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It is hard to believe it is 2017. Time flies when you are having fun and when you are not. It is also hard to believe it has been over three years since Medicare changed the definition of what supports an inpatient admission to the two-midnight rule. This occurred in October, 2013 because CMS was concerned about the number of inappropriate inpatient admissions being denied by review contractors, by the large number of extended outpatient/observation stays that had potential financial impacts for the Medicare beneficiary (co-pays and liability for skilled nursing home stays), and the inconsistent practices between hospitals for inpatient and outpatient status. The policy establishes that inpatient payment is generally appropriate if physicians expect patients’ care to last at least 2 midnights; otherwise, outpatient payment would generally be appropriate.

Unfortunately, the two-midnight policy was not the magic bullet Medicare thought it would be and a recent report by the Office of Inspector General (OIG) finds that there are still inconsistencies and issues with the application of the rule. So let’s examine what might be “right” and what might be “wrong” related to the two-midnight rule. Here I must apologize ahead of time – determining and getting a patient in the correct status is not as simple and straight-forward as this discussion may make it sound. I have the utmost respect and admiration for the physicians and utilization review staff that work very hard daily to interpret and apply Medicare’s guidelines.

Applying the rule

One thing hospital staff has struggled with since implementation of the two-midnight rule is where does admission criteria (such as InterQual and Milliman) fit in this model? The first question that has to be asked related to patients presenting to the hospital is whether they need extended care (such as beyond an ER visit) in a hospital setting and this is a good place to utilize commercial criteria. These criteria can help determine if care in a hospital setting is appropriate.

Once it is determined that care in a hospital setting is necessary, the next task is to determine if the physician believes the patient will need such care beyond a second midnight. If yes, then an inpatient admission is appropriate; if no or if unsure, outpatient with observation is likely the correct status. For inpatient admissions, the medical record should reflect that care beyond a second midnight is expected – for example, the admission orders and plan of care should support that the patient will be receiving tests and/or treatments beyond a second midnight.

And, as a hospital, if you want to be paid for your services and avoid a technical denial, make sure there is an inpatient admission order signed by a practitioner with admitting privileges prior to the patient’s discharge.

Inappropriate inpatient short stays

The OIG reported that overall inpatient admissions have decreased since the implementation of the two-midnight rule by 2.8% and short inpatient stays have decreased by 9.9%. Although this is good news, the OIG also reported that 39% of short inpatient stays “were potentially inappropriate for payment under the 2-midnight policy because the claims did not appear to meet any of CMS’s criteria for an appropriate short inpatient stay.” These accounted for $2.9 billion in payments. We must consider however that the OIG estimated the number of inappropriate inpatient short stays based on claims’ data without actually reviewing the medical records. This assessment was based on inpatient stays with inpatient-only procedures; mechanical ventilation; an unforeseen circumstance such as the beneficiary’s death, transfer to another hospital, or departure against medical advice; or a duration of 2 midnights or longer in the hospital when outpatient time prior to admission is added to inpatient time. Using only claims data, the OIG would be unable to identify appropriate inpatient admissions where the patient experienced clinical improvement after the physician documented an expectation of a 2-midnight stay. This could explain some of the volume of potentially inappropriate short inpatient stays but I understand the OIG’s concern.

Also of concern are the most common reasons for short inpatient stays cited by the OIG report: coronary stent insertion, fainting, digestive disorders, and chest pain. Again the decision to admit is complex and the admitting physician must consider several clinical factors including the beneficiary’s medical history, the severity of the beneficiary’s symptoms, and the expected care. There are patients that will require longer stays, say for coronary stent insertion, due to co-morbidities and overall risk, but most Medicare patients are able to have this procedure and be discharged after one midnight.

This is where it is critical to apply the rule correctly – at the time of admission, did the physician expect the patient to require hospital care beyond a second midnight? Does the patient’s condition and the expected treatments as evidenced in the admission orders and plan of care in the medical record support that expectation? If it is a condition or procedure that can usually be treated in less than two-midnights, does the medical record explain what is different for this patient or for this case?

Inappropriate long outpatient stays

The OIG report did find a slight decrease in the number of long outpatient stays (2.8%) but there were still almost 750,000 long outpatient stays. At MMP, Inc., we also notice that some of our clients continue to have long observation stays going beyond a second midnight. If a Medicare outpatient needs medically necessary care beyond a second midnight, then it is appropriate to admit the patient as an inpatient. This means that as an outpatient receiving observation services is approaching a second midnight, it is time to get an inpatient order or evaluate the need for continued medically necessary care (see the next section for valid reasons for long outpatient stays). These patients do not have to meet any commercial inpatient criteria to be admitted – they only have to continue to need medically necessary care in a hospital setting beyond that second midnight.

Valid reasons for long outpatient stays

But what if after evaluation it is determined that the patient doesn’t continue to need medically necessary care in a hospital setting? What if there are other reasons the patient cannot be sent home at this time that have to do with the convenience of the patient, physician or facility? This is much more common than one might think – certain diagnostic testing is not offered on weekends; testing is not completed until late in the day and the physician will not round until the next morning to discharge the patient; the patient has to wait until the next day to get a ride home from the hospital; etc. In these cases, it is acceptable to keep the patient in the hospital one more midnight as an outpatient.

However, observation services are likely not medically necessary in these cases anymore than inpatient services would be. If continued medically necessary care was appropriate past a second midnight, an inpatient admission would be correct. Therefore, there may be valid reasons for a long outpatient stay, but not really for observation services beyond a second midnight. When medically necessary care in a hospital setting is no longer needed and the patient remains due to convenience factors, the hospital should no longer report covered observation hours on the claim. At this point, observation hours should not be charged or should be reported on the claim as not medically necessary with a GZ modifier. If the hospital is ready for the patient to be discharged, but the patient refuses to leave or the patient’s physician refuses to discharge the patient, it is acceptable to issue an advanced beneficiary notice (ABN) to the patient making them financially responsible for the continued hospital care.

The last things of concern to the OIG are the continued variation in use of inpatient and outpatient status among hospitals and ultimately the financial impact on Medicare and Medicare beneficiaries. Short inpatient stays ranged from around 1% to above 5% and long outpatient stays were from 2% to above 11% between different hospitals. It is not surprising that all hospitals are not applying the rules the same, as Medicare reviewers have even struggled to get it right. This is evidenced by the starts, stops, delays, and transitions of short-stay reviews within Medicare.

Good luck to all the utilization reviewers out there. Maybe a crystal ball or Ouija board would help…

“Inpatient only” services are generally, but now always, surgical services that require inpatient care because of the nature of the procedure, the typical underlying physical condition of patient who require the service, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged.-Source: Medicare Claims Processing Manual, Chapter 4 – Part B Hospital

Annually, CMS releases an updated Inpatient Only (IPO) List in the Calendar Year (CY) Outpatient Prospective Payment System (OPPS) Final Rule. CMS is removing seven CPT codes from this list for CY 2017. This article reminds the reader of two important principles of the IPO list, outlines the criteria for potential removal from the list, lists the codes being removed and their new status indicator assignment, and ends with public comments regarding the removal of Total Knee Arthroplasty (TKA) CPT code 22447 from the IPO list. 

