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The promise of patients over paperwork may greatly benefit hospitals.

The Centers for Medicare & Medicaid Services (CMS) has posted the 2019 Inpatient Prospective Payment (IPPS) Proposed Rule, with the agency suggesting it would strip away language that a physician’s order must be in the medical record in order for a hospital to be paid for inpatient services under Medicare Part A.

When CMS adopted the 2014 IPPS Final Rule, it added a requirement that the admission order be provided by a qualified practitioner and that the order be authenticated prior to discharge. In an Open Door Forum (ODF), CMS even stated that if an inpatient admission order was not authenticated prior to discharge, the admission “never occurred,” meaning the hospital stay could be billed as an outpatient stay to Medicare Part B.

CMS did provide one exception, allowing in “extremely rare” circumstances the billing of an inpatient admission when the admission order is defective or missing, but noted that the exception could only be used in a scenario in which there was “no reasonable possibility that the care could have been adequately provided in an outpatient setting.”

But this may all change on Oct. 1, 2018. In the 2019 IPPS Proposed Rule, again, CMS indicated that it would “remove the language stating that a physician order must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A.”

But before anyone gets excited and plans to stop asking physicians for inpatient admission orders, be advised that CMS also noted that “this proposal does not change the requirement that an individual is considered an inpatient if formally admitted as an inpatient under an order for inpatient admission.”

What does this mean? As with many CMS regulations, the exact meaning is subject to interpretation, and the final rule may differ from the proposed rule. But it appears the following points seem reasonable, assuming the proposal is finalized without modification:

  • An admission order authenticated prior to discharge will no longer be a condition of payment.
  • An inpatient admission order will still be required, but it will no longer be a “do-or-die” requirement. (This is classic CMS ambiguity: something is required, but at the same time not required).
  • Inpatient admissions must still meet the requirements of the two-midnight rule, which includes the two-midnight expectation, the two-midnight benchmark, and the approved exceptions to the two-midnight expectation, which at present are inpatient-only surgery, unexpected mechanical ventilation, and a case-by-case determination by a physician that a patient with an under-two-midnight expectation warrants inpatient admission.
  • If an inpatient order is provided but not signed prior to discharge, the admission will be able to be billed to Part A if inpatient admission was appropriate.
  • If the admission order is defective, such as only stating “admit” without specifying “inpatient,” but the admission was proper, the admission will be able to be billed to Part A.
  • If the admission order is never provided, the hospital could consider billing an inpatient admission if the requirements of the two-midnight rule were met. This will no longer have to be reserved for “extremely rare” circumstances.
  • State law and medical staff rules must still be followed with regard to who should provide an admission order and authentication, but failure to meet those laws and rules will not mean inpatient admission cannot be billed to Medicare.

Some of the unknowns about this proposal that occurred to me include the following:

  • Must there be some inpatient admission action taken by the registration staff, or must the patient be informed they are being admitted as inpatient and provided the initial Important Message from Medicare, or IMM (and the follow-up copy, if applicable)? In other words, will an inpatient admission be able to be billed if there is no registration or notification to the patient that they are an inpatient (they were outpatient throughout their stay)? Or must there be some form of “admission” of the patient? Does the length of stay matter? Can a five-day stay without an inpatient order be billed as inpatient if hospital care was medically necessary? What about a two-midnight stay?
  • In the Jan. 30, 2014 sub-regulatory guidance, CMS stated that “if the physician or other practitioner responsible for countersigning an initial order or verbal order does not agree that inpatient admission was appropriate or valid (including an unauthorized verbal order), he or she should not countersign the order and the beneficiary is not considered to be an inpatient. The hospital stay may be billed to Part B as a hospital outpatient encounter.” Will this still apply, or since order authentication would be “optional,” will this inpatient now require the condition code 44 process to be changed to outpatient or the self-denial process to be changed to Part B billing?
  • If state law or medical staff rules regarding admission orders and authentication of orders are violated, what will be the consequences? If an emergency medicine physician or non-physician practitioner without admitting privileges writes an admission order and the attending never cosigns it or cosigns it late, what action can be taken against the hospital?

Before you even contemplate any changes, we need to wait for CMS to accept comments, review the comments, and then make adjustments, and release the final rule. Then we must wait again until the final rule becomes effective on Oct. 1.

We can only hope that CMS addresses some of these unknowns in the final rule. Comments (and unanswered questions) can be submitted once CMS posts the proposed rule on the regulations.gov website on or about April 30. Simply search for “CMS-1694-P.”


Program Note:

Listen to Dr. Hirsch on Monitor Monday this coming Monday as he continues his reporting on the 2019 IPPS Proposed Rule.

Read the Proposed Rule



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Ronald Hirsch, MD, FACP, 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, 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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