CMS Sends MA Plans a FAQ – And Imaginary Rules on Observation Care

CMS Sends MA Plans a FAQ – And Imaginary Rules on Observation Care

As we have done for the past few weeks now, we start with news about Medicare Advantage (MA). Last week, the Centers for Medicare & Medicaid Services (CMS) sent to MA plans a frequently asked questions (FAQs) paper on what they can and cannot do in 2024, pursuant to the new regulations in CMS-4201-F.

I must first give a shout-out to Dr. Edward Hu from UNC Health, a past president of the American College of Physician Advisors who obtained a copy of the document and shared it, since CMS has not posted it anywhere online. If you have not yet seen it, you can find it here.

The highlight of this document to me is that everything I have been saying on Monitor Mondays and writing about for RACmonitor news about the Two-Midnight Rule and the use of commercial criteria like MCG by MA plans is supported by CMS. That was a big relief.

What is new on the document is that CMS really went after the MA plans for using artificial intelligence (AI) tools like naviHealth to limit or deny access to post-acute care. Now, similar to use of MCG criteria, CMS does not ban the use of such AI tools, but stresses that before denying or limiting care, the plan must assess the patient’s needs, compared to the CMS requirements. In other words, if the tool predicted an inpatient rehabilitation facility (IRF) stay of eight days, but on the eighth day, the patient still meets the IRF requirements, the MA plan cannot deny continuing care. As I have said before, tools like this are absolutely appropriate for approving things: if criteria are met, approve it. No need for a physician review or requesting medical records or a phone call. But if the criteria are not met, they must go further, be it referring to a physician advisor if inpatient admission is in question or a rehabilitation nurse if post-acute care is in question, so they can review for ongoing medical necessity for hospital care or for post-acute care, comparing their current needs to the CMS criteria.

CMS also scolded MA plans for playing games by approving inpatient admissions and then denying payment after discharge, not as a level-of-care denial but as a payment review denial. If you have received any of those, get the FAQ and pass it on to your appeals team.

Tired of MA news?

I have something totally unrelated. Recently I was asked a question about a Medicare Administrative Contractor (MAC) educational page on observation. Interestingly, two other MACs have a similar educational page, all updated in 2023.

So, what’s wrong? First, they all say “outpatient observation services generally do not exceed 24 hours.” Um, have they not heard of the Two-Midnight Rule? Observation could be compliantly up to almost 48 hours, dependent on the patient’s presentation time. That’s really sad they say otherwise.

Then they say “the order for outpatient observation services must be in writing and clearly specify outpatient observation. The order must include the reason for observation, services ordered and be signed, dated, and timed by the physician responsible for the patient during his/her outpatient observation care.”

Did they say, “in writing”? Are they insisting the doctor hand-write that order? An electronic order will not suffice?

Now, date and time is certainly reasonable on an order, but there is no regulation or mention in any manual requiring the order to specify the reason for observation. Will these MACs deny observation claims for physicians and hospitals when the reason is not in the order? Where do they even get these things to include them in their notices?

The notice also states that they want the services ordered specified in the order for observation. Do they not know that the service is observation? Now, perhaps that goes back to the definition of observation from CMS that says it is a “well-defined set of specific, clinically appropriate services,” but they never define those services. Does ordering vital signs at eight hours suffice? Must the doctor specify that the nurse must enter the room at specified intervals and interview and examine the patient?

I have reassured the person who asked about this that their current process of simply obtaining an order for observation is compliant, and nothing more is necessary for the hospital and physician to bill for the care.

Now, how long observation should last is a topic for another time. And for that, tune into my RACmonitor webcast in March.

Facebook
Twitter
LinkedIn

Ronald Hirsch, MD, FACP, ACPA-C, 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, and the National Association of Healthcare Revenue Integrity, 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).

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

The Cost of Ignoring Risk Adjustment: How HCCs Impact Revenue & Compliance

The Cost of Ignoring Risk Adjustment: How HCCs Impact Revenue & Compliance

Stop revenue leakage and boost hospital performance by mastering risk adjustment and HCCs. This essential webcast with expert Cheryl Ericson, RN, MS, CCDS, CDIP, will reveal how inaccurate patient acuity documentation leads to lost reimbursements through penalties from poor quality scores. Learn the critical differences between HCCs and traditional CCs/MCCs, adapt your CDI workflows, and ensure accurate payments in Medicare Advantage and value-based care models. Perfect for HIM leaders, coders, and CDI professionals.  Don’t miss this chance to protect your hospital’s revenue and reputation!

May 29, 2025
I050825

Mastering ICD-10-CM Coding for Diabetes and it’s Complications: Avoiding Denials & Ensuring Compliance

Struggling with ICD-10-CM coding for diabetes and complications? This expert-led webcast clarifies complex combination codes, documentation gaps, and sequencing rules to reduce denials and ensure compliance. Dr. Angela Comfort will provide actionable strategies to accurately link diabetes to complications, improve provider documentation, and optimize reimbursement—helping coders, CDI specialists, and HIM leaders minimize audit risks and strengthen revenue integrity. Don’t miss this chance to master diabetes coding with real-world case studies, key takeaways, and live Q&A!

May 8, 2025
2025 Coding Clinic Webcast Series

2025 ICD-10-CM/PCS Coding Clinic Update Webcast Series

Uncover critical guidance. HIM coding expert, Kay Piper, RHIA, CDIP, CCS, provides an interactive review on important information in each of the AHA’s 2025 ICD-10-CM/PCS Quarterly Coding Clinics in easy-to-access on-demand webcasts, available shortly after each official publication.

April 14, 2025

Trending News

Featured Webcasts

The Two-Midnight Rule: New Challenges, Proven Strategies

The Two-Midnight Rule: New Challenges, Proven Strategies

RACmonitor is proud to welcome back Dr. Ronald Hirsch, one of his most requested webcasts. In this highly anticipated session, Dr. Hirsch will break down the complex Two Midnight Rule Medicare regulations, translating them into clear, actionable guidance. He’ll walk you through the basics of the rule, offer expert interpretation, and apply the rule to real-world clinical scenarios—so you leave with greater clarity, confidence, and the tools to ensure compliance.

June 19, 2025
Open Door Forum Webcast Series

Open Door Forum Webcast Series

Bring your questions and join the conversation during this open forum series, live every Wednesday at 10 a.m. EST from June 11–July 30. Hosted by Chuck Buck, these fast-paced 30-minute sessions connect you directly with top healthcare experts tackling today’s most urgent compliance and policy issues.

June 11, 2025
Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Substance abuse is everywhere. It’s a complicated diagnosis with wide-ranging implications well beyond acute care. The face of addiction continues to change so it’s important to remember not just the addict but the spectrum of extended victims and the other social determinants and legal ramifications. Join John K. Hall, MD, JD, MBA, FCLM, FRCPC, for a critical Q&A on navigating substance abuse in 2025.  Register today and be a part of the conversation!

July 16, 2025

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24