Knowledge Base Category -

Is your hospital continuing to struggle to comply with Final Rule CMS-1599-F that went into effect on October 1, 2013? Are you still seeking any and all of the additional information that you can find to help comply with the new rules? If the answer is yes, you are not alone.

In the past couple of weeks CMS has been busy providing additional guidance. First, was the release of MLN Matters® Number: MM8586. This article provides guidance for the new use of Occurrence Span Code 72 to identify outpatient time associated with an inpatient hospital admission. Next, they posted updated guidance regarding the Hospital Inpatient Admission Order and Certification and an updated Reviewing Hospital Claims for Patient Status download to their Inpatient Hospital Review webpage. They also held yet another “Special Open Door Forum” (ODF) to discuss the Hospital Inpatient Admission Order and Certification; 2 Midnight Benchmark for Inpatient Hospital Admissions on February 4th.

As the question and answer portion of the ODF became more of a question being asked and CMS requesting that you submit that question to IPPSAdmissions@cms.hhs.gov, it became apparent that no big “aha” moments were going to be happening. It was at this point that all I could think about was the chorus to the Sonny and Cher 1967 hit song The Beat Goes On. For those old enough to remember this one sing along:

“The beat goes on, the beat goes on

Drums keep pounding

A rhythm to the brain

La de da de de, la de da de da.”

Now that this song is firmly stuck in your head, let’s take a look at the new and updated guidance from CMS.

Occurrence Span Code 72; Identification of Outpatient Time Associated with an Inpatient Hospital Admission and Inpatient Claim Payment:MLN Matters(R) Number: MM8586

Effective Date: December 1, 2013

Implementation Date: February 24, 2014

Why is this being implemented?

• “The redefinition of occurrence span code 72 allows providers to voluntarily identify those claims in which the 2-midnight benchmark was met because the beneficiary was treated as an outpatient in the hospital prior to the formal inpatient admission order. In other words, it permits providers and subsequently review contractors to identify the “contiguous outpatient hospital services (midnights) that preceded the inpatient admission,” as well as the total number of midnights after formal inpatient order and admission, on the face of the claim.”

Hospital Inpatient Admission Order and Certification (January 30, 2014)

CMS’s attempt to clarify the September 5th Guidance fell a little short. However, there were a few key pieces of information to point out to you.

• If you have a Medicare beneficiary waiting on a skilled nursing facility (SNF) bed, CMS indicates that “a beneficiary who is already appropriately an inpatient can be kept in the hospital as an inpatient if the only reason they remain in the hospital is they are waiting for a post-acute SNF bed. The physician may certify the need for continued inpatient admission on this basis.”
• Residents, non-physician practitioners and ED physicians who do not have admitting privileges can make the initial admission decision. “In countersigning the order, the ordering practitioner approves and accepts responsibility for the admission decision.” This counter-signature would “satisfy the order part of the physician certification, as long as the ordering practitioner also meets the requirements for a certifying physician.”
• “If the physician or other practitioner responsible for countersigning an initial order or verbal order does not agree that inpatient admission was appropriate or valid (including an unauthorized verbal order), he or she should not countersign the order and the beneficiary is not considered an inpatient. The hospital stay may be billed to Part A as a hospital outpatient encounter.”

The entire update can be found at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order-01-30-14.pdf

Highlights from the February 4, 2014 Special Open Door Forum

• CMS has extended the MAC Probe and Educate Period through September 30, 2014. CMS verified (at a caller’s request) that they have not cancelled or delayed the implementation of the new rule.
• In response to a question about whether or not there had to be a statement indicating the expected length of stay in the record, CMS indicated that there are no “magical words” that need to appear saying the physician certifies the stay. CMS would expect to find “regular good documentation” in the record, not a separate “I certify” statement.
• Another caller asked if the MD does not sign a verbal admit order until after the patient is discharged can we bill for anything? CMS responded that as far as the letter of the law you need the order to submit a Part A claim. If the order was not co-signed then you could submit a Part B Outpatient claim (a 13x type of bill).
• One hospital indicated that they were under the impression that they would receive a letter from their MAC after their records had been reviewed under the Probe & Educate program. CMS indicated that they had asked MACs to hold on letters until additional guidance was released regarding the Inpatient Admission Order and Certification. They went on to indicate that this information was released last week and the MACs should no longer be holding letters.

Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013 (Last Updated: 01/31/14)

There were two specific clarifications made to this Guidance that I would like to point out to you. Prior to this update CMS had indicated that “it is not necessary for a beneficiary to meet an inpatient “level of care,” as may be defined by a commercial screening tool, in order for Part A payment to be appropriate.” In this updated version they further indicate that “In addition, meeting an inpatient “level of care,” as may be defined by a commercial screening tool, does not make Part A payment appropriate in the absence of an expected length of stay of 2 or more midnights.” Once again, CMS is making the point that good physician documentation supportive of a 2 or more midnight admission is the key to the decision to admit a patient as an inpatient.

