United Healthcare’s Medicare Advantage and the Two-Midnight Rule

Well, I suppose I have given you enough of a break from my writing about Medicare Advantage (MA) plans and the Two-Midnight Rule. Last week, United HealthCare (UHC) released its coverage summary for hospital care for patients with UHC Medicare Advantage.

And despite the many comments that UHC medical directors felt the rule did not apply to them, or that the hospital’s contract with UHC takes precedence, UHC’s policy is that as of Jan. 1, all provisions of the Two-Midnight Rule apply to them. And I have to admit, I was pleasantly surprised to see them specifically describe the Inpatient-Only List and the case-by-case exception. Now, of course, they do not tell us how they will determine the actual need for hospital care, how they will decide that a second midnight is necessary, or when the case-by-case exception will be allowed.

Despite the adherence with CMS-4201-F demonstrated, I will note that UHC’s policy includes the statement “for coverage to be appropriate under Medicare for an inpatient admission, the documentation must clearly support the member’s severity of illness and intensity of service to warrant the need for inpatient medical care.” That, of course, is absolutely not what the rule states and such a statement became obsolete 10 years ago. In fact, UHC previously attributed this statement to the Centers for Medicare & Medicaid Services (CMS) Quality Improvement Organization (QIO) Manual, Chapter 4, which was last updated in 2003. Now, did they include it on purpose to create confusion and give them a way to deny appropriate inpatient admissions? It will be interesting to see if it is referenced in denials.

Last week also saw the release of a white paper from MCG on Frequently Asked Questions regarding observation. It is a must-read. To quote Dr. Clarissa Barnes, the new president of the American College of Physician Advisors, “Ths quote alone is gold ‘Different payers may have different durations for observation care; however, our view is that the Two-Midnight Rule is a good rubric to have in mind. Time frames beyond this (e.g., 72 hours, 3 days) are not what MCG envisions for observation care.”

Next, last week CMS released the outpatient rule for 2024, along with other final rules. The good news is that for case management and utilization review, almost nothing is changing. There was not one word about the Two-Midnight Rule and inconsequential changes to the Inpatient-Only List.

Normally, I do not talk about payment, but it is worth noting that the payment for comprehensive Ambulatory Payment Classification (APC) 8011, the APC to which most observation stays are assigned, will increase by $171.69. That is a 7-percent increase, which far exceeds the 2024 changes for most other payments. In fact, 2024 will bring a nearly 4-percent decrease in payment for outpatient total joint arthroplasty.

By the way, if you want the 2024 Inpatient-Only List, it’s also posted on my webpage, www.ronaldhirsch.com, along with addendum B. As you will see on my webpage, I advise not using the Inpatient-Only List and instead using addendum B.  

Finally, CMS recently released data on their prior authorization program for specific outpatient surgeries. They did not break down the data by surgery type, but overall, the Medicare Administrative Contractors (MACs) approved 78.6 percent of requests in 2022. I am honestly surprised by that number. Providers know exactly when surgery is covered and what information needs to be submitted, yet over 20 percent of the time, that doesn’t happen. Numbers like this are going to get CMS to realize that maybe prior authorization for more procedures is not such a bad idea for Medicare.