CMS Tells Livanta to Reassess Short-Stay Memo

Well, I went and did it.

You have been hearing me talk over the past few weeks about the now-infamous Livanta memo, in which they explained the applicability of the case-by-case exception to the Two-Midnight Rule. As you may recall, this memo had two types of cases they presented in a very comprehensive way, analyzing them in a format that followed the Centers for Medicare & Medicaid Services (CMS)-sanctioned flowsheet for determining the applicably of the Two-Midnight Rule.

The two cases cited in the memo involved a patient with gastrointestinal bleeding and another with angioedema. From the descriptions provided, the applicability of the exception to these two cases seemed marginal at best, but who were we to question Livanta, the national short-stay inpatient admission auditor?

As Livanta described it, they did not feel it was their position to second-guess the decision of the physician to admit the patient as an inpatient due to increased risk. I support that, but at the same time, that risk must truly be increased. But risk is not only relative, but subjective. How much added risk warrants inpatient admission? What is the “baseline” risk that should be viewed as the comparator? In their example, perhaps the patient with angioedema manifesting as swelling of the lips would be appropriate for outpatient care, but edema in the throat, even if resolved after ED treatment, makes this patient’s risk high enough to warrant inpatient admission.

In addition, we do not have access to the actual medical records. Did the physician actually document “due to increased risk, inpatient admission is warranted”? If so, that would certainly support Livanta’s approval of inpatient admission, but how often do physicians actually do that?

But it was their statement that any Medicare patient presenting emergently with acute appendicitis or acute cholecystitis who needed surgery could be admitted as inpatient that really raised questions. In both of those cases, the surgery itself is not on the Inpatient-Only List, if done laparoscopically. Of course, that does not mean the patient cannot be admitted as inpatient if they fit the case-by-case exception or were expected to need two or more midnights, such as if perforation or peritonitis was present, but that is not what Livanta was stating. They stated that all such patients could be admitted as inpatients.

When this memo came out, I first corresponded with Livanta, and they continued to support their recommendations. I then contacted CMS and was told that the memo was reviewed and approved for release. Livanta said it and CMS agreed with it. What more was there to do than believe it?

But this just did not sit well with me – or most others. You may recall that I conducted a poll on LinkedIn, and 89 percent of respondents did not agree with this, and stated they would advise outpatient status. So, my next step was to submit a request to CMS to discuss this on the next Open Door Forum. They responded by asking me to send my request to the short-stay review team at CMS.

I was not able to attend the Open Door Forum two weeks ago, but Dr. Stephanie VanZandt from BayCare did attend and asked about the memo. As she describes it, her question was met with crickets. They asked her to submit the question via email.

Well, last week I received another email from the CMS short-stay review team, this time noting that CMS has instructed Livanta to retract the memo pending review.

Now, let me be clear here. I would absolutely love for hospitals to be able to admit all these patients as inpatients and get the DRG (payment for DRG 343 ~$10,000) rather than the outpatient payment (base payment for C-APC 5361 is $5,212) – but at the same time, I am personally committed to maintaining the highest standards in compliance and ethics, and Livanta’s recommendations just did not allow me to do that. I was obligated to get clear and unambiguous clarification.

Ten years of working with the Two-Midnight Rule and seven years with the case-by-case exception told me they were interpreting it improperly. And most of my colleagues felt the same way. In addition, we are less than four months away from the Two-Midnight Rule being applicable to the Medicare Advantage plans, so it is crucial that CMS’s interpretation be clear and unambiguous.

So, what now? Well, we wait. Perhaps CMS will come back and say that Livanta was completely correct. More likely they will make some modifications to the recommendations.

Either one is fine with me, but we all just want something definitive and binding, so we can all teach the rules appropriately and compliantly.