The other clarification is about the documentation that the MACs would expect to find to support the 2-midnight expectation. CMS indicates that “physicians need not include a separate attestation of the expected length of stay; rather, this information may be inferred from the physician’s standard medical documentation, such as his or her plan of care, treatment orders, and physician’s notes.”

National Provider Call: 2-Midnight Benchmark: Discussion of the Hospital Inpatient Admission Order and Certification

CMS is already planning additional education through a National Provider Call on Thursday February 27, 2014 from 2:30 PM – 4:00 PM Eastern Time. The target audience for this call includes hospitals, physicians and non-physician practitioners, case managers, medical and specialty societies, and other healthcare professionals. Topics to be covered in this call are the order and certification guidance with case examples, transfers and a question and answer session.

Registration is open and those interested in participating can sign up at the CMS MLN Connects Upcoming Callsregistration website.

It appears that the truism that best applies with the new regulations and guidance is that “The only constant is change.” MMP continues to be on the lookout for updated guidance and education opportunities to pass along to you so, stay tuned.

The Centers for Medicare and Medicaid Services (CMS) hosted a National Provider Call regarding the 2-Midnight Rule that went into effect on October 1, 2013 with the Fiscal Year (FY) 2014 IPPS Final Rule. For those of you that were unable to attend here is a run-down of 5 key takeaways from the session.

1. CMS is already planning future training sessions for Physician Orders/Certification and Transfers.
2. CMS has acknowledged that there could be times when an inpatient stay would still be appropriate even though an “unforeseen circumstance” occurs and the patient ultimately does not require a 2-Midnight or greater hospitalization. Specific examples from CMS have included patient death, transfer, leaving against medical advice (AMA) or the patient rapidly improving. New to this list is a patient that is admitted, documentation clearly supports a 2-Midnight expectation and the patient / family elect Hospice care and the patient is discharged home to hospice. Key to all of these “unforeseen circumstances” is that documentation in the record clearly supports the physician expectation of a 2-Midnight stay.
3. Effective December 1, 2013, the NUBC redefined Occurrence Span Code 72 to allow “Contiguous outpatient hospital services that preceded the inpatient admission” to be reported on inpatient claims. At this time this is a voluntary code but CMS encourages hospital to use this code.
4. Prior to opening the call up to questions and answers, CMS provided answers to two common questions that they had received prior to this call.
5. Q: How does level of care factor into the 2-Midnight Rule?
6. A: Under the 2014 IPPS Final Rule, the decision to admit is based on medical necessity of hospital care whether it is observation or inpatient care. If the answer is yes then the next question to ask is do you think this patient will be in the hospital for at least 2-Midnights?
7. Q: Can any elective surgeries be ok in Inpatient setting?
8. A: If there is an “unexpected circumstance” requiring 2-Midnights (i.e. a complication) then the stay would be appropriate as an Inpatient admission.
9. During the open Q&A session a question was asked regarding patients staying beyond 2-Midnights and whether or not a hospital would still be able to use InterQual® criteria. CMS responded by indicating that they believe hospitals will not use InterQual® or Milliman. They did go on to indicate that these screening tools could be used to help determine whether a patient should remain in the hospital or is safe for discharge.

The entire slide presentation from this call can be downloaded at http://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/2014-01-14-Midnight-Presentation.pdf

What do Probe Reviews, the start time for when the 2 midnight benchmark begin, Physician Documentation, automatic denials and Occurrence Span Code 72 have in common? All of these issues were addressed in the CMS Frequently Asked Questions (FAQs) December 23, 2013 update. Let’s break it down be each updated FAQ.

Q1.1: “Will CMS direct the Medicare review contractors to apply the 2-midnight presumption-that is, contractors should not select Medicare Part A inpatient claims for review if the inpatient stay spanned 2 midnights from the time of formal admission?”

• Yes, when a patient has been in your hospital for two midnights AFTER the inpatient order was written review contractors are to presume that the Medicare Part A inpatient admission was reasonable and necessary.
• New to this answer is that for inpatient admissions from October 1, 2013 through March 31, 2014 “CMS will not permit Recovery Auditors to conduct patient status reviews on inpatient claims with dates of admission between October 1, 2013 and March 31, 2014. These reviews will be disallowed permanently; that is, the Recovery Auditors will never be allowed to conduct patient status reviews for claims with dates of admission during that time period.”
• Caution: These same admissions CAN be reviewed for other issues (i.e. medical necessity of a surgical procedure or coding validation).

Q2.1: “Can CMS clarify when the 2 midnight benchmark begins for a claim selected for medical review, and how it incorporates outpatient time prior to admission in determining the general appropriateness of the inpatient admission?

• All time that a Medicare beneficiary is receiving outpatient services at the hospital will be considered in whether or not the 2-midnight benchmark was met.
• Note: “The Medicare review contractor will count only medically necessary services responsive to a beneficiary’s clinical presentation as performed by medical personnel.”
• Services to be included: observation services, treatments in the Emergency Department, and procedures provided in the operating room or other treatment area
• Services not to be included: treatment received in an outlying Emergency Department or in an ambulance en-route to your hospital.

