38th Annual Institute, NJ PA Chapter of HFMA

October 8, 2014

Appropriate Level of Care and the 2-Midnight Rule

Edward J. Niewiadomski, MDSenior Medical Advisor

Laureen A. Rimmer, RHIA, CPHQ, CPCDirector, Coding, Accreditation & Clinical Services

Objectives• Understand the CMS background & regulatory requirements• Difference between the 2-Midnight presumption vs. benchmark• Physician certification requirements for inpatient hospital services• IPPS and OPPS 2015• Best Practices for financial and operational performance

CMS Background & Regulatory Requirements• October 1, 2013, 2-Midnight Rule, 2014 IPPS• “Midnight”- point in time to determine inpatient length of stay• “CMS”- Observation care as short term, generally not to exceed 24

hours, rare cases up to 48 hours• “NJ Department of Health & Senior Services,” N.J.A.C. title 8, Chapter

43G-32.21, observation < 24 hours

2-Midnight Rule Documentation• Medical necessity and presumption of length of stay documented in

the medical record• Inpatient admission order• Physician or qualified practitioner licensed by state to admit and

admitting privileges• Physician certification• MACs continue “probe and educate”

2-Midnight Rule Exceptions• Procedures defined as “Inpatient-Only”• Unforeseen beneficiary death• Unforeseen transfer• Unforeseen departure against medical advice• Unforeseen clinical improvement• Election of hospice in lieu of continued treatment in the hospital• Mechanical ventilation initiated during present visit

2-Midnight PresumptionCMS-1599-F• Hospital stay, 2 or more midnights after admission• Inpatient admission order• “Presumed” reasonable and necessary for inpatient with medical

necessity• MACs not to focus reviews on stays spanning at least 2 midnights after

admission, BUT• MACs may review these claims as part of routine monitoring, i.e.

possible system gaming

2-Midnight BenchmarkCMS-1599-F• Inpatient admission, generally appropriate Part A inpatient payment• MACs to consider time beneficiary spent receiving outpatient services• Examples: ED, Observation, other treatment areas• Occurrence span code 72 redefined (MLN Matters MM8586, 1/24/14)

Medical Necessity

2 Midnight+

Medical Necessity Documentation=

COMPLIANCE

Medical Necessity for Admission • “In our existing guidance, we stated that the decision to admit a patient

as an inpatient is a complex medical decision based on many factors, including the risk of an adverse event during the period considered for hospitalization, and an assessment of the services that the beneficiary will need during the hospital stay. • The crux of the medical decision is the choice to keep the beneficiary at

the hospital in order to receive services or reduce risk, or discharge the beneficiary home because they may be safely treated through intermittent outpatient visits or some other care.”

IPPS Final Rule CMS-1599-F, Federal Register, p. 50944-50945

Physician Certification of Medical Necessity• No specific forms or procedures required• Inpatient admission order• Order signed/authenticated before discharge• Order dated• Estimated length of stay of at least 2 midnights

Physician Certification of Medical Necessity• Reason for inpatient services includes:• Diagnosis• History• Comorbidities• Severity of signs and symptoms• Risk of adverse events• Current medical needs requiring inpatient care• Plan of care• Plans for post hospital care

“Reasonable and Necessary Rule”• Satisfying the requirements regarding the physician order and

certification alone does not guarantee Medicare payment. Rather, in order for payment to be provided under Medicare Part A, the care must also be ‘‘reasonable and necessary…” • CMS Transmittal 534, Effective 9/8/14, “Claims that are Related”

Observation Stays Got Longer

Two Midnights Billed as “Inpatient” Helps Prevent DenialsDay 1 Day 2 Final Bill Denial/Audit Risk

IP IP IP LOW*

IP Discharge IP HIGH

OBS IP IP VERY HIGH

OBS OBS IP EXTREMELY HIGH

OBS OBS OBS LOW* *with appropriate documentation

“Probe and Educate”• Physician Attestation Statements without Supporting Medical Record

Documentation: The physician’s order contained a checkbox with pre-printed text stating “The beneficiary is expected to require 2 or more midnights of hospital care.” The physician’s plan of care, however, stated that the beneficiary was to have diagnostics performed post-operatively, with a plan to discharge in the morning if stable. The beneficiary was discharged the following day as planned, after a 1-midnight stay. Upon review of the claim, the MAC denied Medicare Part A payment because the medical record failed to support an expectation of a 2-midnight stay when the order was written.

