Observations status stays aren't included in inpatient readmissions data, and that omission may be skewing the data according to McKnight's Long Term Care News. According to Marselas (2018, June 1), " While inpatient readmission dropped by 2.3% during the study period, the researchers found the rate of readmission after an observation stay increased by 3.9%. Many patients also returned for repeat observation stays."
Medicare patients are often surprised to learn that an observation status stay does not count toward the three-day stay needed to qualify for SNF coverage. While the requirement for hospitals to provide beneficiaries with formal notice of observation status (Medicare Outpatient Observation Notice or MOON) may have mitigated that aspect of observation stay shock, concerns continue over the financial impact of 'obs' status. Beyond the patient-centric concerns, quality gains from realized through reducing inpatient readmissions are now in question.