Q4.1: “What documentation will Medicare review contractors expect physicians to provide to support that an expectation of a hospital stay spanning 2 or more midnights was reasonable?”

• Physician complex medical decision making: The expectation of a 2-midnight stay “must be supported by complex medical factors such as history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event.”
• Documentation: Medicare review contractors will expect the Physician’s decision making factors to be documented in the physician assessment and plan of care. “CMS does not anticipate that physicians will include a separate attestation of the expected length of stay, but rather that this information may be inferred from the physician’s standard medical documentation, such as his or her plan of care, treatment orders, and physician’s notes.”

Q4.9: “Under the new guidance, will all inpatient stays of less than 2 midnights after formal inpatient admission be automatically denied?”

• Medicare does anticipate that most stays less than 2 midnights would be as an outpatient. However, “because this is based upon the physician’s expectation, as opposed to a retroactive determination based on actual length of stay, we expect to see services payable under Part A in a number of instances for inpatient stays less than 2 total midnights after formal inpatient admission.”
• CMS has provided specific exceptions to the 2-midnight benchmark when inpatient would still be appropriate:
• Beneficiary death,
• Beneficiary transfer to another acute inpatient facility,
• Beneficiary leaving against medical advice (AMA),
• Beneficiary was admitted for a medically necessary service on the Inpatient-Only List,
• Mechanical ventilation initiated during the present visit (Note: is not intended to apply to anticipated intubations related to minor surgical procedures or other treatment),
• Or a Beneficiary unexpectedly improves and was discharged in less than 2 midnights.
• New to this answer: “Lastly, there may be rare and unusual cases where the physician did not expect a stay lasting 2 or more midnights but nonetheless believes inpatient admission was appropriate and documents such circumstance. The MACs are being instructed to deny these claims and to submit these records to CMS Central Office for further review. If CMS believes that such a stay warrants an inpatient admission, CMS will provide additional subregulatory instruction and the Part A contractors will review any claims that are subsequently submitted for payment in accordance with the most updated list of rare and unusual situations in which an inpatient admission of less than 2 midnights may be appropriate.”

Q5.2: “Is there a way for providers to identify any time the beneficiary spent as an outpatient prior to admission on the inpatient claim so that Medicare review contractors can readily identify that the 2-midnight benchmark was met without conducting complex review of claim.”

• “Effective December 1, 2013, Occurrence Span Code 72 was refined to allow hospitals to capture ‘contiguous outpatient hospital services that preceded the inpatient admission’ on inpatient claims.”
• For now, “Occurrence Span Code 72 is a voluntary code, but may be evaluated by CMS for medical review purposes.”

The entire FAQ download can be found at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/Downloads/QuestionsandAnswersRelatingtoPatientStatusReviews_12232013_508Clean.pdf With the MAC Probe and Educate program just getting underway, you can expect there to be several additional updates to the FAQs.

One of the most talked about changes in the 2014 IPPS Final Rule has been the new 2-Midnight Benchmark guidance for Physicians. Physicians are directed to write the order for an inpatient admission when they have the expectation that a Medicare beneficiary will need medically necessary inpatient services beyond a 2-Midnight Benchmark. I can almost hear it now, but what about…

CMS did indicate that there would be exceptions to when a beneficiary would not exceed 2-Midnights but would still be appropriate as an inpatient. Specific examples include:

• Unforeseen circumstances such as death or transfer,
• The patient rapidly improves and the reasonable expectation was clearly documented in the record, or
• A patient leaves against medical advice (AMA).

On November 27, 2013 CMS released an updated Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013 download to include the new potential exception to the 2-midnight rule of mechanical ventilation initiated during the present visit.

CMS has identified the following potential exception to the 2-midnight rule:

1. Mechanical Ventilation Initiated During Present Visit: CMS stated in its discussion of rare and unusual circumstance that treatment in an Intensive Care Unit, by itself, does not support an inpatient admission absent an expectation of medically necessary hospital care spanning 2 or more midnights. Stakeholders have notified CMS that they believe beneficiaries with newly initiated mechanical ventilation support an inpatient admission and Part A payment. CMS believes newly initiated mechanical ventilation to be rarely provided in hospital stays less than 2 midnights, and to embody the same characteristics as those procedures included in Medicare’s inpatient –only list. While 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 one midnight of hospital care, inpatient admission and Part A payment is nonetheless generally appropriate.

It is important to pay attention to the NOTE included in this update that indicates that “this exception is not intended to apply to anticipated intubations related to minor surgical procedures or other treatment.” So, those outpatient patient procedures that require mechanical intubation during the procedure where the patient is weaned from ventilator support during recovery may not be an appropriate exception to the 2-Midnight Rule.

CMS continues to seek suggested exceptions from the hospital industry. If you have suggestions you can send them by email to IPPSAdmissions@cms.hhs.gov and enter “Suggested Exceptions to the 2 Midnight Benchmark” in the subject line.

