Between 2007 and 2015, hospital readmission rates for more than 3,300 US hospitals dropped significantly according to new federal data. During the same time period, the number of Medicare observation claims slightly peaked. Is there a connection? It depends on the research you read.

No connection – A recent study indicates that hospitals are not gaming the system by reclassifying patients to avoid readmission penalties. Skeptics of the study indicate that the study is limited and does not consider other types of gaming such as exaggerating a patient’s severity of illness or providing complex therapies in the emergency department – both to avoid readmission.

Connection – Other research shows a correlation that as readmission rates went down for certain therapies, stays in the observation units for those therapies increased.

Because of the limitations of these studies and the inability to truly assess gaming versus providing medically necessary treatment, “why” readmissions are down may remain unclear. One thing providers can be sure of is (1) readmissions/patient status remains a hot topic for government contractors and (2) knowing your own data is crucial.