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FY 2015 IPPS Final Rule Focus On Short Inpatient Hospital Stay Policy and Physician Certification

Published on 

Friday, August 22, 2014

 | Medicare Coverage 

The FY 2015 Inpatient Prospective Payment System (IPPS) Final Rule did little to nothing to alleviate the 2-Midnight Rule or Physician Certification requirements for hospitals. As we continue our review of the Final Rule, this week’s article focuses on public comments regarding creating a payment policy for short inpatient hospital stays, the continued request for suggested exceptions to the 2-Midnight rule, the Probe & Educate Program and Physician Certification changes in the IPPS Final Rule as well a proposed change in the FY 2015 Outpatient Prospective Payment System (OPPS) Proposed Rule.

Medicare Payment for Short Inpatient Hospital Stays

In the FY 2015 IPPS Proposed Rule CMS requested public comments on a payment methodology for short inpatient hospital stays. Specifically, CMS outlined specific questions/considerations that they considered to be critical for the payment methodology.

Defining Short or Low Cost Inpatient Hospital Stays

Question

How to define short inpatient hospital stays for determining an appropriate Medicare payment?

  • Should a short inpatient hospital stay be one where the average mean length of stay (AMLOS) is short for the MS-DRG?
    Example: MS-DRG 313 (Chest Pain)
  • In FY 2014 the AMLOS is 2.1 days with a national average payment of $3,217.87
  • Should a short inpatient hospital stay be an atypically short or low cost case relative to other cases within the same MS-DRG
    Example: MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC)
  • In FY 2014 the AMLOS is 6.7 days with a national average payment of $9,949.52

Considerations

CMS believes that if a payment methodology was adopted that paid for atypically low-cost or short stay cases relative to the average case in the same MS-DRG (i.e. MS-DRG 871) this policy would be less likely to apply to MS-DRGs that are already low cost or a short stay (i.e., MS-DRG 313).

Determining Appropriate Payment for Short Inpatient Hospital Stays

Question

How is an appropriate payment determined once a short stay has been identified? “Some have suggested a per diem based payment amount, perhaps modelled on the existing transfer payment policy.”

Considerations

Again, a per diem based payment amount is more likely to impact payment for atypically short-stay or low-coast cases in an MS-DRG with a longer AMLOS. This would be less likely to impact MS-DRGs with a short AMLOS as the full IPPS payment would be made in 1 or 2 days.

Given that payment for the same case will be very different under the OPPS and IPPS dependent on whether or not the beneficiary has been formally admitted as an inpatient, pursuant to a physician order:

  • When should an IPPS payment be limited to an OPPS payment amount?
  • When would it be appropriate for the payment to be higher?
  • If a higher payment is determined to be appropriate then how should the additional payment amount be determined?

Public Comments

Public comments received by the CMS made it apparent that for any short-stay policy there should be some general principles that the policy adheres and it should include some or all of the following:

  • The policy “should provide more appropriate and adequate payment for medically necessary inpatient services that span less than 2 midnights."
  • Payments should be higher than the OPPS rate but not exceed the full IPPS payment for a given MS-DRG.
  • Admissions for procedures on the “inpatient only” list should be excluded from a short-stay policy.
  • The policy should be budget neutral.
  • “Hospitals should be eligible for all add-on payments they would otherwise receive (for example, DHS and IME), either in full or on a pro rate basis.”
  • Short inpatient stays for beneficiaries should be considered inpatients and cost-sharing obligations should be calculated under Medicare Part A.
  • The policy should not increase administrative burden for hospitals, physicians, or other medical providers.
  • “CMS should provide clear and consistent guidance and allow adequate time for hospitals to implement the short-stay policy prior to its effective date.”
  • Short stay policy considerations submitted included considering a per diem approach modeled after the existing transfer policy, creating MS-DRG weights for short-stay and nonshort-stay cases, or allowing the full MS-DRG payment for short stays in the interim while this issue is studied further.
  • Other commenters indicated that to create a separate MS-DRG system for short stays undermines the MS-DRG system that “is predicated on the understanding that there will be a diversity of treatment patterns and individual patient circumstances for any given clinical condition, and that this diversity balances out – high-intensity cases are balanced by low-intensity cases.”
  • MedPAC intends to explore alternative short-stay policies in their next work cycle.

At the end of the day, CMS thanked the commenters and they “look forward to continuing to actively work with stakeholders to address the complex question of how to further improve payment policy for short inpatient hospital stays.”

Suggested Exceptions to the 2-Midnight Benchmark

The CMS has identified that unforeseen circumstances such as a beneficiary’s death, transfer to another hospital, unexpected clinical improvement, election of hospice care, or leaving the hospital against medical advice (AMA) are all situations that could result in a hospital stay shorter than the two midnight expectation by the physician. In these instances, when a medical record contains an inpatient order, the physician’s clinical expectation and orders are clearly documented and support an expected medically necessary two midnight stay, “the patient may be considered to be appropriately treated on an inpatient basis and hospital inpatient payment may be made under Medicare Part A.”