We would like to share with our readers that CMS will be hosting another Special Open Door Forum: Final Rule CMS-1599-F: Discussion of the Hospital Inpatient Admission Order and Certification; 2 Midnight Benchmark for Inpatient Hospital Admissions on Thursday December 19th from 1:00pm-2:00pm Eastern Time. You can go to the Special Open Door Forum CMS webpage at http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/ODFSpecialODF.html for more details on how to participate.

MMP also encourages you to continue to watch for 2-Midnight Benchmark and Physician Certification Guidance updates on the CMS Inpatient Hospital Review page at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/InpatientHospitalReviews.html

The hardest part of Medicare’s new guidance is understanding all of the details and nuances of the rules. For example, there were some surprising guidelines in the temporary instructions for the implementation of the final rule for Part A to B billing of denied hospital inpatient claims that could have a financial impact on hospitals. Drug administrations and nebulizer treatments are some of the more frequent Part B services provided to inpatients and now Medicare is saying these services are not billable on a Part B inpatient claim. I understand these services are included in the room and board charge for inpatients, but how is a hospital to recoup the cost of these services when billing under Part B if these services are not separately billable and there is no inpatient Part A payment?

The temporary instructions were published September 16th in MLN Matters article (SE1333).   A lot of the guidance in this article simply reaffirms the instructions from the final rule. MMP presented that information several weeks ago in an article titled “If ‘A’ Doesn’t Work, Try ‘B’”. 

As a reminder, the basic rule for admissions on or after October 1, 2013 is:

“When an inpatient admission is found to be not reasonable and necessary, the Centers for Medicare & Medicaid Services (CMS) will allow payment of all hospital services that were furnished and would have been reasonable and necessary if the beneficiary had been treated as an outpatient, rather than admitted to the hospital as an inpatient, except for those services that specifically require an outpatient status such as outpatient visits, emergency department visits, and observation services, that are, by definition, provided to hospital outpatients and not inpatients.”

So this week, I would like to point out a few items from the temporary instructions that are new or clarified guidance.

• One of the most significant clarifications concerns the billing of infusions and injections and nebulizer treatments on the Part B inpatient claim. The article clarifies that routine services generally captured in the room and board rate are not separately billable Inpatient Part B services. This includes IV infusions and injections, blood administrations, and nebulizer treatments provided by the floor nurse.
• In the case of UR self-audit determination that the stay was not medically necessary, the hospital must submit a no-pay, provider liable Part A claim and receive a denial before submitting the Part B inpatient claim (12x type of bill). Provider liability is indicated by the inclusion of Occurrence Span Code “M1” and the inpatient admission Dates of Service on the no-pay inpatient claim. If a Part A claim for payment has already been submitted, the hospital must cancel that claim, submit the no-pay claim, and receive a denial prior to billing Part B.
• Services provided prior to the admission order are billed on a 13x outpatient claim; services provided after the admission order are billed on the 12x Part B inpatient claim. This means “inpatient-only” services (such as procedures on the inpatient only list) provided prior to the admission may not be reported on the inpatient claim even though they are not payable on the outpatient claim. Also if observation services are continued after the admission order is written, they are not billable on the inpatient claim since they are exclusively “outpatient” services.
• The article includes a listing of revenue codes not covered under inpatient Part B medical necessity denials. However, note that when a revenue code can be sometimes covered and sometimes not covered, providers should use the HCPCS code to determine if the service is covered.
• The article encourages providers to remember the medical necessity requirements for outpatient services, specifically those outlined in local coverage determinations (LCDs), and to include all diagnosis codes to support these medical necessity requirements on both the Part B inpatient and outpatient claims.
• Billing of limited Part B services still applies when there is no Part A payment because the beneficiary is not entitled to Part A benefits or has exhausted Part A benefits.

Please refer to the article for complete information including the specific claim requirements for the Part A provider liable claim and the Part B inpatient claim.

With just 40 days until the 2014 Final Rule goes into effect, there are significant changes for hospitals to digest and develop a plan to educate key stakeholders. Ongoing improper payments for short-stay hospital claims prompted two of the biggest changes. These two changes are the Two-midnight Benchmark and the Two-midnight Presumption Medical Review Policies.

Two-midnight Benchmark: Patient Status Guidance for Admitting Physicians

Historically, the decision to admit a beneficiary as an inpatient was based on a 24 hour benchmark. In the Final Rule CMS specifies “that the 24 hours relevant to inpatient admission decisions are those encapsulated by 2 midnights. This distinction is consistent with our application of Medicare utilization days, which are based on the number of midnights crossed.”

The two-midnight benchmark is intended as guidance for Physicians in identifying those patients that are appropriate for inpatient admissions. Specific 2 midnight guidance includes:

• There are two indications for a Physician to write an inpatient admission order:
• If the Physician has the expectation that a beneficiary’s length of stay (LOS) will be longer than 2 midnights.
• If the beneficiary undergoes an inpatient only procedure. In this instance, CMS acknowledges that there are times when a beneficiary would not require a two-midnight stay after an inpatient only procedure and they indicate “that procedures on the OPPS inpatient-only list are always appropriately inpatient, regardless of the actual time expected at the hospital so long as the procedure is medically necessary and performed pursuant to a physician order and formal admission.”
   
