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According to CMS, some hospital staff members are concerned about how Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), Fiscal Intermediaries (FIs), and the Comprehensive Error Rate Testing (CERT) contractors are using screening criteria (such as Interqual) to analyze medical documentation to determine whether inpatient hospital claims are medically necessary. In the memo, CMS explains how claims are reviewed for appropriate inpatient admissions and summarizes the resources that hospital staff may use to understand inpatient admission decisions.


CMS noted that contractors use other criteria (besides screening criteria) to determine whether an inpatient hospital claim meets medical-necessity requirements. In addition to Medicare coverage guidelines, they also use admission, invasive procedure, and published CMS criteria as well as practice guidelines that are well-accepted by the medical community.


According to CMS, contractors ask questions such as the following during their reviews:


  • Was the inpatient hospital care medically necessary, reasonable, and appropriate for the diagnosis and the beneficiary’s condition during the stay?
  • Were there any pre-existing medical problems or extenuating circumstances that made the beneficiary’s admission medically necessary?
  • Were the beneficiary’s signs and/or symptoms severe enough to warrant the need for medical care?
  • Did the beneficiary receive services of such intensity that they can be furnished safely and effectively only on an inpatient basis?


Inpatient care, rather than outpatient care, is required only if the beneficiary’s medical condition, safety, or health would be significantly and directly threatened if that care was provided in a less intensive setting. Without accompanying medical conditions, factors that would only cause the beneficiary inconvenience in terms of time and money needed to care for the beneficiary at home or for travel to a physician’s office, or that may cause the beneficiary to worry, do not justify a continued hospital stay.


Appropriate Admission


Answers to the question “What constitutes an appropriate inpatient admission?” are answered for hospital staff and others in the Medicare Benefit Policy Manual (Chapter 1, Section 10). Specifically, an inpatient is someone who has been formally admitted to a hospital for bed occupancy for purposes of receiving services there. The expectation is that, in most cases (but not all), he or she will remain at least overnight and occupy a bed.


Naturally, a physician or other practitioner responsible for a patient’s hospital care is responsible for deciding whether the patient should be admitted as an inpatient. They should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis.


However, as the Medicare manual explains, the decision to admit a patient is a complex medical judgment that can be made only after the physician has considered a number of factors, including the patient’s medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital’s by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors that must be considered when making the admission decision include such things as:


  • The severity of the signs and symptoms exhibited by the patient;
  • The medical predictability of something adverse happening to the patient;
  • The need for diagnostic studies that appropriately are outpatient services (i.e., their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more) to assist in assessing whether the patient should be admitted; and
  • The availability of diagnostic procedures at the time when and at the location where the patient presents.


Admissions of particular patients are not covered or non-covered solely on the basis of the length of time the patient actually spends in the hospital.


To comment on this article please go to editor@racmonitor.com


About the Author


Carol Spencer, RHIA, CCS, CHDA is a senior healthcare consultant with Medical Learning, Inc. (MedLearn®) in St. Paul, Minn. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that equip healthcare organizations with coding, chargemaster, reimbursement management and RAC solutions.

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