Under a newly proposed policy, Pennsylvania would pay hospitals and physicians an observation rate for Medicaid patients who are treated in their emergency departments but for whom they cannot make an immediate decision on the need for admission.
As described in a Pennsylvania Bulletin notice published last Saturday,

Observation services are a well-defined set of clinically appropriate and medically necessary services, which include short-term treatment, assessment and reassessment, that are furnished while a decision is made as to whether to admit an MA beneficiary to the inpatient hospital setting for further treatment or to discharge the MA beneficiary from the hospital outpatient setting. The Department is recognizing the need for observation services because a physician may not be able to initially determine whether an inpatient hospital admission is medically necessary.

The proposed policy, to take effect at the beginning of the state’s 2017 fiscal year (July 1, 2016), addresses and prescribes payments for hospitals and physicians, including new procedure codes.
According to the notice, Pennsylvania anticipates spending $10.229 million in state funds, and $28.28 million overall, for such services in FY 2017.
Interested parties have 30 days from the notice’s publication (May 14) to submit written comments about the proposed policy.
Find the Pennsylvania Bulletin notice introducing this proposed policy here.