• The decision to write an inpatient admission order should be based on:
• The Physician expectation that the beneficiary will require medical care beyond 2 midnights.
• Factors leading a Physician to write an inpatient admission order need to be clearly and completely documented in the medical record. Supportive documentation would include “complex medical factors such as history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event.”
• Note: Factors that could result in an inconvenience to the beneficiary and/or family are NOT justification for an inpatient admission.
  
  
• Timing for the two-Midnight Benchmark:
• If the Physician does not expect that a beneficiary will need medical services beyond 2 midnights then the beneficiary should be placed in outpatient with observation services. “As new information becomes available, the physician must then reassess the beneficiary to determine if discharge is possible or if it is evident that an inpatient stay is required.”
• After one midnight has past, “the decision to admit becomes easier as the time approaches the second midnight, and beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written.”
• Currently, the inpatient admission starts at the date and time that the admission order is written. This will continue to apply on or after October 1st.
  
  However, final rule guidance directs that the decision to admit is based on all of the time a beneficiary is in the hospital, including any initial outpatient services. “In other words, if the physician makes the decision to admit after the beneficiary arrived at the hospital and began receiving services, he or she should consider the time already spent receiving those services in estimating the beneficiary’s total expected length of stay.”
  
  Services that are to be considered toward the 2 midnight expectation include observation services, treatment in the emergency department and procedures performed in the operating room or other treatment areas.
  
  
• Example: A beneficiary spends one midnight as an outpatient observation or has routine recovery following an outpatient surgery. The following day the physician reassesses the beneficiary and expects that he will need another midnight of medical services. At this point the physician should take the time spent in outpatient observation or routine outpatient surgery recovery into consideration that the 2 midnight benchmark will be met and an inpatient admission order should be written.
  
  
• Potential Exceptions when Inpatient Admission May Not span two-midnights: 
• When a physician has an expectation that a beneficiary will remain in the hospital beyond 2 midnights and “the beneficiary improved more rapidly than the physician’s reasonable, documented expectation. Such unexpected improvement may be provided and billed as inpatient care, as the regulation is framed upon a reasonable and supportable expectation, not the actual length of care, in defining when hospital care is appropriate for inpatient payment.”
• “If an unforeseen circumstance, such as beneficiary death or transfer, results in a shorter beneficiary stay than the physician’s expectation of at least 2 midnights, the patient may be considered to be appropriately treated on an inpatient basis, and the hospital inpatient payment may be made under Medicare Part A.”

2-midnight Presumption: Guidance for Medical Reviewers

The 2-midnight presumption “directs medical reviewers to select claims for review under a presumption that the occurrence of 2 midnights after admission appropriately signifies an inpatient status for a medically necessary claim.” Under this revised policy, the main focus of review efforts will now be on inpatient short stays with a LOS of 1 midnight or less.

In addition to this shifted focus, CMS will also be monitoring for “evidence of systematic gaming, abuse or delays in the provision of care in an attempt to qualify for the 2-midnight presumption (that is, inpatient hospital admissions where medically necessary treatment was not provided on a continuous basis throughout the hospital stay and the services could have been furnished in a shorter timeframe).”

Reviews contractors will continue to assess claims that cross 2 midnights to ensure the medical necessity of services provided, that the hospitalization was medically necessary, to validate coding and documentation and when directed by the CERT Contractor or other governmental entity to do so.

• What Medicare Review Contractors are looking for in the Medical Record:
• A physician order for an inpatient admission to the hospital.
• Required elements of the physician certification.
• Medical documentation supporting that the decision to admit as an inpatient was reasonable and necessary.
• “Contractors will consider complex medical factors that support a reasonable expectation of the needed duration of the stay relative to the 2-midnight benchmark. Both the decision to keep the beneficiary at the hospital and the expectation of needed duration of the stay are based on such complex medical factors as beneficiary medical history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk (probability) of an adverse event occurring during the time period for which hospitalization is considered.”
  
  
• Certification and Recertification of the need for Inpatient Admission:
• The physician must certify and recertify that inpatient services are medically necessary. CMS clarified that the relationship between the physician order and physician certification by adding language to 42 CFR 412.3(c) that “the physician order also constitutes a required component of the physician certification of the medical necessity of hospital inpatient services under Part 424 of this chapter.”
• Physicians need to be mindful that the admission order and physician certification are not conclusive proof that an admission was medically necessary but two pieces of information to be considered along with documentation in the medical record.
• CMS is requiring that for inpatient admissions the certification has to be completed, signed and documented in the medical record before the beneficiary is discharged.
• Guidance on the certification requirements can be found in the Code of Federal Register (CFR) at §424.10, §424.11 and §424.
• Note: CMS indicated in an August 15, 2013 Open Door Forum that they will be providing further guidance in the near future on how to satisfy this requirement.
  
