Admission Order Regulation Change Brings Relief – And Uncertainty

2019 IPPS removes requirement for authentication of admission orders prior to discharge.

EDITOR’S NOTE: This is the first installment of a two-part series.

When the Centers for Medicare & Medicaid Services (CMS) finalized the 2019 Inpatient Prospective Payment System (IPPS) Final Rule, hospitals across the country breathed a deep sigh of relief, because CMS removed the requirement that all admission orders be authenticated prior to discharge.

At first glance, this may not seem to be a big issue. The move to electronic health records, with access to charts from any location, has led to the need for significantly fewer verbal orders, as has the focus of accreditation agencies on reducing or eliminating verbal orders due to patient safety concerns.

But the admission order is different. While orders for medications and tests can be placed by any provider caring for the patient, the admission order is only valid if it is either entered or authenticated by a practitioner with admitting privileges. That means that admission orders entered by most emergency medicine doctors and residents (and some specialists) without admitting privileges, or taken verbally, must be authenticated by a doctor with admitting privileges. And starting on Oct. 1, 2013, that authentication was required to occur prior to discharge, or the admission could not be billed to Medicare Part A for payment. As a result, thousands of inpatient admissions were written off by hospitals in order to achieve compliance with Medicare regulations.

While the financial pain was not too bad with short inpatient admissions – such as a three-day admission for community-acquired pneumonia with a payment around $6,000, for example – it was significantly worse when writing off a colon resection at $20,000-$40,000, or a complex cardiac surgery, at over $100,000.

And to make matters worse, these claims were not eligible for self-denial and full rebilling, as specified in MLN Matters SE1333, since the inpatient status was the correct status and the denial was for noncompliance with a condition of payment.

As with many CMS regulations, the interpretation of this new regulation in the 2019 IPPS Final Rule has led to some confusion, and rightly so. In the rule, CMS stated, “we are finalizing our proposal to revise the inpatient admission order policy to no longer require a written inpatient admission order to be present in the medical record as a specific condition of Medicare Part A payment. Specifically, we are finalizing our proposal to revise the regulation at 42 CFR 412.3(a) to remove the language stating that a physician order must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A.”

“Our proposal does not change the requirement that, for purposes of Part A payment,” CMS continued, “an individual becomes an inpatient when formally admitted as an inpatient under an order for inpatient admission.”

What should hospitals do in response to this regulatory change? I will address that in two future articles, separating the situations into a discussion of the unauthenticated admission order and a discussion of the absent admission order. Although this article will include a statement about “views and recommendations,” I must reiterate that for these publications, my review must be considered as my personal interpretation of the regulation. CMS has not released any sub-regulatory guidance or provided any recent case scenarios that can be used to interpret and operationalize the changes. Each hospital must review the regulations and develop its own policy.

Determining the best course of action for inpatient admission when the admission order was not authenticated prior to discharge represents the simpler of the two situations. I think CMS made it clear that if the inpatient admission meets all requirements, the authentication could be obtained after discharge and the admission compliantly billed to Part A. Those requirements include that an admission order is in the record, placed either by a provider without admitting privileges as described above, or as a verbal order transcribed into the record by a person without ordering privileges, and that the admission met the requirements for inpatient admission, including the two-midnight rule (the details of which I hope do not require review, since the rule will be five years old on Oct. 1).

If you already have processes in place to obtain that authentication prior to discharge, it is probably best not to make changes to them. But many hospitals have instituted hard stops, requiring the patient to remain in a bed without the discharge order being allowed to be entered (or the discharge to be effectuated until the physician authenticates the admission order). Depending on the circumstance, that may mean a patient remaining for several hours if a certain surgeon is in the midst of a surgery. That is not patient-centered, exposing the patient to added risk, albeit small, and keeping a bed occupied that could be used for a “sick” patient. Therefore, there should be some method to allow the discharge to proceed without the order authentication in these limited circumstances.

Allowing authentication of the admission order after discharge does not alleviate all concerns, as you still must abide by any medical staff rules and regulations, bylaws, state laws, or any additional requirements that may apply. But the penalty for violating one of those policies is not forfeiture of the ability to be paid for your care. Rather, you risk loss of accreditation if the surveyor determines that it is warranted.

The ability to obtain the authentication after discharge presents one other complicating factor that must be carefully considered. When CMS introduced this requirement in 2013, it also stated that “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 to be an inpatient. The hospital stay may be billed to Part B as a hospital outpatient encounter.” Many hospitals took advantage of this to avoid having to use the onerous Condition Code 44 process to change an inpatient to outpatient and simply ensured that the admission order was not authenticated prior to discharge.

This regulatory change now means that if the practitioner determines an inpatient admission order is improper and that the order requires authentication, there must be a way to ensure that the order is never authenticated instead of simply ensuring no authentication prior to discharge. Since many of these stays are of short duration, it is relatively easy to tell a physician not to authenticate the admission order of Patient X in the next two days. But despite assuming legal responsibility for the orders they authenticate, it is the rare physician who reviews every order in their inbox prior to authentication. That means that a improper admission order placed several weeks ago is likely to be authenticated at some point, rendering the admission order valid and requiring the admission to be formally reviewed under the hospital’s utilization review (per 42 CR 482.30), followed by self-denial and rebilling, along with fulfilling the patient notification requirement.

In summary, if an admission order is not authenticated prior to discharge, it appears that CMS is allowing authentication after discharge without any loss of the ability to bill the admission. But once again, I must stress that each hospital must determine if this is the approach it wants to take. In the next article, I will delve into the more vexing problem of the absent admission order. Please be sure you check your tire pressure prior to that adventure; it’s going to be rough ride.

Program Note: Register to listen to Dr. Ronald Hirsch every Monday on Monitor Mondays at 10-10:30 a.m. ET.


Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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