EXECUTIVE SUMMARY
In the Outpatient Prospective Payment System final rule for 2016, the Centers for Medicare & Medicaid Services modified the two-midnight rule to allow shorter stays to be billed as inpatient stays based on the judgment of the admitting physician.
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CMS shifted enforcement of the rule to two Beneficiary and Family-Centered Care Quality Improvement Organizations, which will alert the Recovery Auditors if they find patterns of high rates of claims denials.
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CMS did not include any guidance about what constitutes a short stay except to say that it’s a matter of physician judgment.
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Case managers should review every patient’s records to ensure that the physician documentation supports an inpatient admission and that the admitting order is signed by the admitting physician before the patient is discharged.
The Centers for Medicare & Medicaid Services (CMS) has modified the controversial two-midnight rule to allow shorter stays to be billed as inpatient stays based on the physician’s judgment, but the change means that complete documentation is more important than ever before.
In the Outpatient Prospective Payment System (OPPS) final rule for calendar year 2016, issued Oct. 30, 2015, CMS said that inpatient stays of less than two midnights will be payable under Medicare Part A on a case-by-case basis. The decision to admit is based on the judgment of the admitting physician.
The new rule maintains the original two-midnight benchmark for inpatient stays but permits greater flexibility for determining that a stay of less than two midnights meets medical necessity criteria for an inpatient stay, says Debra Primeau, MA, RHIA, FAHIMA, president of Primeau Consulting Group, headquartered in Torrance, CA.
At the same time, CMS shifted the enforcement of the rule to two Beneficiary and Family-Centered Care Quality Improvement Organizations (QIOs), Livanta and KEPRO, from the Medicare Administrative Contractors (MACs) and the Recovery Auditors (RAs). The QIOs were to begin reviewing the short stays on Jan. 1, 2016. They will alert the RAs if they find patterns of high rates of claims denials after medical review or failure to improve after a hospital has received education.
The new rule may not help clear up the confusion about whether short stay patients should be admitted as inpatients or receive observation services since CMS did not include any guidance about what constitutes a short inpatient stay except to say that it’s a matter of physician judgment, says Deborah K. Hale, CCS, CCDS, president of Administrative Consultant Services, a Shawnee, OK, healthcare consulting firm.
Stakeholders in the hospital industry had asked CMS to create a one-midnight rule, a suggestion the agency did not take. “Without any specific guidance except the exceptions already given, this change just adds to the confusion,” Hale says. Procedures on the inpatient-only list are exempt from the two-midnight rule. Hospitals may be paid for an inpatient admission when patients leave against medical advice, die, or are transferred to another facility and the expectation they would stay two midnights is documented in the record.
The new policy covers stays where the physician expects the stay may be less than two midnights, but the patient needs the intensity of care that falls within the inpatient criteria as set forth by CMS in the new OPPS rule and which is supported by the treating physician’s judgment, says Steven Greenspan, JD, LLM, vice president of regulatory affairs for Executive Health Resources, a Newtown Square, PA, healthcare consulting firm.
One-midnight inpatient stays should not be confused as being an exception under the CMS rare and unusual exception policy, Greenspan says. CMS continues to list only new mechanical ventilation as a case that qualifies for a short inpatient stay under the rare and unusual exception policy, he adds. “CMS specifically stated in the final rule, ‘We would like to clarify that our proposed modification to the current exceptions process does not define inpatient hospital admissions with expected lengths of stay less than two midnight as rare and unusual,’” Greenspan says.
The changes in the rule make it more important than ever for case managers to review every patient record at the point of entry to ensure that the physician documentation supports patient status, based on the inpatient admission criteria the hospital uses, Primeau advises.
“The documentation requirements haven’t changed. Patient status is still based on whether or not a patient should be there on an inpatient basis, regardless of the length of stay. The documentation needs to make it clear that the patient’s condition warrants inpatient care rather than observation services as an outpatient, including a list of all the reasons a patient requires an inpatient stay,” she says.
Case managers should pay careful attention when the expected stay is less than two midnights to ensure that the medical record has robust documentation of clinical factors that warrant an inpatient stay, adds Kurt Hopfensperger, MD, JD, senior medical director of audit, compliance, and education at Executive Health Resources.
“For a one-midnight stay to qualify for reimbursement as an inpatient admission, the documentation must include medical history, comorbidities, details on the level of intensity of the care needed, the level of severity of illness, and the risk of an adverse event and all of them must support an inpatient stay,” Hopfensperger says.
Case managers should also make sure that the admission order is signed by a physician with admitting privileges before the patient is discharged, Hale says.
“The requirement for the admission order to be signed before the patient is discharged by a physician with admitting privileges has caused all kinds of nightmares and some denials. In many hospitals, emergency department physicians do not have admitting privileges and can’t sign the admission order, but the electronic order entry system does not have a way to flag the emergency department physician orders that require a co-signature by the admitting physician. That’s where case managers can help with compliance,” Hale says.
Many hospitals are incorporating utilization review documentation improvement opportunities into the role of clinical documentation improvement specialist who looks at medical necessity as well as making sure the documentation reflects severity of illness and clinical treatment, Hale says. “They aren’t taking over the role of the case manager, but making it a team effort,” she adds.
CMS has stated that stays of less than one midnight will have the highest priority for medical reviews but has not announced whether all one-midnight stays will be reviewed or whether the MACs will conduct prepayment reviews on one-midnight stays, Greenspan says.
Every case the QIO denies will be referred to the MAC for recoupment. If hospitals have an unacceptably high denial rate, they will be referred to the Recovery Auditors.
CMS will provide the QIOs with a list of hospitals with eligible claims for one-midnight stay reviews. These reviews will be limited to a total of 20 a year, or 10 every six months for small hospitals and up to 50 cases and a maximum of 25 every six months for larger hospitals, Greenspan says.
CMS says payment for stays of less than two midnights is going to be decided on a case-by-case basis and will be based on the clinical judgment of the medical reviewer who may or may not use commercial utilization tools, clinical requirements information, or medical literature, Greenspan says.
“CMS has steadfastly maintained that it doesn’t endorse screening tools and auditors can choose whether to use them or not. Both of the QIOs have said they will use InterQual criteria and if the case doesn’t meet InterQual criteria, it will go on to physician review,” Hopfensperger says.
“The good news is that the rules haven’t changed much. Even better news is that the QIOs are reviewing short stays. Unlike the RAs, the QIOs don’t get paid on a contingency fee so there is not the same incentive to routinely deny cases,” Primeau says.
By giving the responsibility for reviewing claims to the QIOs, CMS is returning to the processes it used when the DRG system was first adopted and the QIOs (formerly known as the PRO) reviewed claims for medical necessity, Hale says.
When the QIOs conducted medical necessity of admission reviews in the 1980s and 1990s, reviews included screening with medical necessity criteria but claims could not be denied unless a physician agreed that inpatient status was inappropriate, she said.
“If the QIOs use that methodology, everyone should happy. If they use the method the RAs used and a nurse or a non-clinical person conducts the reviews without physician involvement, there are going to be a lot of complaints,” Hale says.