  
• Reasonable and Necessary Admissions:
• Commenter’s of the Final Rule requested additional guidance as to what criteria would support a reasonable and necessary admission.
  
  CMS Response:
  “Medicare review contractors must abide by CMS policies in conducting payment determinations, but are permitted to take into account evidence-based guidelines or commercial utilization tools that may aid such a decision. We also acknowledge that this type of information may be appropriately considered by the physician as part of the complex medical judgment that guides his or her decision to keep a beneficiary in the hospital and formulation of the expected length of stay. As we update our manuals and take additional steps to implement this rule, we anticipate using our usual processes to develop and release subregulatory guidance such as manual instructions and education materials, which may include open door forums, regional meetings, correspondence and other ongoing interactions with stakeholders; and that our contractors will continue to involve local entities as they implement these rules.”
  
  
• Beneficiary Status Order:
• “The order serves the unique purpose of initiating the inpatient admission and documenting the physician’s (or other qualified practitioner as provided in the regulations) intent to admit the patient, which impacted its required timing. Therefore, we are specifying in new paragraph (d) of §412.3 that ‘The Physician order must be furnished at or before the time of the inpatient admission”
• An order to “Admit to ICU” or to “Admit” is no longer sufficient for an inpatient status order. The order “must specify the admitting practitioner’s recommendation to admit “to inpatient,” “as an inpatient,” “for inpatient services,” or similar language specifying his or her recommendation for inpatient care.”
• If Physicians and Review Contractors can consider time spent in outpatient towards the inpatient admission does that mean that this time can count towards the 3 day requirement for Skilled Nursing Facility (SNF) services?
• Per CMS, “We reiterate that the physician order, the remaining elements of the physician certification, and formal inpatient admission remain the mandated means of inpatient admission. While outpatient time may be accounted for in application of the 2-midnight benchmark, it may not be retroactively included as inpatient for skilled nursing care eligibility or other benefit purposes. Inpatient status begins with the admission based on a physician order.”

CMS held an Open Door Forum this past Thursday August 15th regarding the Final Rule. After participating in this call, it appears that there are more questions than answers. In fact, CMS encourages everyone to send them questions at  IPPSAdmissions@cms.hhs.gov. They indicated that they will be providing further guidance in the near future. Be assured that as additional guidance is provided we will be sharing it with you.

This seems to be the year for some big changes from Medicare. As providers are wondering what will happen with the major revisions to OPPS, Medicare finalized two policies relating to patient status in the final IPPS rule that are equally dramatic. The two interrelated policies are designed to reduce the frequency of inappropriate extended observation care and provide appropriate payment for necessary inpatient services. Next week, we will address the revisions concerning the admission and medical review criteria for hospital inpatient admissions. This week we examine the Part B Inpatient Billing requirements.

In the 2014 IPPS final rule, CMS finalized the requirements of the proposed rule for Part B inpatient billing when an inpatient admission is determined to not be medically necessary. When this rule becomes effective on October 1, 2013, it replaces the current Part A to B rebilling regulations under the Ruling that was published on March 13, 2013. The major significant differences of the Final Rule from the Ruling concern the allowance of Part B inpatient billing as the result of a hospital self-audit and the application of timely filing.

Here is a summary of the requirements of the Final Rule. For complete information, please refer to the IPPS final rule which is scheduled to be published in the Federal Registry on August 19th. Until that time a display copy can be viewed at 2014 IPPS Final Rule display copy.

If a hospital inpatient admission is determined to not be medically necessary after a patient’s discharge, the hospital may decide to submit a Part B inpatient claim for all services provided to the patient during the admission.

Who makes the determination the admission is not medically necessary?

• This decision could be made by CMS or a Medicare contractor as a denial, upon medical review of the inpatient claim. In this case, the hospital may decide to appeal the Part A denial or submit a Part B inpatient claim (a 12x type of bill).
• The decision could be made by the hospital as part of a utilization review “self-audit” in accordance with the Medicare Conditions of Participation UR guidelines. If the hospital determines an inpatient admission is not medically necessary after the patient’s discharge, the hospital may bill for Part B inpatient services.

What type of hospitals can submit Part B inpatient claims?

• All hospitals billing Part A services are eligible to bill Part B inpatient services, including short-term acute care hospitals paid under IPPS, hospitals paid under OPPS, LTCHs, IPFs, IRFs, CAHs, children’s hospitals, cancer hospitals, and Maryland waiver hospitals.

What services can be included on the Part B inpatient claim?

• All hospital services that were furnished to an inpatient (after the order for inpatient admission) and would have been reasonable and necessary if the patient had been treated as an outpatient, except for those services specifically requiring an outpatient status. The excluded outpatient services are diabetes self-management training services (DSMT), outpatient visits including ED visits, and observation services. Outpatient services provided prior to the admission order may be billed on a Part B outpatient claim (see below for more information).
• In the proposed rule, rehabilitative therapy services (physical therapy, occupational therapy, and speech language pathology services) were proposed to be excluded as strictly “outpatient” services. This proposal was not finalized; providers may continue to include therapy services on Part B inpatient claims. However, these therapy services will be subject to the Part B therapy caps, the therapy caps exception process, the manual medical review process, and all other requirements for payment and coverage of therapy services under Part B such as functional status reporting requirements.

