Being Better than “Them,” the $250 Million Star, and 24 Hours for Medicaid Admissions

Let’s start with a recent court case. SCAN health plan, a Medicare Advantage (MA) plan, recently sued Medicare because their star rating dropped from 4.5 to 3.5.

They claimed that Medicare’s method for calculating the rating was contrary to the regulations. Well, SCAN won the case, and as a result, they will receive an additional $250 million bonus. If anything says how flawed the Medicare Advantage program is, it is the fact that one star is worth that much money. Imagine the care that could be provided with $250 million. Now, MA plans’ expenditures are regulated with a medical loss ratio, so all that money won’t go to executive bonuses, but still… And remember that patient complaints affect star ratings, so when your patient is not happy with their plan, advise them to call 1-800-MEDICARE.

By now everyone knows that the MA plans must follow the Two-Midnight Rule, and you have surely heard and read about how to file complaints when the MA plans blatantly ignore the rule. But many do not know that there are also rules for Medicaid about when inpatient admission is appropriate – and it is actually stricter. 42 CFR 440.2 defines an inpatient as “a patient who has been admitted to a medical institution as an inpatient on recommendation of a physician or dentist and who receives room, board and professional services in the institution for a 24-hour period or longer…or is expected to stay but does not actually stay in the institution for 24 hours.” That’s right, no midnights to count; this is strictly 24 hours.

But, as was discussed at the American College of Physician Advisors free Town Hall last week, most Medicaid plans, especially Managed Medicaid, ignore that, using the usual argument that the patient was getting better at 24 hours, so inpatient admission is not approved or criteria for inpatient admission are not met.

Well, maybe it is time for providers to push back. Remember that “CMS” stands for the Centers for Medicare & Medicaid Services, so when Medicaid plans ignore federal regulations and there are no specific state regulations defining an inpatient, report them to your CMS regional office. With enough complaints, CMS will be forced to address this abhorrent behavior.

There was also a chat comment that created a bit of discussion. An anonymous attendee posted, “Given the variability in the (observation) rules, what about a strategy of making everyone inpatient, fighting certain denials with peer-to-peer and retro appeals then rebilling those we don’t win?”

One of the panelists responded that to admit everyone as inpatients could be considered fraud. In response to that, an anonymous attendee, perhaps the same person, posted, “Name the law or regulation a hospital is violating if they make everything inpatient,” and went on to point out that Payers aren’t following the rules (implying that this gives providers the right to ignore the rules).

All I can say is “wow.” Every hospital must have in place a utilization review plan to ensure that patients are admitted to the right status, and to blatantly ignore that obligation because the Payers make up their own rules is wrong. OK, let’s not use the word “fraud,” but call it “submitting false claims” but a durian fruit by any other name still smells as bad.

It still irks me that in 2023, when I did an analysis of Observation services, there were a significant number of non-surgical acute-care hospitals that did not get paid for one Medicare observation stay, suggesting they were admitting everyone as inpatients and accepting the few denials that occurred – and they considered that acceptable behavior. How can hospitals and physicians claim the high ground in this battle when some are behaving like this? How can any compliance officer allow such behavior? We all need to do better.