Important Principles of the IPO List

CMS notes in the 2017 OPPS Final Rule that it is not uncommon to receive questions about the IPO list leading them to believe there may be a misunderstanding by some regarding certain aspects of the IPO list. Specifically, the following two aspects:

• “First, just because a procedure is not on the IPO list does not mean that the procedure cannot be performed on an inpatient basis. IPO list procedures must be performed on an inpatient basis (regardless of the expected length of the hospital stay) in order to qualify for Medicare payment, but procedures that are not on the IPO list can be and very often are performed on individuals who are inpatients (as well as individuals who are hospital outpatients and ASC patients).
• Second, the IPO list status of a procedure has no effect on the MPFS professional payment for the procedure. Whether or not a procedure is on the IPO list is not in any way a factor in the MPFS payment methodology.”

Established Criteria for Procedure Removal from Inpatient Only (IPO) List

The criteria for consideration of removal of a CPT code from the IPO list includes the following:

• Most outpatient departments are equipped to provide the services to the Medicare population.
• The simplest procedure described by the code may be performed in most outpatient departments.
• The procedure is related to codes that we have already removed from the IPO list.
• A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis.
• A determination is made that the procedure can be appropriately and safely performed in an ASC, and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list.

CY 2017 Procedures Removed from the IPO List

‍Codes Removed from IPO List assigned Status Indicators

The spine procedure codes removed from the IPO list are add-on codes to procedures currently performed in the Hospital Outpatient Department and describe variations of (including additional instrumentation used with) the base code procedure. As add-on codes, these codes will be assigned to status indicator “N.”

“The Laryngoplasty codes are related to and clinically similar to CPT code 21495 (Open treatment of hyoid fracture), which is currently not on the IPO list. The two laryngoplasty procedure codes will be assigned to APC 5165 (Level 5 ENT Procedures) with status indicator “J1.”

Response to Solicitation of Public Comments on the Possible Removal of Total Knee Arthroplasty (TKA) Procedure from the IPO List

In the 2017 OPPS Proposed Rule CMS solicited comment from the public on a list of questions relating to the removal of TKA from the IPO list in the future. They also acknowledged the fact that “TKA candidates, although they all have osteoarthritis severe enough to warrant knee replacement, are a varied group in which the anticipated length of hospitalization is dictated more by comorbidities and diseases of other organ systems. Some patients may be appropriate for outpatient surgery while others may be appropriate for inpatient surgery.” But before we review comments received and CMS’s response, let’s look at knee CPTs by the numbers.

Knee CPTs by the Numbers

• 2000: CPT 27447 (Arthroplasty, knee, condyle and plateau; medial and lateral compartments with or without patella resurfacing (total knee arthroplasty)) was placed on the original IPO list in the 2000 OPPS Final Rule (65 FR 18781)
• 4.6 days: The geometric mean average length of stay (GMLOS) in 2000 for the DRG to which uncomplicated TKA procedures were assigned.
• 2.8 days: The GMLOS for the MS-DRG in 2016
• 2002: A similar procedure described by CPT code 27446 (Arthroplasty, knee, condyle and plateau; medial OR lateral compartment) (unicompartmental knee replacement) was removed from the IPO list.
• 2008: CPT code 27446 was added to the ASC covered surgical procedures.
• 2013: CMS Proposed to remove the procedure described by CPT code 27447 from the IPO List in the CY 2013 OPPS/ASC proposed rule. After consideration of public comments, this proposal was not finalized.

The Public Weighs in on Removing CPT 27447 from the IPO List

The following are comments were published in the 2017 OPPS Final Rule.

• “The overwhelming majority of the commenters…supported removing TKA from the IPO list.”
• Those supporting the removal of TKA included “ASCs, therapeutic professional associations, hospital associations, as well as many surgeons.”
• Most supporters “noted that an appropriate patient selection protocol should be used to determine the patients who are best suited for outpatient joint replacement.”
• A few commenters opposing the removal of a TKA procedure represented professional organizations, health systems, and hospital associations. “The comments believed that the increased likelihood that Medicare patients have comorbidities that require the need for intensive rehabilitation after a TKA procedure preclude this procedure from being performed in the outpatient setting. They also state that most outpatient departments are not currently equipped to provide TKA procedures to Medicare beneficiaries, which require exceptional patient selection, exceptional surgical technique, and a carefully constructed postoperative care plan
• Commenters expressed concern about the implications that the removal of this procedure would have for pricing methodologies, target pricing, and reconciliation process in the Comprehensive Care for Joint Replacement and Bundled Payments for Care Improvement Models currently in place through the CMS Innovation Center.

CMS responded to comments in typical CMS fashion by indicating that they “thank the stakeholder public for the many detailed comments on this topic. We will consider all of these comments in future policy making.”

So for now, 27447 remains on the IPO List. The Final Rule and IPO list in Addenda E can be accessed on the CMS Hospital 2017 OPPS web page. Additional guidance about Inpatient-only Services in general can be found in the Medicare Claims Processing Manual, Chapter 4 – Part B Hospital, Section 180.7.

TRANSMITTALS

Recovering Overpayments from Providers Who Share Tax Identification Numbers

• MLN Matters Article SE1612
• Issued June 22, 2016
• Affects providers of services and suppliers who share the same Tax Identification Number (TIN) even though they may have different National Provider Identifiers or other billing numbers used to bill Medicare.

Summary of Changes: Allows CMS to recover payments made to a provider of services or supplier that shares the same TIN with a provider of services or supplier that has an outstanding Medicare overpayment across multiple states within a Medicare Administrative Contractor (MAC) jurisdiction

October Quarterly Update to 2016 Annual Update of HCPCS Codes Used for Skilled Nursing Facility (SNF) Consolidated Billing (CB) Enforcement

• Transmittal 3546, Change Request 9688, MLN Matters Article MM9688
• Issued June 17, 2016, Effective October 1, 2016, Implementation October 3, 2016
• Affects physicians, providers, and suppliers submitting claims to all Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries who are in a Part A Skilled Nursing Facility (SNF) stay.

Summary of Changes: This notification provides updates to the lists of Healthcare Common Procedure Coding System (HCPCS) codes that are subject to the consolidated billing provision of the SNF Prospective Payment System (PPS)

JW Modifier: Drug Amount Discarded/Not Administered to any Patient

• Transmittal 3538, Change Request 9603, MLN Matters Article MM9603
• Issued June 9, 2016, Effective January 1, 2017, Implementation January 3, 2017
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for drugs or biologicals administered to Medicare beneficiaries.

