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


More often than not, the subjects of utilization review and case management are underreported, taking a back seat to other RAC preparedness issues, but they were front and center during this Webinar. The questions along with related concerns sparked considerable interest in how to build a rock-solid RAC defense.


Among many questions submitted, the following are provided here as a convenient reference for RACMonitor readers.


Please note that the relevant Medicare Policy Manuals mentioned below can be found here. Furthermore, a complete list of all chapters and crosswalks for the Medicare Claims Processing Manual can be found here.


The questions below are reproduced here exactly as they were submitted during the live Webinar or were received via e-mail after the Webinar. We asked the edu-Trax® staff to provide the answers as they appeared in a transcript of the Webinar.


Wherever possible, we have listed document references for your convenience.


1.    Question: “Is it allowable to use a licensed inpatient bed for physician-ordered OP/ observation services?”


Answer: CMS guidelines address the billing ‘status’ determination – outpatient/observation or inpatient – which indicates the level of care the patient requires rather than the ‘license’ of the bed the patient care is delivered in. It is not uncommon in some facilities to have inpatients and outpatient observation patients in the same room. We would suggest that facilities check with their states regarding specific licensure requirements or restrictions.


2.    Question: “Please give the Medicare manual reference for billing Part B when an inpatient admission is not medically necessary.”


Answer: See the Medicare Benefit Policy Manual, Chapter 6 (pages 3-6), Section 10: “Medical and Other Health Services Furnished to Inpatients of Participating Hospitals (Rev. 37, Issued: 08-12-05; Effective / Implementation: 09-12-05)


“In PPS hospitals, this means that Part B payment could be made for these services if: …the admission was disapproved as not reasonable and necessary…”


3.    Question: “Is the ability to use CMAP logic available to all states? In Alabama we have been told by our MAC that we could not use this method.”


Answer: CMS will neither “endorse nor recommend the use of any protocol,” however, they have supported the use of the Case Management protocol in seven demonstration states. Although MACs (Medicare Administration Contractors) may give their opinion in specific states, that opinion would not supersede an opinion by CMS.


4.    Question: “Does a hospital need the approval of CMS to implement a CMAP program?”


Answer: No. When asked, CMS answered as follows: “CMS is not recommending or endorsing any particular protocol. To the extent that such protocols are available, the hospital is responsible for ensuring that it complies with existing payment policy … the QIO should not suggest that CMS either endorses or recommends any specific protocol. If state law impacts the use of such a protocol, the hospital would comply with state law.”


5.    Question: “When you talk about the MD order ‘admit per-case management protocol,’ and you have it in the hospital bylaws, does CMS recognize these orders written by a case manager as a legitimate status order? Do they need to be cosigned? Can the writing of the order be by case management alone?”


Answer: Individuals granted the ability to write orders for patient care are limited by the state law, and to a certain extent are driven by medical staff bylaws rules and regulations. These will determine ‘who’ is able to write orders, all physician verbal, status, and status change orders must be co-signed by a physician according to CMS regulations. Any individual writing orders must ensure that such action is within the scope of their license.

6.    Question: “When an order is written for ‘assign per-case management protocol’ and the case manager doesn’t see the patient until eight hours later, what is the status of the patient until that time?  Does the status assigned only become effective at the time the physician signs the order?”


Answer: According to CMS, the time that a physician signs the observation order is the time from which billable observation time should be calculated (Medicare Claims Processing Manual, Chapter 4, Section 290.2.2). Based upon recent statements from the RACs, unsigned status change physician orders from outpatient observation to inpatient should be billed as outpatient observation until the time the physician signs the order.


7.    Question: “The patient (was) found to have an incorrect status and the (attending) physician agreed to change status to observation. Does the code 44 require this to be run through UR physician advisor?”


Answer: No. Code 44 is used when a recommended inpatient status change determination is not agreed to by the attending physician.


“… is for use on outpatient claims only, when the physician ordered inpatient services, but upon internal utilization review performed before the claim was initially submitted, the hospital determined the services did not meet its inpatient criteria prior to discharge.”


8.    Question: “I work in a CAH. We have been wording our patients as being ‘admitted to observation.’ Should we say ‘admit to outpatient’ instead of using ‘admit to observation’?”


Answer: Depending upon the patient, where the symptoms meet “observation”, the order should read “place or admit to outpatient for observation.”


9.    Question: “With regards to the communication efforts that must occur between the physicians and case managers, do you recommend that we have integrated progress notes that address the review of the case and whether the case meets our InterQual criteria? Our current CM notes are integrated with our nursing module and typically do not include the case review, whether the case met InterQual, and the discussion/communication between the key two groups.”


Answer: We would not recommend integrating CM progress notes with the nursing notes in the medical record. CM and UR documentation should be available at all times and the facility should maintain the documents in a manner which protects the QA and state privilege from discovery. These documents should be readily available to the facility in the event they would be useful in defending a RAC challenge to specific billed encounters.


10. Question: “Regarding the short-stay reviews by the RAC as a target, I would like to conduct an audit of my Medicare cases (1,2 day stays), and if I find that the records do not meet admission criteria (InterQual) would I be advised to correct and rebill as an OPT with a late entry note by the attending indicating that this case did not meet criteria and we rebill as an OPT ?”


Answer: We are unable to give a general answer to the above specific situation. We would advise that, if upon a pre-RAC internal audit results demonstrated a determination which was different from the original claim submission, the billing, rebilling, or self-disclosure of the results should be reviewed with legal counsel to determine if a pattern of behavior beyond the RACs’ review ability were demonstrated. ‘Late entry’ physician documentation would not be recommended as a routine course of action related to the above situation.


Comment: “About our modified protocol. Our protocol practice: at our facility we chose to implement CM protocol like other protocols operate – heparin protocol, for example. We do require that the physician make the initial decision for admission status assignment and on those initial orders have them mark the accept or decline CM protocol for the rest of the stay. What our protocol allows for is the clarification of confusing orders (admit as inpt for observation, admit to tele etc), progression of status via the protocol permission initially ordered by the physician (obs to inpt), or in less frequent cases, initial the code 44 process. If we progress the status, the CMs write the order “per protocol” from obs to inpt. The physician signs the order, usually by the next day, and we also provide notification in the physician progress notes. We feel this is much like how a heparin protocol works: the physicians initiate the heparin protocol on admission, the nurses make rate changes based on the labs and write the order ‘per Heparin protocol.’ The physician is not notified every time there is a rate change.”


Question: “Are we at RAC risk with status progression with our above process if the physician is not called at the time the status was changed, but the change was done so per the initial order of the physician and the physician was notified of the change through the order and progress note sheet? I am concerned they will not honor the inpt time until the doc signs the order sheet the next day. Please let me know if you think there could be RAC risk. The process has been hugely successful but we will not keep it if there is financial risk involved with it.”


Answer: A “heparin protocol” as described above is a clinical protocol approved by the medical staff and implemented (followed) by clinical staff (typically nurses) as permitted by state laws. The Case Management protocol is a process of communication regarding billing regulations and a physician order is essential. A RAC risk exists where no physician order (other than the original admit order) regarding status is dated, timed and signed by the physician.


Next Steps


As we said in the Webinar, hospital utilization and case management review are your strongest RAC defenses. Now is the time to review your UM or UR policies, plans and implementation and to take a good look at case management functions.


Whatever obstacles may exist at your facility need to be identified and removed before the RAC comes a-calling.




Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

You May Also Like

Leave a Reply

Your Name(Required)
Your Email(Required)