“New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage, the article rightly highlights the role of Recovery Audit Contractors (RACs) -- overzealous government audit contractors -- in the increase in observation status. Their constant second-guessing of physician judgement on short hospital stays is the true cause of the increase of observation stays, which some have depicted in an inaccurate way. 

Allowing RACs to deny the care provided years after the patient was cared for is indefensible, and forced hospitals to be cautious when admitting patients. This is why the Centers for Medicare and Medicaid Services recently took away patient status reviews from the RACs. However, after many abuses and because of the high number of claims denied by the RACs there is a 10-year backlog of appeals as hospitals seek to overturn the inappropriate denials for patient care provided.

The AHA believes that hospitals and practitioners should communicate clearly with patients and their families about their status in the hospital. Providing the best care possible while relying on the sound judgement of physicians is the right prescription for patients. 

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