Summary of Changes: Transmittal 3530, dated May 24, 2016, is being rescinded and replaced by Transmittal 3538 to update the Effective and Implementation dates. Effective January 1, 2017, claims for discarded drug or biological amount not administered to any patient, shall be submitted using the JW modifier. Also, effective January 1, 2017, providers must document the discarded drugs or biologicals in patient's medical record. This CR updates the Section 40 - Discarded Drugs and Biologicals of Chapter 17 of the Claims Processing Manual 100-04.

Claim Status Category and Claim Status Codes Update

• Transmittal 3527, Change Request 9550, MLN Matters Article MM9550
• Issued May 20, 2016, Effective October 1, 2016, Implementation October 3, 2016
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries..

Summary of Changes: The purpose of this Change Request (CR) is to update as needed the Claim Status and Claim Status Category Codes used for the Accredited Standards Committee (ASC) X12 276/277 Health Care Claim Status Request and Response and ASC X12 277 Health Care Claim Acknowledgment transactions. This Recurring Update Notification (RUN) can be found in Chapter 31, Section 20.7.

July 2016 Update of the Hospital Outpatient Prospective Payment System (OPPS)

• Transmittal 3523, Change Request 9658, MLN Matters Article MM 9658
• Issued May 13, 2016, Effective July 1, 2016, Implementation July 5, 2016
• Affects providers and suppliers who submit claims to Medicare Administrative Contractors (MACs), including Home Health and Hospice (HH&H) MACs, for services provided to Medicare beneficiaries and which are paid under the Outpatient Prospective Payment System (OPPS).

Summary of Changes: This Recurring Update Notification describes changes to and billing instructions for various payment policies implemented in the July 2016 OPPS update.

July 2016 Integrated Outpatient Code Editor (I/OCE) Specifications Version 17.2

• Transmittal 3524, Change Request 9661,MLN Matters Article MM9661
• Issued May 13, 2016, Effective July 1, 2016, Implementation July 5, 2016
• Affects providers submitting claims to Medicare Administrative Contractors (MACs) for outpatient services provided to Medicare beneficiaries and paid under the Outpatient Prospective Payment System (OPPS) and for outpatient claims from any non-OPPS provider not paid under the OPPS. It is also intended for claims for limited services when provided in a Home Health Agency (HHA) not under the Home Health PPS (HH PPS) or claims for services to a hospice patient for the treatment of a non-terminal illness..

Summary of Changes: This notification provides the Integrated OCE instructions and specifications for the Integrated OCE that will be utilized under the OPPS and Non-OPPS for hospital outpatient departments, community mental health centers, all non-OPPS providers, and for limited services when provided in a home health agency not under the Home Health Prospective Payment System or to a hospice patient for the treatment of a non-terminal illness. The attached Recurring Update Notification applies to 100-04, Chapter 4, section 40.1

OTHER NEWS

Temporary Pause of QIO Short Stay Reviews

• Inpatient Hospital Reviews Webpage
• Updated June 6, 2016

Summary of Changes: CMS requires that beginning June 6, 2016, the BFCC-QIOs re-review all short stay patient status claims that were denied under the QIO medical review process.

Medicare Will Use Private Payor Prices to Set Payment Rates for Clinical Diagnostic Laboratory Tests Starting in 2018

• CLFS Payment Rates Press Release
• Issued June 17, 2016
• Affects laboratories performing clinical diagnostic laboratory tests

Summary of Changes: CMS released a final rule implementing Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA), requiring laboratories performing clinical diagnostic laboratory tests to report the amounts paid by private insurers for laboratory tests. Medicare will use these private insurer rates to calculate Medicare payment rates for laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) beginning January 1, 2018. Further details of this rule can be found by clicking here.

CMS Proposes Rule to Improve Health Equity and Care Quality in Hospitals

• https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-06-13.html
• Issued June 13, 2016
• Affects the 6,228 hospitals and critical access hospitals that participate in Medicare or Medicaid.

Summary of Changes: The rule proposes to reduce overuse of antibiotics and implement comprehensive requirements for infection prevention. The proposed rule also advances protections for traditionally underserved and often excluded populations based on race, color, religion, national origin, sex (including gender identity), age, disability, or sexual orientation. For a closer look at this proposed rule, click here.

Medicare Makes Enhancements to the Shared Savings Program to Strengthen Incentives for Quality Care

• https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-06-06.html
• Issued June 6, 2016
• Affects Accountable Care Organizations in the Medicare Shared Savings Program.

Summary of Changes: CMS released a final rule improving how Medicare pays Accountable Care Organizations in the Medicare Shared Savings Program for delivering better patient care. Medicare is moving away from paying for each service a physician provides towards a system that rewards physicians for coordinating with each other. Accountable Care Organizations are a major part of that transition, rewarding providers that deliver high-quality, efficient, and coordinated care for patients.

For those of you that do not live in the state of Alabama it is hard to comprehend just how big college football is in this state. When I was new to the state one of the first questions people would ask is “which team are you for?” As a transplant from “up north,” (Tennessee), the obvious answer for me was neither.

In the world of Medicare and Acute Care Hospitals one main question that keeps being asked is, “are you an inpatient or an outpatient.” And for the Medicare beneficiary that has spent zero or one midnight in a hospital bed, though the answer will ultimately be inpatient or outpatient, it is not always an obvious answer.

The Comprehensive Error Rate Testing (CERT) Program is used to calculate the improper payment estimate for the Medicare Fee-for-Service Program. Each November, the Department of Health and Human Services (HHS) publishes the improper payment rate in the Agency Financial Report at www.hhs.gov/afr. CMS later publishes more detailed information in an annual Medicare Fee-for-Service (FFS) Improper Payments Report and Appendices. This article will focus on why patient status for zero and one day lengths of stay remains a focus, who is keeping a close eye on this dilemma and resources for you to help assess this patient population in your hospital.

Why Zero and One Day Inpatient Lengths of Stay Continues to be a Focus?

“Are you and Inpatient or Outpatient” still being a question for zero and 1 midnight hospitalizations is best demonstrated in the Appendices table Projected Improper Payments by Length of Stay. This table was new to the Appendices in 2014 and again appears in the 2015 report. Depicted below is a compare of data from the 2014 table and 2015 table. While the improper payment rate dropped 9.3% it is this group of claims that continue to have the highest error ate.

Table 1: “Projected Improper Payments by Length of Stay” 2014 to 2015 Compare

‍Who is Monitoring for Compliance with Patient Status Assignment?

Beneficiary and Family Centered Care (BFCC) QIOs and Recovery Auditors

HHS indicated in the FY 2015 Agency Financial Report that they are committed to reducing improper payments in the Medicare FFS program. One of the five corrective actions they believe will have a considerable effect in preventing and reducing improper payments is the update to the “Two Midnight” rule in the CY 2016 OPPS Final Rule. At the same time they announced the following two changes in their education and enforcement strategies.

