Blue Cross NC’s New Inpatient Policy Violates Federal Regulations – And Aetna Thanks Blue Cross for Taking the Spotlight Off Them

EDITOR’S NOTE: This article was originally published Monday, Dec. 8 by RACmonitor as a special bulletin.

Many people are still seething mad about Aetna’s devious plan to approve all inpatient admissions, but pay a lower rate for those that do not meet MCG’s nonexistent severity criteria. Well, I hope you have saved some seething for Blue Cross of North Carolina.

What are they going to do? Well, as usual, the details are scant, but starting Feb. 1 , they will have a new policy for inpatient status approval for elective procedures that simply states they will no longer approve inpatient status in advance of an elective surgery, and that “the level of care will be determined based on the member’s clinical condition following the procedure.”

Now, it should be clear to all that unlike Aetna’s policy, which is legal but immoral, this policy is a blatant violation of the federal regulations governing Medicare Advantage (MA) coverage of basic benefits. Blue Cross of North Carolina is not only disregarding the Inpatient-Only List, which does not require a specific clinical condition for a surgery to be compliantly billed as inpatient, but it also does not acknowledge the case-by-case exception that allows inpatient admission prior to surgery, based on the physician’s determination that inpatient admission is warranted prior to surgery due to potential risk or complexity – not to mention the two-midnight benchmark that allows inpatient admission for patients who require over two midnights of necessary hospital care.

As if attempting to legitimize it, they go on to state that “this change aligns with CMS (Centers for Medicare & Medicaid Services) guidelines and supports appropriate site-of-service utilization. Providers should continue to follow standard authorization processes for the procedure itself.” Yet when I looked up their prior authorization policy, the list of surgeries requiring prior authorization is very limited, consisting of common surgeries such as joint replacement, spine procedures, cardiac surgery, gynecologic, urologic, and gastrointestinal procedures, which require no prior authorization.

But then that same policy states that all scheduled inpatient admissions do require prior authorization. So, if the doctor wants to do a multi-level cervical spine fusion as inpatient for a high-risk patient, you do not need to get prior authorization for the surgery itself, but you do need to get prior authorization for the inpatient admission – but at the same time, they will not allow prior authorization for inpatient admission in advance of a surgery. And if everything goes well, it seems that they will assess, as they claim, the “clinical condition” after surgery – and probably deny inpatient admission, because the outcome was good.

Now, I will note that Blue Cross has indicated that additional guidance will be available in the coming weeks, so perhaps that will outline a compliant procedure, but I am not optimistic. I do expect that North Carolina hospitals will be closely watching this and providing Blue Cross feedback, hopefully before implementation, and before other Blue Cross plans copy this tactic.

There is one other related issue to discuss. With the impending abolition of the Inpatient-Only List – which includes a prohibition on denials of admission status for surgeries removed from the List, until CMS allows them – the question came up of whether that applies to Medicare Advantage (MA) plans. And since that denial prohibition is actually part of the federal regulations at 42 CFR 412.3, subsection 2, it seems that they cannot deny such claims for improper status. Now, of course, this may simply lead them all to adopt Aetna’s tactic to approve inpatient admission, but pay the claim at a reduced rate. So, keep a close eye on the online policy addendums for your MA plans, and alert your contracting team to another impending hit to revenue.