Malfeasance – A Two-Way Street? And more on Criteria

We have been talking a lot lately about the malfeasance of Medicare Advantage (MA) plans, and deservedly so. But malfeasance can be a two-way street. Last week, the Lown Institute released data on unnecessary back surgery.

From their analysis of Medicare and MA data, more than $2 billion was spent on such surgeries over a three-year period.

The numbers are rather startling, so do take some time to review their report. Not only do they talk about overuse, but they call out the facilities that are judicious in their use of surgery for patients with back pain.

One data point really stood out to me: at a well-known academic medical center in Ohio, very close to a large lake, fewer than 1 percent of patients with osteoporotic vertebral fractures received in an unnecessary vertebroplasty, but at a very famous hospital in Arizona affiliated with a healthcare system based in Minnesota and named after two brothers, this rate was nearly 20 percent. Now, of course, claims data is woefully inaccurate, but there is clearly a difference in utilization. Is this overuse by one, underuse by the other, or simply true patient variation?

In that light, many of you may recall me reporting on national observation rates, using data from 2021. Well, I was able to obtain data from 2023, and the pattern is the same. First, since everyone has slid to the edge of their chairs waiting, the average observation rate, excluding hospitals under 25 beds and those that had no observation stays at all, is 18.4 percent. Now, remember, this is not the benchmark, and the data is very rough, so do not go using it as a target. If you get every patient in the right status, then your observation rate is where it should be.

But back to malfeasance. The startling part is that once again, the number of hospitals that had not one claim paid as the comprehensive Ambulatory Payment Classification (APC) for observation stands out. Now, for many, they are surgical hospitals or specialty hospitals, and not all Maryland hospitals pay observation the same way they do in every other state, but way too many are regular hospitals that should be submitting some or many outpatient claims with patients who received eight or more hours of observation services and then get paid under C-APC 8011. The data format is messy, so I cannot exclude every hospital that has a legitimate reason to not get paid for any observation stays, but it is at least 100 hospitals in this cohort. No observation? Can you blame the MA plans from using a skeptical eye to view us, when some of us play our own games?

Finally, Dr. Eddie Hu and I recently had a discussion about something I said last week. I noted that MA plans are allowed to use InterQual, MCG, or the Magic 8 ball to approve inpatient admissions. He disagreed. He noted that 42 CFR 422.566 requires MA plans to make determinations based on Medicare coverage rules. And the coverage rule for inpatient admission is the Two-Midnight Rule, which requires determining the expected length of necessary hospital care.

And neither InterQual nor MCG do that. In fact, in a comment to the Centers for Medicare & Medicaid Services (CMS) on a proposed rule, MCG states, “the problem is that there is rarely published evidence to help predict how long it will take for a given patient to improve sufficiently for discharge. Often, sources will use terms that describe the nature and severity of illness as a means to help the clinician identify severe illness; however, it is very rare to find any evidence that ties a particular finding or severity of illness to a likely duration of need for hospital care. For example, in heart failure, there are no ‘specific’ sources that state how many midnights recovery might take.”

That means we really have no way for the PAYERs, or the Medicare auditors for that matter, to objectively determine if the physician’s decision to admit the patient as an inpatient meets the CMS regulations. No NCD, no LCD, no medical literature. It truly is the utmost of subjectivity.

On Monitor Mondays, a listener recently asked why the rule persists if there is no literature to allow accurate prognostication. And that’s a very astute question. I think that for the first 10 years of the rule, the MA plans were not held to the rule by CMS, and denials occurred, but when CMS-4201-F mandated compliance with the Two-Midnight Rule, the numbers of audits surged. This lack of objective measures has resulted in more frustration, and as a result, more complaints to CMS. (If you are not yet reporting malfeasance to CMS yet, follow the instructions here to start doing it.) Perhaps CMS will now realize the large gap in every party’s ability to comply with the rule, and will provide more guidance. But then again, maybe the Magic 8 ball is the solution.

These opinions are those of Dr. Hirsch and not R1 RCM or MedLearn Media.