• “Beginning on October 1, 2015, the Quality Improvement Organizations (QIOs) assumed responsibility to conduct initial patient status review of providers to determine the appropriateness of Part A payment for short stay inpatient hospital claims. From October 1, 2015 through December 31, 2015, short stay inpatient hospital reviews conducted by the QIOs will be based on Medicare’s current payment policies.
• Beginning on January 1, 2016, QIOs and Recovery Audit Contractors (RACs) will conduct patient status reviews in accordance with policy changes finalized in the Hospital Outpatient Prospective Payment System rule (CMS-1613-P) and effective in calendar year 2016. Effective January 1, 2016, RACs may conduct patient status reviews only for those providers that have been referred by the QIO as exhibiting persistent noncompliance with Medicare payment policies.”

To learn more about the transition of patient status reviews, you can:

• Read a related article at http://www.mmplusinc.com/news-articles/item/two-midnight-rule-once-again-to-be-or-not-to-be;or
• Join us for our 2016 Medicare Updates Webinar tomorrow afternoon.

Office of Inspector General

• FY 2014 and 2015 Work Plans: Inpatient Admission Criteria (OEI; 00-00-00000)

With the implementation of the “Two Midnight” Rule, the OIG added new inpatient admission criteria to the Work Plan in FY 2014 and 2015. This issue was focused on determining the impact of the new admission criteria on hospital billing, Medicare payments, and beneficiary payments. It also was focused on determining how billing varied among hospitals in FY 2014. This focus was based on the fact that “previous OIG work identified millions of dollars in overpayments to hospitals for short inpatient stays that should have been billed as outpatient stays. Beginning in FY 2014, new criteria state that physicians should admit for inpatient care those beneficiaries who are expected to need at least 2 nights of hospital care (known as the “two midnight policy””). Beneficiaries whose care is expected to last fewer than 2 nights should be treated as outpatients. The criteria represent a substantial change in the way hospitals bill for inpatient and outpatient stays.”

• FY 2016 Work Plan: Hospitals’ use of outpatient and inpatient stays under Medicare’s two-midnight rule (OEI; 02-15-00020)

With hospitals now entering into their third fiscal year under the “Two Midnight” Policy, as part of the FY 2016 Work Plan the OIG will “determine how hospitals’ use of outpatient and inpatient stays changed under Medicare’s two-midnight rule, as well as how Medicare and beneficiary payments for these stays changed, by comparing claims for hospital stays in the year prior to the effective date of the two-midnight rule to stays in the year following the effective date of that rule. We will also determine the extent to which the use of outpatient and inpatient stays varied among hospitals. CMS implemented the two-midnight rule on October 1, 2013. This rule represents a substantial change to the criteria that hospital physicians are expected to use when deciding whether to admit beneficiaries as inpatients or treat them as outpatients.”

Hospital Zero and One Day Inpatient Stay Volume

The CERT, OIG, BFCC-QIOs and potentially the Recovery Auditors are monitoring hospital’s compliance with the “Two-Midnight” policy by auditing zero and one midnight inpatient claims. But, do you know how this specific patient volume has changed where you work?

PEPPER Report

One source available to IPPS Participating Hospitals is the Program for Evaluating Payment Patterns Electronic Report (PEPPER). In the PEPPER User’s Guide, the OIG encourages hospitals to develop and implement a compliance program and conduct regular audits as a part of this program to ensure charges for Medicare services have been correctly documented and billed. They note that the PEPPER “can help guide the hospital’s auditing and monitoring activities.”

This report focuses on Medicare severity diagnosis related groups (DRGs) and discharges at risk for improper payment due to billing, coding and/or admission necessity.” One-day and Same-day Stays for Medical and Surgical DRGs are target areas in the report. A hospital is compared to its state, Medicare Administrative Contractor (MAC) Jurisdiction and the Nation for each target area.

The tables below compare the Nationals, J-J MAC Jurisdiction (Alabama, Georgia and Tennessee) and Alabama’s 80th Percentile for the 3rd quarter (April – June) of the Fiscal Year prior to implementation of the “Two-Midnight” Policy (2013), one year after implementation (2014) and the most current 3rd quarter fiscal year data (2015).

The PEPPER provides the following suggested interventions for Hospitals that are High Outliers:

“This could indicate that there are unnecessary admissions related to inappropriate use of admission screening criteria or outpatient observation. A sample of same- and/or one-day stay cases should be reviewed to determine if inpatient admission was necessary or if care could have been provided more efficiently on an outpatient basis (e.g., outpatient observation). Hospitals may generate data profiles to identify same- and/or one-day stays sorted by DRG, physician or admission source to assist in identification of any patterns related to same- and/or one-day stays. Hospitals may also wish to identify whether patients admitted for same- and/or one- day stays were treated in outpatient, outpatient observation or the emergency department for one or more nights prior to the inpatient admission. Hospitals should not review same- and/or one- day stays that are associated with procedures designated by CMS as “inpatient only.”

RealTime Medicare Data

Another source that can assist you is our sister company RealTime Medicare Data (RTMD). RTMD collects over 680 million Medicare claims annually from 23 states and the District of Columbia, and allows for searching of over 5.1 billion historical claims. In response to the “Two-Midnight” Policy, RTMD has available in their suite of Inpatient Hospital reports a One Day Stay Report. This report enables a hospital to view one day stay paid claims data by DRG and Physician to direct where audits should be focused. For further information on all that RTMD has to offer you can visit their website at www.rtmd.org.

Resources

Department of Health and Human Services Fiscal Year 2015 Agency Financial Report: http://www.hhs.gov/afr/fy-2015-hhs-agency-financial-report.pdf

The Supplementary Appendices for the Medicare Fee-for-Services 2015 Improper Payments Report: https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/CERT-Reports-Items/Downloads/AppendicesMedicareFee-for-Service2015ImproperPaymentsReport.pdf

FY 2016 OIG Work Plan: http://oig.hhs.gov/reports-and-publications/archives/workplan/2016/oig-work-plan-2016.pdf

Short-term Acute Care Program for Evaluating Payment Patterns Electronic Report User’s Guide 18th Edition: https://www.pepperresources.org/Portals/0/Documents/PEPPER/ST/STPEPPERUsersGuide_Edition18.pdf

New “Exception” to the 2-Midnight Rule

Just 40 days prior to the 2014 Final Rule going into effect we released an article titled Inpatient Status: To Be or Not to Be, That is the Question. Since that time, through sub-regulatory guidance CMS has indicated that there may be “unforeseen circumstances” or “exceptions” where even though a beneficiary’s stay is not 2-Midnights that inpatient may still be appropriate.

• CMS defines “unforeseen circumstances” as when a beneficiary’s stay is shorter than the physician’s expectation of at least 2 midnights and “the patient may still be considered to be appropriately treated on an inpatient basis for payment purposes, and the hospital inpatient payment may be made under Medicare Part A.” Examples provided by CMS include unforeseen: death, transfer to another hospital, departure against medical advice, clinical improvement, and election of hospice care in lieu of continued treatment in the hospital.
• CMS has also acknowledged that there is the possibility of an “exception” to the 2-Midnight Rule where an inpatient admission would be reasonable in the absence of an expectation of a 2 midnight stay. Prior to the CY 2016 Outpatient Prospective Payment (OPPS) Final Rule, CMS had only identified one “exception.” The exception is mechanical ventilation initiated during the present visit.

