While supplies last! Free 2022 Coding Essentials for Infusion & Injection Therapy Services book with every RACmonitor webcast order. No code required. Order now >

On November 26, 2012, National Government Services (NGS) published a “news article” on its website entitled, “Two-Step Process for Clinical and Payment Decisions.” 

NGS stated it has been working closely with CMS to develop a two-step process to determine whether a patient should be admitted as an inpatient or treated and receive outpatient observation. They asserted that this designation should have no bearing on the medically necessary services that the patient receives, since “either status allows for the full scope of services needed to safely and successfully treat the patient,” thus blurring the line between inpatient and outpatient procedures. 

They explained that the two-step process would “allow for a 48-hour period in which an order for inpatient versus outpatient status is made, based on assessment of progressing clinical status and a reasonable expectation of the time frame in which care will be safely completed,” and the patient could be admitted as an inpatient any time the patient progressed to a “more clinically complicated or unstable status.”

Step one of this two-step process is for the physician to establish a presumptive diagnosis and treatment plan and determine whether the patient can be safely released from the ED or post-anesthesia care unit. If the patient is not stable for release, in cases where there is a “definitive diagnosis” inpatient admission is appropriate if “the practitioner understands that the patient will need ongoing inpatient services with a high degree of certitude or assesses the likelihood that care may be safely rendered within a 48-hour time frame.” The article defined two situations when inpatient status is appropriate: For “diagnostic/therapeutic treatments expected to require a stay of greater than 48 hours,” or when “the patient remains unstable, diagnosis unclear at 48-hour mark.” Outpatient/ observation status is to be used when “patient stabilized and or treatment effective within 48 hours, allowing for discharge” and for the “’rule out’ phase, in which diagnosis is uncertain and a diagnostic/therapeutic plan has not been fully ascertained.”

This article, which it must be noted was not in the form of a Local Coverage Determination (LCD) and does not have the authority of an LCD, is sure to cause a lot of confusion nonetheless.

It appears to be inconsistent with the regulations delineated in the Medicare Benefit Policy Manual, Chapter 1, Section 10, which states:

“Physicians should use a 24-hour period as a benchmark, i.e., 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, the decision to admit a patient is a complex medical judgment which 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.” Furthermore, “admissions of particular patients are not covered or noncovered solely on the basis of the length of time the patient actually spends in the hospital.”

The NGS statement appears to violate several aspects of this CMS guidance. While acknowledging that the decision of the treating physician is “essential to the patient’s status designation as either inpatient or outpatient,” they seem to have oversimplified the admission decision to a determination of “a reasonable expectation of the time frame in which care will be safely completed… with a high degree of certitude.” This policy, which is tied to a 48-hour time frame, flies in the face of the 24-hour benchmark recommended in the Medicare Benefits Policy Manual and the concept of the “complex medical decision” as well. The Manual clearly states that actual length of stay is not to be used to define coverage for admission, yet NGS has apparently done just that.

Hospitals in NGS MAC/FI jurisdictions are now faced with how to react to this new spin on the admission decision. Since the ALJ must follow NCDs and give deference to LCDs but doesn’t use “news articles” in its decisions, it would be wise to stay with the regulations as they appear in the manuals, NCDs, and LCDs.

Of course, if applied to one- and two-day stays, a “48-hour rule” could result in a lot more denials, appeals, and delays in payment. Meanwhile, watch for clarification from NGS on this issue.

About the Author

Steven J. Meyerson, MD, is a Vice President of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

Contact the Author


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

The NGS news article: http://www.ngsmedicare.com/wps/portal/ngsmedicare…

Please send us your comments on “Two-Step Process for Clinical and Payment Decisions” at our blog.


Steven J. Meyerson, MD, CHCQM-PHYADV

Steven Meyerson, MD, CHCQM-PHYADV, is the founder of Steven Meyerson Consulting. Dr. Meyerson is a nationally recognized expert and consultant in the physician advisor role, case management, and hospital Medicare compliance. He is board certified in internal medicine and geriatrics and serves on the board of the American College of Physician Advisors (ACPA). He edits and writes for the ACPA online blog.

You May Also Like

Leave a Reply

Your Name(Required)
Your Email(Required)