2013, using claims data from national insurers Aetna, UnitedHealthcare and Humana. The patients were adults aged 18-64 with conditions commonly managed in both observation and short-stay inpatient settings, including chest pain, abdominal pain, fainting, headache, heart rhythm disturbances, and infections of the skin and soft tissue.

They found that total and out-of-pocket spending are rising much more rapidly for observation care than for short-stay hospitalizations. Among observation care stays, total spending for skin infections grew 17 percent per year over the study period and out-of-pocket spending grew 20 percent per year over the study period, as against 1.4 percent total spending growth and 2.9 percent out-of-pocket spending growth for short-stay hospitalizations for the same condition per year.

To be specific, use of observation care for chest pain patients is 8.4 times more often than inpatient care in 2013; for patients with heart rhythm issues, the cost of a short-stay inpatient hospitalization for cardiac dysrhythmias was associated with adjusted total spending of 7,948 dollars as against 2,641 dollars for observation care.

In the final year studied, out-of-pocket spending for infections of the skin or soft tissue was 4.5 times higher for short-stay hospitalizations, and for cardiac dysrhythmias was 3.9 times higher for short-stay hospitalizations.

"It is unclear exactly why there are such large differences in spending between the two care settings, but it may reflect differences in the prices negotiated between insurers and hospitals for observation versus inpatient care, unobservable differences in care delivery, or differences in quality in the two settings," said Emily Adrion, lead researcher and a sponsored affiliate of the UM School of Public Health Department of Health Management and Policy.

Understanding what is driving these cost differentials will be a critical next step for UM researchers, Adrion said.

The study has been published in the December issue of Health Affairs. Enditem