CMS finalized a second “exception” to the 2-Midnight Rule in the CY 2016 OPPS Final Rule released October 30, 2015. CMS indicated in the Final Rule that “after consideration of the public comments we received, we are finalizing, without modification, our proposal to revise our previous “rare and unusual” exceptions policy to allow for Medicare Part A payment on a case-by-case basis for inpatient admissions that do not satisfy the 2-midnight benchmark, if the documentation in the medical record supports the admitting physician’s determination that the patient requires inpatient hospital care despite an expected length of stay that is less than 2 midnights.”

Challenge for Hospitals

With this new “exception,” to be or not to be an inpatient continues to be the question. Unfortunately, CMS provides no examples of what they would consider to be such an exception. What we do know is this:

• Records will be considered on a case-by-case basis.
• Documentation in medical records must support the admitting physician’s determination that the patient required inpatient hospital care absent the expectation of a 2-Midnight stay.
• CMS has indicated that factors relevant to determining whether or not the inpatient stay would be nonetheless appropriate for Part A payment include:
• The severity of the signs and symptoms exhibited by the patient;
• The medical predictability of something adverse happening to the patient; and
• The need for diagnostic studies that appropriately are outpatient services, that is, their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more).
• One final challenge is making sure you have an appropriately authenticated inpatient order in the record prior to the patient being discharged.

1-Day Short Stay Hospital Volumes

From the implementation of the 2-Midnight Rule through September 30, 2015 short-stay reviews have been a review focus of Medicare Administrative Contractors (MACs) through the Probe and Educate Program. As of October 1, 2015 the short-stay review responsibility has shifted to the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations (QIOs). But before I get ahead of myself, let’s look at the numbers.

Has the implementation of the 2-Midnight Rule impacted the volume of 1-Day short stays?

To answer this question, I needed to ask two more questions.  

• Has there been a significant difference in 1-day stays prior to the implementation of the 2-Midnight Rule vs. after October 1, 2013?
• What is the percentage of 1-day short stays compared to a hospital’s total inpatient volume for our client base?

To find answers, I looked to our sister company RealTime Medicare Data (RTMD). RTMD collects over 680 million Medicare claims annually from 23 states and the District of Columbia, and allows for searching of over 5.1 billion historical claims. By accessing this data base I analyzed 1-Day Short Stay paid claims data for several hospitals within the MMP footprint. Specifically, I chose 1-day short stay claims with dates of service January 1, 2013 through June 30, 2013 which pre-dated implementation of the 2-Midnight Rule and January 1, 2015 through June 30, 2015 to compare the same six months after implementation of the 2-Midnight Rule. What I found was that while not all hospitals realized a decrease in 1-day stays, collectively there was a 2.87% decrease in 1-Day Short Stays compared to overall inpatient volume as depicted in Table 1.

Table 1

 I do not believe there should be a 1-Day Stay volume benchmark for all hospitals to strive for. I do believe that if physician documentation in your medical records supports the need for an inpatient admission, then the volume of 1-day short stays at your hospital will be what it should be. On the other hand, if you are an outlier above or below an “average” this may be a reason to take a closer look at these claims.

Medical Review Responsibility Change effective October 1, 2015

As previously mentioned, the BFCC-QIO’s have assumed responsibility for the short-inpatient stay medical review process. This transition, while outlined in the CY 2016 OPPS Proposed Rule, was not a proposal and subsequently occurred October 1, 2015.

CMS indicated in the CY 2016 OPPS Final Rule that “Under the new short-stay inpatient medical review process that we adopted beginning on October 1, 2015, BFCC-QIOs began to transition to reviewing a sample of post-payment claims and making a determination of the medical appropriateness of the admission as an inpatient.

QIOs will conduct “Revised Determination Reviews” (42 CFR 405.980) on hospital short-stay Medicare Part A claims. QIOs will conduct patient status reviews to determine the appropriateness of Medicare Part A payment for these short-stay inpatient hospital admissions, in accordance with section 1862(a)(1)(A) of the Act. In conducting these reviews, QIOs will use the information documented in the patient’s medical record, and may use evidence-based guidelines and other relevant clinical decision support materials as components of their review activity (we refer readers to 42 CFR 476.100 relating to setting standards for QIO reviews).

Comment: Several commenters stated the need for transparency and for more detailed information regarding the types of claims that would be subject to QIO review, claim sample sizes, the frequency of reviews, the claim look back periods, ADR limits, and administrative burden.

Response: We will address the technical medical review questions posed by commenters in subregulatory guidance.

We expect to release this information on the CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityImprovementOrgs/index.html?redirect=/qualityimprovementorgs/, no later than December 31, 2015.”

There are five BFCC-QIO Service Areas in the country. Most of the MMP footprint is located in an area where KEPRO is the BFCC-QIO. On September 30, 2015 KEPRO provided a Two-Midnight Short-Stay Reviews webinar. Short-stay review guidance provided in this session is outlined in Table 2.

Table 2

Resources

• Link to display copy of the CY 2016 OPPS Final Rule: https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-27943.pdf

• Link to CY 2016 OPPS Final Rule in the November 13, 2015 Federal Register:http://www.gpo.gov/fdsys/pkg/FR-2015-11-13/pdf/2015-27943.pdf

• Link to KEPRO Two-Midnight Short-Stay Reviews webpage: https://www.keproqio.com/twomidnight/Default.aspx

A standard circus act throughout time has been jumping through hoops – little dogs with bows and skirts jump through hoops; growling lions and tigers jump through hoops; even people jump through flaming hoops. There is a new “act” in town and it too requires jumping through hoops.

The NOTICE Act

On August 6, 2015, President Obama signed into law the NOTICE Act (Notice of Observation Treatment and Implication for Care Eligibility Act). The NOTICE Act requires hospitals to:

• Provide written and oral notification to patients when they have received observation services for more than 24 hours.
• Notification must be done within 36 hours from the beginning of observation services or at the time of discharge, whichever is first.
• The notice must explain the patient’s status (outpatient with observation services) and the reasons for the outpatient with obs status as opposed to being admitted as an inpatient.
• The notice must also explain the implications of that status for cost-sharing requirements and for subsequent eligibility for coverage of services furnished by a skilled nursing facility.
• The notice must be “written and formatted using plain language and made available in appropriate languages.”
• The patient or their representative must acknowledge receipt of the notice with their signature, or the annotation and signature of the presenter if the patient refuses to sign.
• Hospitals have one year – until August 2016 – to implement this requirement.

CMS may provide additional guidance on the format and requirements for the notice prior to the implementation date. For example, what constitutes “appropriate languages?”