When can outpatient services furnished during the 3-day (1-day for non-IPPS hospitals) payment window be billed separately?

• When there is no Part A coverage for the inpatient stay, services provided to the patient prior to admission may be separately billed to Part B as outpatient services (13x type of bill). This includes any outpatient visits or observation services provided prior to the admission order.

When can Part B inpatient claims be submitted?

• The “expanded” Part B inpatient services can only be billed when payment cannot be made under Part A because the inpatient admission was not reasonable and necessary. This new policy does not apply to other circumstances when there is no Part A payment, such as when a beneficiary exhausts or is not entitled to Part A benefits.
• A Part B inpatient claim cannot be submitted if there is a current Part A claim. Any corresponding Part A claims must be canceled by the provider or denied by Medicare and any pending appeals must be withdrawn by the provider. A Part A “no pay/provider liable” claim must be submitted first if the decision to bill Part B inpatient claim is made as part of a hospital “self-audit”. Once the Part A claim denial is posted in the claims history, the Part B claim(s) can be submitted.
• The final rule applies timely filing requirements for services with dates of admission on and after October 1, 2013. Both Part B inpatient and outpatient claims must be filed within one calendar year after the date of service.
• Medicare allowed an extension of the Ruling time frames - hospitals may follow the Part B billing timeframes established in the Ruling after the effective date of the final rule, provided (1) the Part A claim denial was one to which the Ruling originally applied; or (2) the Part A inpatient claims has a date of admission before October 1, 2013, and is denied after September 30, 2013 on the grounds that although the medical care was reasonable and necessary, the inpatient admission was not.

What information must be included on the Part B claims?

• The hospital must furnish information as may be necessary in order to determine the amounts due for the services billed on the Part B outpatient or inpatient claims.
• This means re-coding to itemize the outpatient services provided with HCPCS codes as required and diagnosis coding for the time period of the claim. Providers will need to consider appropriate coding to support the medical necessity of the Part B services furnished.

What if the hospital determines the inpatient admission is not medically necessary prior to the patient’s discharge?

• This new policy does not change the existing regulations concerning changing a patient’s status from inpatient to outpatient following the condition code 44 requirements.

Does the patient’s status change if a Part B inpatient claim is submitted and how does this affect utilization days and the skilled nursing facility (SNF) 3-day qualifying stay?

• The patient’s status remains inpatient because there is no provision to change a patient’s status after he or she is discharged from the hospital.
• Medicare will not deduct the days associated with the inpatient hospital stays billed under Part B from a beneficiary’s 150 utilization days when no Part A payment is made for that inpatient hospital stay.
• The 3-day inpatient hospital stay which qualifies a beneficiary for “post-hospital” SNF benefits does not have to be covered by Medicare, as long as it is does not represent a “substantial departure from normal medical practice”. This means that most denied hospital inpatient stays will meet the requirements to qualify the patient for SNF coverage because the care was medically necessary, although the admission was not. An exception would be if the admission was solely for the purpose of qualifying the beneficiary for the SNF stay and therefore was a substantial departure from normal medical practice.

What is the patient’s liability and must hospitals bill the patient for their liability?

• If a Part A admission is denied as not reasonable and necessary and the patient is not liable under section 1879 of the Act, the hospital must refund Part A deductible and co-payment amounts paid by the patient and other insurers.
• The patient (Medicare beneficiary) is responsible for applicable deductible and co-payment amounts for covered Part B services and the cost of services excluded from coverage such as self-administered drugs.
• If the beneficiary is not enrolled in Part B, hospitals should bill Part B to ensure the claim enters the coordination of benefits cross-over process in the event the beneficiary has coverage under a supplemental or secondary insurance plan.
• The issue of whether hospitals are required to bill the beneficiaries for their Part B liabilities is governed by the beneficiary inducement and anti-kickback laws and falls under the jurisdiction of the OIG.

May appeals adjudicators require payment under Part B if a Part A denial is upheld?

• No, appeals adjudicators may only consider the claim that is before them and may not order payment for items or services that have not yet been billed.

I realize this is a lot of information to absorb. You may want to print this article to use as a resource for future questions. MMP plans to present a webinar prior to October 1st to address both the Part B inpatient billing and the new admission criteria. Be on the lookout in the Wednesday@One for> announcements about this upcoming webinar.

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.

CMS, Members of Congress and others have been expressing concerns about observation stays and short inpatient stays for Medicare beneficiaries. Three main concerns being voiced include:

• Beneficiaries paying more for long observation stays than if they had been an inpatient,
• Beneficiaries not meeting the three day qualifying inpatient stay requirement for skilled nursing facility care; and
• Improper payment for short inpatient stays when the beneficiaries could have been treated in a lesser level of care such as outpatient.

