Non-compliant Payers: “Hello, CMS, Are You Listening?”

As you may know, several payers have adopted a policy that they will review hospital billing for facility fees for emergency department visits, and will use their proprietary tools to automatically downgrade such visit codes based on the diagnoses and services listed on the claim. But as nearly all surely know, this is not compliant activity.

Centers for Medicare & Medicaid Services (CMS) guidance is that hospitals should develop their own guidelines on choosing a facility code and sticking by it. It does not say that payers can arbitrarily adjust the codes. Of course, they are free to request the medical record and a copy of the hospital coding guidelines and audit the claim, but that is clearly not the same as a computer algorithm automatically downgrading the claim.

And now this activity is spreading. Last week, Blue Cross of North Dakota said that they are going to start doing the same thing to physician billing for office and emergency department visits billed with level 4 or 5. They will look at the diagnoses on the claims and automatically downgrade the code to a lower level whenever they feel it is appropriate.

Are they kidding? That’s not how visit codes are selected. It is not based on diagnoses submitted on the claim; it is based on the physician’s medical decision-making under the 2023 rules for evaluation and management visit code selection. And the only way to see the medical decision-making is to read the medical record. Yet will they request the record? Nope.

Will they even inform the provider that their code was downgraded? Nope; the doctor will simply get paid the lower amount. If they do not have software that compares the expected payment per contract to the amount actually paid, they will be none the wiser. Now, of course, you may be thinking, “it’s North Dakota, with less than a thousand physicians in the whole state, so who cares?” Well, you know these payers watch each other and copy their competitors’ tactics to reduce expenditures, so expect it to spread. And of course, talk to your contracting team and ensure that this activity is prohibited in your contracts.

Moving on, sometimes you think you have heard everything, then something new pops up. A Medicare Advantage (MA) patient was hospitalized as an inpatient. The hospital compliantly provided the initial and follow-up copies of the Important Message from Medicare (IMM). The patient was stable for discharge, and was informed of that. The patient then called their Quality Improvement Organization (QIO) to appeal their discharge. So far, so good. But then the QIO informed the hospital that they contacted the MA plan, Aetna Better Health, and the MA plan informed them that the patient’s stay was approved for two more days – and as a result, they were not going to review the case, and the patient must be permitted to stay.

What? Since when does the payer’s determination of approved days have any standing in a discharge appeal? Heck, since most contracts pay inpatient admissions as diagnosis-related groups (DRGs), the MA plan could authorize every single day regardless of medical necessity, up until the claim hits the contracted outlier status, since they pay not one additional cent until then. But that’s not how the system works. The QIO’s determination should be based solely on medical necessity for hospital care. I certainly hope this hospital pursues this and we get clarification. This cannot possibly be right.

This is also a good time to note that we still have no official guidance from CMS on how to properly shift financial liability to MA patients. They have informed us that the Hospital-Issued Notices of Non-Coverage (HINNs) and Advance Beneficiary Notice (ABN) cannot be used for MA patients, but do not provide any alternative. Some facilities “adapt” these notices by removing any mention of CMS or Medicare, and some use their legal staff to develop a formal patient notice. And while that seems reasonable, without formal guidance, we are all just hoping we are doing the right thing.

Hey, CMS, are you reading this? Help us out. You know the MA population is growing, and more patients are appealing their discharge. We want to do things properly.

Programming note: Listen every Monday as Dr. Ronald Hirsch makes his Monday Rounds on Monitor Mondays with Chuck Buck, 10 Eastern and sponsored by R1 Physician Advisory Solutions.