What This Means for Hospitals and Patients

If hospitals are applying the two-midnight inpatient admission rule correctly, the volume of patients receiving observation services for more than 24 hours without subsequently being converted to inpatient status should be low. Remember if a patient requires medically necessary services beyond a second midnight, Medicare regulations state that the patient should be admitted as an inpatient. Patients who no longer require medically necessary services but remain in the hospital for convenience reasons do not meet the criteria for observation services, so observation hours should no longer be charged. Here is one shortcoming of the new law – it does not address patients in an extended outpatient “without observation” status. An Advance Beneficiary Notice (ABN) can be given to these patients who no longer require medically necessary treatment in the hospital setting but remain in an extended outpatient status if the hospital continues to charge for hourly services.

Several states including Connecticut, Maryland, New York, Pennsylvania and Virginia, already require hospitals to give patients notices about observation care and some hospitals in other states are voluntarily providing notices to patients concerning their status. Hospitals have a whole year to develop a process for implementing this requirement – whether it is to modify their current notification process or come up with a new process.

One purpose of the notice is to explain “cost-sharing” – that is the patient’s financial responsibility of outpatient status with observation versus inpatient status. It would be rare that the patient’s deductible and co-pay for observation care would exceed the inpatient deductible of $1,260. The outpatient deductible is only $147 per year for all Part B services and hospital outpatient co-pay is around 20% of the observation payment (proposed to be " $2,100 for 2016) and other separately payable services. If the 2016 OPPS proposal for a comprehensive observation payment goes forward, all adjunctive services provided during the outpatient with observation stay are bundled into the observation payment. Patients in an outpatient hospital stay are also responsible for self-administered drugs but again it is unlikely that the combined outpatient cost-sharing will exceed the inpatient deductible amount. The one exception is for patients who do not have Part B coverage – these patients would be responsible for the cost for the total outpatient care. As opposed to the Important Message from Medicare for inpatient admissions, under this Observation Notice patients do not have any appeal rights – their only options if they are concerned about their costs are to try to sway their physician to admit them or leave the hospital.

It is also unlikely that a patient receiving only outpatient with observation services for greater than 24 hours would be a candidate for a skilled nursing facility (SNF) admission – another notification requirement of the act. Medicare beneficiaries must have a qualifying three-day inpatient stay to qualify for Medicare benefits for a SNF admission. In the days prior to the two-midnight rule, it was not unusual to have patients with extended observation stays of 3 days or longer that were not eligible for Medicare coverage of a SNF admission. The more likely scenario now, post-two-midnight rule, is that patients receiving observation services will be converted to an inpatient status for hospital care prior to being transferred to a SNF. The problem here, not addressed by the new law, is whether the post-observation care inpatient admission lasts for three days, enough to qualify for the SNF admission.

So hospitals are left with another hoop to jump through that, although well-intentioned, may fall short on protecting the patient.

The 2014 IPPS Final Rule placed a significant burden on hospitals by requiring that a Physician Certification be completed on ALL Medicare inpatient admissions. In their effort to achieve “policy goals with the minimum administrative requirement necessary,” CMS finalized the 2015 OPPS proposed changes to the physician certification process that only requires physician certification for long-stay and outlier cases.

Implications for Hospitals:

• The physician certification change does not change the fact that there must be a signed inpatient order prior to a beneficiary being discharged as a hospital Condition of Participation (CoP) & a requirement for payment for Medicare Part A Services.
• Physician documentation in the medical record (e.g., History & Physical, MD Progress Notes and Physician Orders) still must support the medical necessity for hospital care that is expected to span at least two midnights.

• For Medicare beneficiaries that reach a 20 day length of stay it will be important to make sure that the “physician certifies or recertifies the following:

1. (1)The reasons for either –
2. (i)Continued hospitalization of the patient for medical treatment or medically required diagnostic study; or
3. (ii)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. (2)The estimated time the patient will need to remain in the hospital.
5. (3)The plans for posthospital care, if appropriate.’

• The physician certification continues to be a requirement until January 1, 2015 and must include the following:
• Authentication of the Practitioner order prior to the beneficiary being discharged,
• The reason for inpatient services,
• The estimated time that the patient will require as an inpatient; and
• The plans for hospital care.

Final Rule Comments and Responses

• Comment: CMS indicates that several commenters “continued to disagree that CMS has the statutory authority to require signed admission orders for all inpatient cases.”
  
  Commenters further “argued that the continued requirement for admission orders is essentially the same as the certification requirement and stated that section 1814(a)(2) of the Act is explicit in requiring physician certification only for services “furnished over a period of time” and not for all services.”
  
  Response: Not surprising, CMS disagrees noting that, “While the inpatient admission order was a required component of the physician certification under our previous policy, the order and the physician certification do not serve identical policy goals under our proposal, which we are now finalizing. For all cases, a properly authorized and documented admission order is necessary because the admission order is integral to a clear regulatory definition of when and how a beneficiary becomes an inpatient.”

• Comment: There were also several commenters that requested that the timing of a signed admission order be by the time of billing as is permitted for Critical Access Hospitals (CAHs).
  
  Response: Again, not surprising, CMS disagrees and indicates that “we believe that, in most cases, matters relating to the determination of patient status should be resolved before discharge, due to the consequences that flow from such a determination. For example, whether services are billed under Medicare Part A or Part B can have a significant impact on a beneficiary’s financial liability. Therefore, we do not believe it is appropriate to change our existing policy which requires that inpatient orders be signed prior to discharge by a practitioner familiar with the case and authorized by the hospital to admit inpatients.”

• Comment: Several commenters also requested additional guidance around the required content and format of the physician certification statement.
  
  Response: CMS reiterates in the Final Rule that “the physician certification requirements at § 424.13 generally may be satisfied by elements routinely found in a patient’s medical record, such as progress notes. CMS does not require that a physician certification comply with a specific standard or format--only that it ensures that the conditions at § 424.13(a) were met. If the medical record adequately describes the reasons for continued hospitalization, the estimated time the patient is expected to require inpatient care, and discharge planning (where appropriate), and the medical record is signed by a physician involved with and responsible for the patient’s care, this would satisfy certification requirements.”

Final Rule

“We are finalizing the policy as proposed in the CY 2015 OPPS/ASC proposed rule, which limits the requirement for physician certification to long-stay (20 days or longer) and outlier cases”

“We are also are finalizing our proposed revision of paragraph (b) of § 424.13, without modification, to specify that certifications for long-stay cases must be furnished no later than 20 days into the hospital stay.”

For those interested, the Revision of the Requirements for Physician Certification of Hospital Inpatient Services Other Than Psychiatric Inpatient Services can be found on pages 901-912 of the Display Copy of the Final Rule.

Link to the Display Copy of the Final Rule: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1613-FC.html?DLPage=1&DLSort=2&DLSortDir=descending

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.

Some things change…, some things don’t… Although a lot changed last year with the Medicare standard for inpatient admission, the fact that all Medicare services must be reasonable and necessary did not change. In fact, this is part of the law upon which the Medicare program is founded.

