IPPS 2014 Final Rule Dress Rehearsal

on Tuesday, 01 October 2013. All News Items | Case Management | Documentation | Coding

We are now into the second day of the Centers for Medicare and Medicaid Services (CMS) 2014 Fiscal Year. For those that were unable to listen to the CMS Special Open Door Forum (ODF) this past Thursday September 26th, CMS appeared to have heard and has responded to the medical community’s concerns around the education and implementation of the new 2-Midnight Benchmark for inpatient admissions and the Physician Certification of all inpatient admissions.

Clarification of CMS Inpatient Hospital Policy, Why Now?

On the same day as the ODF, CMS also released a letter to the American Hospital Association (AHA). In both this letter and during the ODF, CMS indicated that they have been facing “pressures” that include:

  • “An increase in the average length of observation stays;
  • An increase in the Comprehensive Error Rate Testing (CERT) error rate for short inpatient stays;
  • An increase in the number of inpatient appeals; and
  • Requests from the hospital industry requesting clarification on inpatient review policy.”

The two year conversation around these “pressures” between CMS and the hospital industry are what prompted the implementation of the 2-Midnight Benchmark and Physician Certification process. CMS announced that the next three months (October 1, 2013 – December 13, 2013) will be a transition period where they will monitor the impact of the changes to ensure that they result in the best interest for Medicare beneficiaries. Further, they announced a New Probe and Education Program.

New Probe and Education Program

This new program will begin with dates of admission on or after October 1, 2013 through December 31, 2013. Specific instructions for Contractors include the following:

  • Medicare Administrative Contractors (MACs)
    • MACs will shift their pre-payment focus to admissions on or after October 1st through December 31st with “0” or “1” midnight lengths of stay.
    • The focus of these reviews will be to “determine the medical necessity of the patient status in accordance with the two midnight benchmark.”
    • The Pre-payment Probe limit has been set at 10-25 claims per hospital.
    • If a MAC completes a probe and finds no issues they will “cease further such reviews for that hospital from October – December 2013, unless there are significant changes in billing patterns for admissions.”
    • If a MAC does identify issues, education will be provided to the hospital and then the MAC will conduct further follow-up as necessary.
    • Since these will be pre-payment reviews, a hospital could re-bill any denied claims in accordance with the Part A to Part B rebilling Final Rule.
    • MACs will use their review findings to determine a hospital’s compliance with the new inpatient rules and provide feedback to CMS for development of joint education and guidance.
  • Recovery Auditors (RAs)
    • During this same 90 days, “CMS will not permit Recovery Auditors to review inpatient admissions of one midnight or less that begin on or after October 1, 2013.”
    • The RA Pre-payment Demonstration will be suspended during the 90 day period for the 11 states that are participating in this demonstration (FL, CA, MI, TX, NY, LA, IL, PA, OH, NC, and MO).
    • RAs will continue pre-payment reviews for Therapy Caps.
  • Caution:
    • CMS reminds providers that “physicians should make inpatient admission decisions in accordance with the 2 midnight provisions in the final rule. If at any time there is evidence of systematic gaming, abuse or delays in the provision of care in an attempt to surpass the 2-midnight presumption could warrant medical review.”
    • During this transition period MACs can continue to perform coding validation reviews.
    • The CERT contractor, Zone Program Integrity Contractors (ZPICs), Office of Inspector General (OIG), etc. are not limited by this 90 day time period and can continue to pick any claims for review.
    • Contractor reviews specifically supporting the medical necessity of a surgery (i.e. total knee replacement) and correct coding reviews can continue during this time.

Dress Rehearsal

Moving forward, CMS has set up an Inpatient Hospital Reviews webpage on their website under Medical Review and Education and encourages hospitals to check this site frequently for updates.

Hospitals should take this time to use the next three months as a dress rehearsal to continue with staff education, proceed with your plans to be compliant with the 2-Midnight Benchmark and develop processes to ensure completion of the Physician Certifications prior to beneficiaries being discharged.

2014 IPPS Final Rule Resources:

Link to the Final Rule:  http://www.gpo.gov/fdsys/pkg/FR-2013-08-19/pdf/2013-18956.pdf

Link to September 5, 2013 Guidance - Hospital Inpatient Admission Order and Certification:  http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order-09-05-13.pdf

Link to MLN Matters: SE1333 – Temporary Instructions for Implementation of Final Rule 1599-F for Part A to Part B Billing of Denied Hospital Inpatient Claims


Link to CMS Open Door Forums webpage:  http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/ODFSpecialODF.html

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc. Beth has over twenty-two years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it..

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.

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