The Office of Inspector General (OIG) recently released a report in response to these concerns based on 2012 claims data. To help our clients better understand the potential payment differenced in patient status we have provided the following comparison of outpatient stays and short inpatient stays.

‍Report Drill Down:

Observation Stays:

• Medicare paid $2.6 billion which averages $1,741 per stay.
• Beneficiaries paid $606 million which averages $410 per stay.
• The top 10 most common reasons for observation stays should not be a surprise to anyone and include chest pain, digestive disorders, fainting, signs & symptoms, nutritional disorders, dizziness, irregular heartbeat, circulatory disorders, respiratory signs & symptoms and medical back problems.
• Observation stays typically begin with treatment in the emergency department.
• The most common operating procedure was coronary stent insertion.

Long Outpatient Stays (stays lasting at least 1 night but had no observation services coded):

• Some of these stays did include observation services that were not coded by the hospital as they are not always paid a separate amount for coding claims as observation stays.
• This set of beneficiaries had similar characteristics to the observation stays i.e. most stays began in the emergency department and beneficiaries were most commonly treated for chest pain and digestive disorders.

Short Inpatient Stays (stays lasting less than 2 nights):

• This group of beneficiaries on average was more costly to Medicare and the Beneficiary.

1. Medicare paid $5.9 billion which averages to $5,142 per stay.
2. Beneficiaries paid $831 million which averages to $725 per stay.

• Ninety percent of this group spent 1 night in the hospital while the remaining 10% spent less than 1 night in the hospital.
• Similar to the other two stay types, these stays began in the emergency department, were most commonly treated for chest pain and 6 of the 10 most common reasons for a short inpatient stay were also among the 10 most common reasons for observation stays (chest pain, digestive disorders, fainting, nutritional disorders, irregular heartbeat and circulatory disorders).

Concerns and Report Conclusions:

Concern: Beneficiaries paying more for long observation stays than if they had been an inpatient

• Short Inpatient Stays in 2012 were more costly to the beneficiary when being treated for the same reason.
• Two exceptions where the cost was more for an observation stay were for coronary stent insertions and circulatory disorders.
• Six percent of all observation stays paid more than the inpatient deductible with a smaller subset paying more than two times the inpatient deductible.

Concern: Beneficiaries not meeting the three day qualifying inpatient stay requirement for skilled nursing facility care

• There were 617,702 hospital stays that lasted at least 3 nights that did not include 3 inpatient nights and therefore did not qualify for SNF services.
• While not mentioned in this report, a point of interest is that similar legislation has recently been introduced in the House (H.R. 1179) and the Senate (S.569) which would amend the law to allow for time beneficiaries spent in the hospital under observation services to count toward the required three-day hospital stay for coverage of skilled nursing facility (SNF) care.

Concern: Improper payment for short inpatient stays when the beneficiaries could have been treated in a lesser level of care such as outpatient.

• Short inpatient stays in 2012 were more costly to Medicare than observation stays. This validates the concern that there is improper payment for short inpatient stays when the beneficiaries could have been treated in a lesser level of care such as outpatient.
• Use of short inpatient stays varied widely among hospitals.

Moving Forward:

Proposed Changes to Payment Policies for Inpatient and Outpatient Stays

This report touches on two payment issues that occurred earlier this year. The first issue was announced in April when CMS made a proposal through a Notice of Proposed Rulemaking (NPRM) that would have a tremendous effect on how hospitals bill for observation and short inpatient stays. If implemented, “CMS contractors would presume that inpatient hospital stays lasting 2 nights or longer were reasonable and necessary and would qualify for patient as inpatient stays. Conversely, CMS contractors would presume that stays lasting less than 2 nights would not qualify for payment as inpatient stays and instead would be paid for as outpatient stays.” The OIG believes that their report findings may be useful as “our results further indicated that, under the policies proposed in the NPRM, some hospitals would likely follow the previsions and continue to bill these as outpatient stays; other hospitals – given strong financial incentives and few barriers – would likely not follow the provision and would admit beneficiaries as inpatients as soon as possible to meet the 2-night presumption.”

In March the second issue announced was that “CMS revised its Part B inpatient billing policy to allow for all hospital services that were provided and would have been reasonable and necessary if the beneficiary had been treated as an outpatient.”

Since the release of this OIG report, CMS released the fiscal year 2014 IPPS Final Rule last Friday August 2nd. Both proposals are now implemented in the Final Rule. We will be addressing the IPPS changes in the coming weeks

The findings in this report also “raise concerns about SNF services” and the OIG advises that “CMS should consider how to ensure that beneficiaries with similar post-hospital care needs have the same access to and cost-sharing for SNF services.”

On a final note, you should be aware that the OIG plans to “refer to CMS in a separate memorandum the SNFs that received $255 million in inappropriate payments so that CMS can look into recoupment.” Unfortunately, beneficiaries could be receiving unexpected bills for SNF services at some point in the not too distant future. The entire report can be accessed at http://oig.hhs.gov/oei/reports/oei-02-12-00040.pdf.