A recent Palmetto GBA article emphasizes that inpatient services must still be medically necessary for Medicare coverage in addition to meeting the two-midnight expectation. As the article points out, this is a standard from the original Social Security Act that created Medicare, which in section 1862 states:

"…no payment may be made under part A or part B for any expenses incurred for items or services - which, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member…"

The article goes on to quote numerous other references concerning the continuing requirement for medical necessity in regards to the new admission standard from Rule 1599-F itself and the ensuing CMS guidance. So let’s look at the issue of medical necessity as it relates to the determination of patient status and the need for services to be provided in a hospital setting.

The medical necessity of the services (for the diagnosis or treatment of an illness or injury) should be considered first and foremost for every patient encounter without regard initially to the patient’s status. Does the patient need these services to diagnosis or treat a medical condition? Are the services being provided in the appropriate setting? If the services are reasonable and necessary for the patient’s medical condition and being provided at the correct location for those services, then you can move on to determining the appropriate patient status.

Diagnostic services or short-term treatments that a patient may receive and then return home are generally outpatient services – this includes lab, radiology, and other diagnostic testing; clinic visits; short-term emergency services; and same day surgery services. These services include routine preparation and recovery times. Occasionally, routine recovery for some surgeries and procedures may last overnight, but if this is expected and routine for all patients and the patient is expected to go home after recovery, an outpatient status is still appropriate.

Some patients need extended medically necessary services in a hospital setting. This may include diagnostic testing, observation of the patient’s condition, or procedures or treatments that can only be rendered in a hospital setting. If the care the patient is receiving is custodial in nature, rendered for social purposes, or for reasons of convenience, then the care does not meet Medicare’s definition of medically necessary and is not covered by Medicare. Examples of this would be patients waiting on a ride home after an outpatient encounter or patients in the hospital to receive prep for a diagnostic test because they are unable to do the prep at home. Commercial criteria for patient care (inpatient and observation services), such as InterQual and Milliman, may assist in determining if the care is appropriate to be provided in a hospital setting. Note that this is still not a determination of patient status – that is the next step after determining that the care is medically necessary.

Once it has been established that the patient is receiving medically necessary care in the appropriate hospital setting, then it is time to determine the appropriate status using the new two-midnight expectation.

• If the physician does not think the patient will require treatment beyond two midnights or is not sure, then it is likely that observation services are appropriate. In order to bill for observation hours, there must be a physician’s order for observation. This observation care meets the longstanding Medicare definition of observation services as those “services, which include ongoing short term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.”
• If the physician expects the patient to require hospital care beyond two midnights, then inpatient status is appropriate. The documentation in the record needs to clearly support the physician’s expectation for care beyond two midnights. If for some reason, the care does not actually last beyond the second midnight, inpatient status is still appropriate as long as the original expectation was reasonable, based on the patient’s condition and the plan of care. However, the record should clearly document what happened that resulted in a “shorter-than-expected” stay whether it was a transfer to another hospital, a patient that left AMA, or an unexpectedly rapid recovery.

Under the new admission guidelines, observation care should not continue past a second midnight. If hospital care beyond the second midnight is not medically necessary, then observation care is not appropriate either. If the care is being provided for convenience or social purposes, it is not a covered Medicare service. The patient needs to be in an outpatient status and only services that are medically necessary should be charged. If hospital care beyond a second midnight is medically necessary, then the patient meets the criteria for inpatient admission and an inpatient order should be written prior to the second midnight.

Novitas, the MAC for Jurisdictions H and L, presented a teleconference last week on the Two-Midnight Rule and the Probe and Educate program. They reviewed the two-midnight rule and provided scenarios of some common reasons for denials they are seeing under the Probe and Educate reviews. Examples included:

• Documentation did not support that there was an expectation of a two-midnight stay;
• There was not a physician’s order for an inpatient admission and the record did not indicate that a two-midnight stay was expected;
• Two-midnight stay expected but the patient discharged prior to the second midnight and the record failed to indicate the reason for the early discharge.

For more information, please see the Novitas handout and Resources for the teleconference.

Determining coverage of services and patient status is a two-step process: first, determine if the services are medically necessary and then second, apply the two-midnight expectation to determine the correct patient status.

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.

On April 1st, President Obama signed into law the Protecting Access to Medicare Act of 2014. Per a White House Press Secretary release this new law “averts cuts to Medicare physician payments that will go into effect on April 1, 2014, under the current-law “sustainable growth rate” system, to extend other health-related provisions set to expire, and to make other changes to current-law health provisions.” In addition to averting cuts to physician payments, this law includes additional “Medicare Extenders” and “Other Health Provisions.” But before looking at some of the more significant topics within the law, it is interesting to note how quickly this bill was presented, voted on and became law.

• March 26, 2014: Representative Joe Pitts (R-PA), Chairman, Energy and Commerce Subcommittee on Health introduced H.R. 4302 the Protecting Access to Medicare Act of 2014.
• March 27, 2014: The House voted by a voice vote and approved the bill. This vote was under special rules that provided for no amendments, limited debate and only needed a two-thirds majority votes.
• March 31, 2014: The United States Senate passed the bill with a vote of 64 YEAs, 35 NAYs and 1 Not Voting.

April 1, 2014: The Act was signed into law by President Obama signed the Protecting Access to Medicare Act of 2014 into Law.

Spotlight on Extensions and Health Provisions in the Law:

Section 101: Physician Payment Update: This section provides for a 0.5 percent update for claims with dates of service on or after January 1, 2014, through December 31, 2013. Further, it provides a zero percent update to the 2015 Medicare Physician Fee Schedule (MPFS) through March 31, 2015.

Section 103: Extension of Therapy Cap Exception Process: This section extends the exceptions process for outpatient therapy caps through March 31, 2015. When a provider requests an exception to the cap for medically necessary services they must submit the KX modifier on their claim. This law extends the application of the caps, exceptions process, and threshold for therapy services provided in a hospital outpatient department (ODP).

Therapy caps for 2014:

• Occupational Therapy (OT) cap is $1,920
• Physical Therapy (PT) and Speech-Language Pathology Services (SLP) combined is $1,920

Additional information regarding therapy caps can be found on the CMS Therapy Cap webpage as well as Chapter 5, Section 10.3 in the Medicare Claims Processing Manual.

Section 106: Extension of the Medicare-Dependent Hospital (MDH) Program: This program provides enhanced payment to small rural hospitals where Medicare beneficiaries makes up a significant percentage of inpatient days or discharges. This provision extends the program through March 31, 2015.

More information about MDH Hospitals can be found in the Acute Care Hospital Inpatient Prospective Payment System Fact Sheet. Specific criteria to be designated a MDH Hospital includes:

• It is rural (located in a rural area);
• It has 100 or fewer beds during the cost reporting period;
• It is not also classified as a Sole Community Hospital (SCH); and
• At least 60 percent of its inpatient days or discharges were attributable to Medicare Beneficiaries entitled to Part A during the hospital’s cost reporting period.

Section 111: Extension of Two-Midnight Rule:

For hospital staff closely involved in trying to implement the Two-Midnight Rule, I felt it was important to provide you with the exact language in the bill.

