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The 2016 Outpatient Prospective Payment System (OPPS) Final Rule finally has been released, and the Centers for Medicare & Medicaid Services (CMS) has adopted the proposed change to the two-midnight rule to allow for physician judgment.

While this may have muddied the waters a bit for determinations for patients with traditional fee-for-service Medicare, that confusion and frustration pales in comparison to the continuing struggles of hospitals trying to get paid for inpatient care provided to patients covered by Medicare Advantage (MA) plans. These plans use many of the same tactics employed by the Recovery Auditors (RACs), using the outcome of the hospital stay to retrospectively deny inpatient admissions and applying commercial criteria sets only when they allowed them to deny a case (and, in other cases, misapplying the criteria to deny inpatient admission).

At the same time, these insurers are reporting increasing profits, with UnitedHealthCare (UHC) reporting net income of almost $1.6 billion over the last three months and Aetna reporting almost $750 million for the same period. Several of these insurers are also planning mergers, with UHC and Aetna planning to join forces and Anthem talking of merging with Cigna. These mergers are under close scrutiny by all, with the American Hospital Association (AHA) already opposing them on antitrust grounds.

CMS is also continuing to promote MA plans, since it allows CMS to pay a monthly risk-adjusted payment to cover all costs, relieving the agency of the day-to-day responsibility of claim payment. While this seemed to be a way to limit expenditures by Medicare, few were surprised to read how the MA plans were taking advantage of CMS by inappropriately increasing patient’s risk scores, thereby increasing their monthly capitation payments and net outlays by the Medicare Trust Fund.

While individual hospitals will have little voice in the merger discussions or the investigations into upcoding, hospitals can continue to fight the MA plans on a case-by-case basis and get the reimbursement for the care they provided. To quote one case manager, “UHC MA patients only represent a small proportion of our patients but the vast majority of our denials.” I continue to hear similar statements around the country. I therefore will use UHC to illustrate the misapplication of policies and lay the foundation for denial prevention.

One really needs to go no further than the UHC Hospital Services (Inpatient and Outpatient) Policy, No. H-006, last updated on Sept. 15, which states simply, “Coverage Statement: Hospital services (inpatient and outpatient) are covered when Medicare criteria are met.” You really cannot get any clearer than that; if Medicare criteria for inpatient admission are met, the claim should be paid as an inpatient admission.

That therefore means that as of now, the admission criteria specified in the Inpatient Prospective Payment System (IPPS) Final Rule, also known as the “two-midnight rule,” should be followed by UHC since it is the current “Medicare criteria.” So if a physician has a reasonable expectation of a two-midnight stay, the documentation supports that expectation (or meets one of the exceptions), and the patient is formally admitted, the inpatient admission should be paid by UHC even if the patient is subsequently discharged prior to the second midnight.

CMS says this quite clearly in the Executive Summary to the 2014 IPPS Final Rule in the Federal Register, volume 78, number 160, page 50506, stating that “we are specifying that for those hospital stays in which the physician expects the beneficiary to require care that crosses two midnights and admits the beneficiary based upon that expectation, Medicare Part A payment is generally appropriate.” And therefore, based on UHC policy H-006, if a physician expects a UHC MA patient to require care that crosses two midnights and admits the beneficiary, inpatient payment from UHC is generally appropriate.

Furthermore, I am told that one of the most common denials by UHC is for the patient who is placed in outpatient with observation (because there is no expectation of a two-midnight stay or the physician is unsure of the expected length of stay) who subsequently worsens or does not improve and continues to require hospital care, as stated on page 50945, “to receive services or reduce risk.” Per the CMS two-midnight rule, this patient warrants inpatient admission. But when the hospital contacts UHC to provide notification, they are told that the patient should remain in outpatient status and that UHC will not approve inpatient admission “because the patient does not meet inpatient criteria.” That means that UHC is dictating that the patient who continues to require hospital care should remain in the hospital past the second midnight as an outpatient. But this is explicitly contrary to the Medicare criteria (and therefore, to UHC policy) that states that “beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written.” This does not indicate that “the patient must meet inpatient criteria” or “the patient must be worsening;” inpatient admission simply requires that the patient needs to remain in the hospital for care that cannot be safely provided at a lesser setting.

Because it is so important, let me repeat CMS’s mandate: “beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written.” In other words, if such patients cannot advance to the next level of care safely, be it home or to a skilled nursing facility, regardless of who is going to pay for the SNF, then inpatient admission is warranted. The final rule even states that that in “only rare and exceptional cases do reasonable and necessary outpatient observation services in the hospital span more than 48 hours.”

What patients meet this standard? Any patient who requires care that can only be safely provided in the hospital, based on the condition. A patient who was placed as outpatient with observation for dehydration and is receiving intravenous fluids but does not improve meets this standard; we are not at the point where we would send a patient home with a bag of saline and ask them to squeeze the bag to drip it in at 30 drops a minute. Likewise, if an observation patient with acute pain continues to require IV analgesia, he or she should be admitted as inpatient prior to the second midnight; we cannot send them home with a handful of syringes of Dilaudid, some saline flush syringes, and a heparin lock in place and ask them to self-administer the medication when their pain gets over a 7 out of 10 on the scale.

What about criteria? The UHC denials often indicate that the patient did not “meet criteria for inpatient admission.” But this is a gross misinterpretation of the criteria. To paraphrase the criteria (and avoid possible copyright infringement), InterQual notes that inpatient admission is indicated on episode day three if the patient is not clinically stable for discharge and the patient exceeds the observation day limit, which is two days. It does not require the patient to “pass inpatient criteria,” but only be unstable for discharge after two days of care, which is a much lower hurdle to clear.

MCG care guidelines contain similar language. Their guidelines state that inpatient admission is required rather than observation when symptoms are too persistent to be within the scope of observation care. “Too persistent” is defined as insufficient improvement or worsening despite treatment lasting up to 24 hours. As with InterQual, to warrant inpatient admission, MCG simply requires the patient to continue to need care that can only be safely provided in a hospital, even if that care is simply a continuation of the exact same care that was provided to them for the first day.

So the next time you contact UHC for authorization to admit a patient as an inpatient prior to the second midnight, ask them first if they agree that the patient continues to require hospital care. If so, refer to UHC Policy H-006 and then to the Federal Register, volume 78, number 160, page 50506, and demand they approve the inpatient admission. If the UHC representative feels that the patient is stable for discharge to a lower level of care and does not even need hospital care, make use of the discharge screens in your criteria to determine if this is in fact the case. If the patient does not pass discharge screening, the UHC representative should be asked to support their denial with specific facts, and a peer-to-peer discussion may be indicated. And of course if the patient does pass discharge screening, it is more difficult to argue with the insurer. At that point, contact the patient’s physician to determine if there are additional clinical factors to explain why the patient is not being discharged, with intervention by your physician advisor if necessary.

It is unfortunate that hospitals have to devote resources to these efforts, but if the MA plans are allowed to continue to say one thing and do another thing and make up their own rules and apply them selectively, at some point patients may pay the ultimate price by suffering lack of access to quality medical care. Hospitals must continue to fight these cases one by one until the MA plans are held accountable for their activities.

About the Author

Ronald Hirsch, MD, FACP, CHCQM is vice president of the Regulations and Education Group at Accretive Physician Advisory Services at Accretive Health. 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 American Case Management Association and a Fellow of the American College of Physicians. 

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