Don’t ignore the two-midnight rule. It’s still in effect
Post-payment audits delayed until October
Executive Summary
A bill signed into law on April 1 directs the Centers for Medicare & Medicaid Services (CMS) to postpone post-payment audits of the two-midnight rule until after March 31, 2015. In the meantime, CMS has implemented pre-payment "probe and educate" reviews to determine if hospitals are in compliance.
• The rule is still in effect, and hospitals have to meet its requirements.
• Legislation pending in Congress would direct CMS to develop criteria for short inpatient stays.
• Case managers need to make sure documentation is detailed and complete, that all admissions have a signed order by a physician, and that the physician estimates the length of the patient stay and includes a plan for care.
Post-payment audits for the Centers for Medicare & Medicaid Services’ (CMS) controversial two-midnight rule have been postponed again, this time until after March 31, 2015, but that doesn’t mean that case managers no longer have to worry about meeting its requirements.
"First of all, the two-midnight rule is 100% in effect and hospitals must follow it. CMS is expecting hospitals to apply the rules and submit claims with required documentation and certification," says Ralph Wuebker, MD, MBA, chief medical officer for Executive Health Resources, a Newtown Square, PA, healthcare consulting firm.
The delay has to do with the Recovery Auditors [RAs], who won’t be able to conduct post-payment reviews for hospital stays that fall under the two-midnight rule and occurred from Oct. 1, 2013, through March 31, 2015. That’s according to the "Protecting Access to Medicare Act of 2014," which President Obama signed into law on April 1. The law also has implications for ICD-10. (See related story, page 60.)
The two-midnight rule was intended to give hospitals clarity on what constitutes an inpatient admission and what is outpatient with observation services, but instead it caused more confusion, says Priya Bathija, JD, senior associate director for policy for the American Hospital Association (AHA).
The AHA had been asking CMS to delay the two-midnight rule since before the original implementation date, she adds. "Hospitals are still struggling with implementing the two-midnight rule. There are significant kinks in the policy that need to be worked out. We believe that CMS needs more time to issue guidance for hospitals and hospitals need more time to make sure physicians know what to document and to ensure that their electronic medical record systems can handle all of it," she says.
In the Inpatient Prospective Payment System final rule for fiscal 2014, CMS established a benchmark of two midnights for an appropriate inpatient admission and set out a series of documentation requirements to support the admission, including the need for a formal, written and signed admission order by a physician or another practitioner who has admitting privileges in the hospital, and the requirement that the medical record must include the reasons the physician believes the patient should be admitted, the anticipated length of stay, and the plan of care.
There are some exceptions to the rule. Procedures on the inpatient-only list are exempt from the two-midnight rule, as are incidents when patients leave against medical advice, die, are transferred to another facility, or mechanical ventilation is initiated during the stay for non-surgical reasons. The final rule doesn’t eliminate instances when a one-day stay is medically necessary, Wuebker says. "There will be the occasional situation when the patient recuperates more quickly than what is expected or what is typical. In those cases, the documentation in the medical record must clearly show that the admitting physician believed, based on his or her clinical rationale, that the patient would need care for at least two midnights. If hospitals have a significant number of one-midnight cases, they are likely to be subject to an audit," he says.
Short stays are the reason for a lot of confusion, and two bills were introduced in Congress directing CMS to develop a policy to address the short-stay patients who receive inpatient services, according to Erik Rasmussen, senior associate director of federal relations for the AHA.
"Congress clearly recognizes that the two-midnight rule needs more clarity and that CMS needs to develop a policy to address the short-stay outliers who clearly need inpatient services but don’t need to be in the hospital over two midnights. What’s confusing is the undefined middle patients, those who are sick enough for an acute care stay but don’t need to be in the hospital over two midnights," he says.
The American Hospital Association continues to encourage co-sponsors of S.2082, which would require the Secretary of Health and Human Services to consult with interested stakeholders, including hospitals, physicians and representatives from the MACs and RAs to determine the criteria for inpatient stays that are shorter than two midnights and to develop a payment methodology for shorter inpatient stay, according to Rasmussen.
"The current CMS policy is bad news for seniors because it undermines the medical judgment of physicians. The bill also rightly calls on the agency to develop an acceptable long-term payment solution," said Rick Pollack, executive vice president of the American Hospital Association, in a news release from the AHA issued shortly after the bill was introduced in early March.
In the meantime, CMS has directed the Medicare Administrative Contractors (MACs) to conduct prepayment "probe and educate" reviews of short-stay admissions that occurred on or after Oct. 1, 2013, when the final rule went into effect. The MACs are requesting between 10 and 25 records, depending on the size of the hospital, and assessing the hospital’s compliance with the admission order requirements, certification requirements, and the two-midnight benchmark. Providers with moderate, significant, or major errors will receive letters of explanation, be offered individual educational calls and a second set of audits by the MACs. If hospitals have major concerns (more than seven denials out of 10 charts reviewed or 14 denials out of 25 charts reviewed), the MACs will review an additional 100 to 250 records. "Hospitals need to perform well on the probe and educate’ audits in order to avoid a tenfold increase in the number of charts requested," Wuebker says. (For details on the "probe and educate" process, see related article on page 61.)
Hospitals should use this time to get the admission process correct under the new rule, says Elizabeth Lamkin, MHA, chief executive officer and partner in PACE Healthcare Consulting, LLC, based in Beaufort County, SC. Hospitals are getting a temporary break from Recovery Audit reviews, but CMS expects hospitals to be in compliance when the RAs start conducting post-payment reviews, she adds.
As payers move from volume-based to value-based reimbursement, instead of every department operating in a silo, hospitals need to create one smooth continuum with all of the players—physicians, case managers, clinical documentation specialists, coders, billing and revenue cycle staff working together, Lamkin says.
Lamkin cautions hospitals against letting down their guard because of the perceived RA hiatus. "The post-payment reviews by Recovery Auditors are just one set of audits. Hospitals are still subject to audits from the Medicare Administrative Contractors, the Zoned Program Integrity Contractors, Medicare Administrative Contractors (MACs), the Office of the Inspector General, Comprehensive Error Rate Testing (CERT) reviews and others. Hospitals should focus on getting the entire system under control to manage all of those audits," Lamkin says.
The bottom line is that documentation must be detailed and complete, she says. "If hospitals get it right on the front end with appropriate case management and a system for reviewing medical necessity of admissions and getting bed placement right, they are setting themselves up to pass any audits," she says.
Lamkin suggests that hospitals develop a robust program to audit random current and closed records to make sure they comply with the rules. "Hospitals have a chance to determine if they might get a denial if they are audited and to take this opportunity to get it right before the real audits start," she says.
From the Protecting Access to Medicare Act of 2014’
SEC. 111. EXTENSION OF TWO-MIDNIGHT RULE.
(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))).