“(a) CONTINUATION OF CERTAIN MEDICAL REVIEW ACTIVITIES.— The Secretary of Health and Human Services may continue medical review activities described in the notice entitled ‘‘Selecting Hospital

Claims for Patient Status Reviews: Admissions On or After October 1, 2013’’, posted on the Internet website of the Centers for Medicare & Medicaid Services, through the first 6 months of fiscal year

2015 for such additional hospital claims as the Secretary determines appropriate. (b) LIMITATION.—The Secretary of Health and Human Services shall not conduct patient status reviews (as described in such notice) on a post-payment review basis through recovery audit contractors under section 1893(h) of the Social Security Act (42 U.S.C. 1395ddd(h)) for inpatient claims with dates of admission October 1, 2013, through March 31, 2015, unless there is evidence of systematic gaming, fraud, abuse, or delays in the provision of care by a provider of services (as defined in section 1861(u) of such Act (42 U.S.C. 1395x(u))).”

What does this mean for hospitals?

• The Medicare Administrative Contractor (MAC) Probe and Educate program has now been extended for a fourth time through March 31, 2015.
• Recovery Audit Contractors “shall not conduct patient status reviews on a post-payment review basis” for inpatient claims with dates of service October 1, 2013 through March 31, 2015. It is important to remember that on February 18th CMS announced that current RAC activity is winding down during the new contract procurement round.
• Hospitals should take advantage of this additional time to continue to educate staff and fine tune your processes.

Section 212: Delay in Transition for ICD-9 to ICD-10 Code Sets

“The Secretary of Health and Human Services may not, prior to October 1, 2015, adopt ICD–10 code sets as the standard for code sets under section 1173(c) of the Social Security Act (42 U.S.C. 1320d–2(c)) and section 162.1002 of title 45, Code of Federal Regulations.”

This is a significant delay for everyone that has been proactively planning and providing education for an October 1, 2014 transition to the ICD-10 Code Sets. MMP plans to continue to provide I-10 Corner articles and encourages all to not look at this as a setback but as an opportunity to provide more training to your staff and test the readiness of your computer systems.

Section 221: Medicaid DSH

This law delays reductions in payments to Disproportionate Share Hospitals (DSH) by a year and then makes additional reductions through 2024.

There are still quite a few extensions and provisions not discussed in this article. MMP encourages those interested to review the Protecting Access to Medicare Act of 2014 in its entirety.

With the major changes to Medicare’s inpatient admission requirements, trying to keep up with all the nuances of the rules and education efforts is like trying to juggle bowling balls. The Probe and Educate Review Process is replacing most previous Medicare Administrative Contractor (MAC) reviews, so this article addresses some questions concerning this process. If you have other questions, please refer to the resources listed at the end of this article or send me an email.

What is the purpose of the Probe and Educate Review Process?

The Probe and Educate Review Process is a focused prepayment medical review strategy for MACs designed to ensure provider understanding of the new two-midnight benchmark for determining the necessity of an inpatient admission (42 CFR 412.3) and to provide responsive provider-specific education, as necessary, to correct improper payments.

How long will the Probe and Educate Review Process last?

At the end of January, CMS decided to extend the Probe and Educate Review Process through September 30, 2014.

Will the MAC actually deny inpatient claims for not meeting the new inpatient criteria (2 midnight benchmark) during the Probe and Educate program?

Yes, claims that do not meet the two-midnight benchmark for an appropriate inpatient admission will be denied. Because the probe reviews will be conducted on a prepayment basis, hospitals can rebill for medically reasonable and necessary Part B inpatient services provided during denied Part A inpatient hospital stays provided the denial is on the basis that the inpatient admission was not reasonable and necessary. Hospitals may rebill for Part B inpatient services in accordance with Medicare Part B payment rules and regulations.

Will other Medicare review contractors be allowed to audit records for the medical necessity of inpatient admission?

No, Recovery Auditors and other Medicare review contractors will not conduct post-payment patient status reviews of inpatient hospital claims with dates of admission on or after October 1, 2013 through October 1, 2014.  

What types of inpatient claims will be selected for review by the MACs under the Probe and Educate Review Process?

MACs will select Medicare Part A inpatient claims spanning 0 to 1 midnight after formal inpatient admission.

Will claims containing inpatient-only procedures with stays less than 2 midnights be included in the Probe and Educate reviews?

No. However, CMS indicated on the last Special Open Door Forum concerning the new 2-midnight rule, that the contractors are not able to easily identify inpatient only procedure admissions up front. These claims may be initially selected for review, but will be released for payment when the MAC determines it was an inpatient–only procedure.

How many claims can a hospital expect to be selected for review?

MACs will initially select 10-25 records per hospital (25 for large hospitals, although “large” has not been defined). If a hospital has more than 1 error in a 10 record sample or more than 2 errors in a 25 record sample, after a three month education period, a repeat Probe & Educate sample of 10-25 records will be selected. Continuing problems of major concerns (7/10 or 14/25 errors) after a second three month education period could result in a third sample of 100-250 records for that hospital.

How will I be notified of the request for records for the Probe and Educate Review Process?

Providers will receive additional development requests (ADR) through the normal process. Providers that have claims selected for prepayment review may receive an ADR letter through the mail or will receive an ADR notice via the Fiscal Intermediary Standard System (FISS). Providers should monitor the Fiscal Intermediary Standard System (FISS) for claim status instead of seeking hard copy request for ADRs.

The MACs have published announcements on the Probe and Educate program; some include specific information on the ADR edits; for example Cahaba GBA 2-midnight ADR information, Novitas Probe and Educate information, and Palmetto Probe Reviews.

What elements will the MAC be looking for in the inpatient record for the Probe and Educate Review Process?

MACs will assess the hospital’s compliance with three things:

1. the admission order requirements,
2. the certification requirements, and
3. the 2-midnight benchmark

Will I be notified of the results of the reviews and if so, how?

Yes. MACs will send detailed results letters to providers for both denials and reviews with no findings.

Can the MAC and other Medicare Review Contractors audit inpatient claims for issues other than the medical necessity of the inpatient admission?

Yes. Medicare review contractors may review claims to ensure the services provided during the inpatient stay were reasonable and necessary in the treatment of the beneficiary, to ensure accurate coding and documentation, and may conduct other reviews as dictated by CMS and/or another authoritative governmental agency.

CMS will also monitor provider billing trends for variances indicative of abuse, gaming, or systematic delays in the submission of claims, for the purpose of avoiding the MAC prepayment probe audits during this initial probe and educate period.  Any evidence of systematic gaming, abuse or delays in the provision of care in an attempt to receive the 2-midnight presumption could warrant medical review.

Where can I obtain additional information about the Probe and Educate Review Process?

• Inpatient Hospital Reviews webpage
• See the following downloads at the bottom of this page:
• Questions and Answers Relating to Patient Status Reviews
• Selecting Hospital Claims for Patient Status Reviews
• Reviewing Hospital Claims for Patient Status
• MLN Matters Article SE1403
• Also check your local MAC’s website