Background: Observation stays in Medicare have grown over the last 15 years, yet limited research exists on how observation may impact outcomes for older adults.
Objective: To examine the relationship of an observation stay with 30-day hospital returns, total acute care days post-discharge, mortality, and out-of-pocket costs, compared to an inpatient admission.
Design: Retrospective cohort study using instrumental variable analysis.
Importance: The Medicare Competitive Bidding Program (CBP), a policy that reduced durable medical equipment prices, was implemented starting in 2011. Legislation introduced in 2024 aims to remove supplemental oxygen from the CBP because of concerns that recent decreases in oxygen prescribing are due to lower prices set by the CBP, which may have decreased supply and, in turn, limited oxygen access for patients with chronic lung diseases. However, low-value prescribing of oxygen is also prevalent in practice, and decreased oxygen prescription rates may not have necessarily caused harm.
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