The CMS has also indicated that there can be exceptions to the 2-midnight benchmark and it would still be appropriate for the beneficiary to be an inpatient. Specifically, in the 2014 IPPS Final Rule the exception was provided of procedures on the OPPS inpatient only list always being appropriate as an inpatient regardless of length of stay as long as the procedure is medically necessary and performed pursuant to a physician order and formal admission.

To date, one additional exception has been added in sub-regulatory guidance. “CMS believes a physician will generally expect beneficiaries with newly initiated mechanical ventilation to require 2 or more midnights of hospital care, if the physician expects that the beneficiary will only require 1 midnight of hospital care, inpatient admission and Part A payment is nonetheless generally appropriate.”

The CMS continues to be open to suggestions regarding potential additional exceptions to the 2-midnight benchmark. Suggestions can be sent to CMS via written correspondence or email at SuggestedExceptions@cms.hhs.gov.

Medicare Administrative Contractor (MAC) Probe and Educate Program

While there were no changes made to the 2-midnight rule that was finalized in the FY 2014 IPPS Final Rule, CMS does indicate in the 2015 IPPS Final Rule that “during the summer and fall of 2014, CMS plans to evaluate the results of the “probe & educate” process (a process by which MACs are reviewing a prepayment, provider-specific probe sample of inpatient Part A claims for appropriateness of inpatient admission under the revised 2-midnight benchmark and providing provider-specific education, as necessary, to correct improper payments) and issue additional subregulatory guidance to our claim review contractors, if necessary, to ensure consistency in application of the 2-midnight policy.”

Revision of the Requirements for Physician Certification for Critical Access Hospital Inpatient Services

For Critical Access Hospitals (CAHs) to receive payment under Medicare Part A for inpatient services a physician must certify “that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the critical access hospital.”

The 2014 IPPS Final Rule revised the physician certification timing requirement for CAHs from being required no later than 1 day before the date on which the claim for payment for the inpatient CAH service is submitted to require that “the certification must be completed, signed, and documented in the medical record prior to discharge (78 FR 50970).”

The 2015 IPPS Final Rule reversed the 2014 ruling and finalized that “a CAH is required to complete all physician certification requirements no later than 1 day before the date on which the claim for the inpatient service is submitted.”

FY 2015 OPPS Proposed Changes to the Physician Certification

Within the July 3rd, 2014 release of the FY 2015 OPPS Proposed Rule came two proposals that have the potential to ease some of the burden created by the FY 2014 IPPS Final Rule for Inpatient hospitals.

Inpatient Order Proposed Change

“While we continue to believe that the inpatient admission order is necessary for all inpatient admissions, we are proposing to require such orders as a condition of payment based upon our general rulemaking authority under section 1871 of the Act rather than as an element of the physician certification under section 1814(a)(3) of the Act.”

Physician Certification Proposed Change

“We are proposing to change our interpretation of section 1814(a)(3) of the Act to require a physician certification only for long-stay cases and outlier cases.”

“We are proposing to revise paragraph (a) of § 424.13 to specify that ‘Medicare Part A pays for inpatient hospital services (other than inpatient psychiatric facility services) for cases that are 20 inpatient days or more, or are outlier cases under subpart F of Part 412 of this chapter, only if a physician certifies or recertifies the following:

  1. The reasons for either –
  2. Continued hospitalization of the patient for medical treatment or medically required diagnostic study; or
  3. Special or unusual services for cost outlier cases (under the prospective payment system set forth in subpart F or part 412 of this chapter).
  4. The estimated time the patient will need to remain in the hospital.
  5. The plans for posthospital care, if appropriate.’

If both proposals are finalized, hospitals need to be mindful of the following:

  • The Inpatient Order remains a Condition of Participation (CoP) and a requirement for payment for Medicare Part A Services.
  • Thorough physician documentation in the medical record (i.e. History & Physical, MD Progress Notes and Physician Orders) continues to be required to support the medical necessity for hospital care expected to span at least two midnights.
  • The Inpatient Admission Order must still be signed prior to the beneficiary’s discharge. Without the inpatient order hospitals should not submit a Medicare Part A claim. In a response to a comment in the 2014 IPPS Final Rule, CMS indicated that “because the physician order is a requirement as a condition of payment, if the order is not documented in the medical record, the hospital should not submit a claim for Part A payment.”
  • For Medicare beneficiaries that reach a 20 day length of stay it will be important to make sure that the Physician Progress notes on that day support the need for a continued medically necessary hospitalization and the plan of care for the beneficiary.

For more information:

Article Author: Beth Cobb, RN, BSN, ACM, CCDS
Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Protection Assessment Tool.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.