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.

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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).

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