“Probe and Educate”• Short Stays for Medical Conditions: The beneficiary presented to the

ED with recent onset of dizziness and denied any additional complaints. The beneficiary reported a recent adjustment to his blood pressure medication. The physician’s notes stated that the beneficiary was stable and that his blood pressure medication was to be held and dosage adjusted. The notes also indicated that the physician intended to observe the beneficiary overnight. The beneficiary was discharged the next day. The hospital submitted a claim for a 1-day inpatient stay. Upon review of the claim, the MAC denied Medicare Part A payment because the medical record failed to support an expectation of a 2-midnight stay.

2015 IPPS and Proposed OPPS• IPPS Final Rule CMS 1607-F, FY 2015• CMS welcomes additional suggestions to add to the rare and unusual

exception to the 2-Midnight Rule• Public comment to design an alternate payment methodology for

short inpatient hospital stays

2015 IPPS and Proposed OPPS• OPPS Proposed Rule, CMS 1613-P, FY 2015• “Physician certification” for long-stay and outliers• Revise to specify certifications must be furnished no later than 20

days into the hospital stay• Admission order, medical record and progress notes will continue to

be required to support medical necessity of an inpatient admission

SummaryDate Guidance Comments

8/19/13 IPPS Final Rule CMS-1599-F for FY 2014 2 Midnight Rule effective with admissions on or after 10/1/13.

9/26/13 CMS Special Open Door Forum Conference call and transcript of call outlining responses to provider questions and probe & educate by the MACs for dates of admission 10/1/13 to 12/31/13. MAC to focus on one inpatient midnight claims. Recovery Auditors not to review claims for this issue for same dates of admission. (exception for pre-payment reviews of therapy in pre-payment demonstration states).

1/24/14 CR # 8586 Occurrence Span Code 72 Identification of Outpatient Time Associate with an Inpatient Hospital Admission and Inpatient Claim for Payment

Guidance to account for total hospital time, including outpatient time that directly precedes the inpatient admission when determining if an inpatient order should be written, based upon the expectation that the beneficiary will stay in the hospital for 2 or more midnights receiving medically necessary care.

1/30/14 CMS guidance to clarify physician order & certification for Hospital inpatient admission

Content of physician certification outlined, timing, authorization to sign the certification, inpatient order and specificity of orders.

10/1/13 to 1/31/14 MAC Probe & Educate Probe & educate time period 10/1/13 to 9/30/14. MAC requested to re-review claims to ensure claim decision and subsequent education consistent with most recent clarifications. Appeal timelines clarified.

SummaryDate Guidance Comments

4/1/14 President signed the Protecting Access to Medicare Act of 2014

Extends MAC probe & educate to 3/31/15. Recovery Auditors prohibited to conduct inpatient status review of claims 10/1/13 to 3/31/15.

5/12/14 CMS UPDATE: MACs completed most of first round probe reviews (10 or 25 claims, volume dependent) and beginning provider education

CMS conduct pre-payment patient status probe reviews for dates of admission 10/1/13 to 3/31/15. MACs conduct patient status reviews using probe & educate strategy for claims 10/1/13 to 3/31/15. MAC education and repeat process, when necessary.

5/15/14 CMS, HHS Proposed IPPS Rule for FY 2015. Final Rule to be published 8/22/14.

Suggested Exceptions for the 2 Midnight Benchmark; inviting further feedback in rare and unusual circumstances that were not identified to justify inpatient admission for Part A payment, absent an expectation of care spanning at least 2 midnights.

7/14/14 CMS, HHS Proposed OPPS rule for CY 2015

Inpatient admission order is necessary for all inpatient admissions and proposing to require such orders as a condition of payment, rather than as an element of the physician certification. Medical necessity documentation for inpatient stay still required. Proposing, for non-outlier cases, 20 days as the appropriate minimum threshold for physician certification and define long stay cases as cases with stays 20 days or longer.

Best Practices• Collaboration of Revenue Cycle team, Case Management, Patient

Access, Health Information Management, Clinical Documentation Improvement, Patient Financial Services• Understand clinical documentation process and educate physicians

Best Practices• Case management model to support concurrent physician decision

making inpatient vs. observation• Case managers in the ED and role to support patient placement in the

appropriate service• Strong physician leadership with observation services for timely

decision making• Role of Utilization Review Committee and Physician Advisors

Best Practices• Physician tools, evidence based medicine to support clinical decisions• Clinical and financial metrics to measure performance• Policies for observation billing, inpatient only list, use of occurrence

span code 72• Auditing for compliance• Aggressive and appropriate appeals strategy

Closing• 2-Midnight Rule compliance is required • Monitor CMS “probe and educate” with your organization• Stay tuned for OPPS comments and Final Rule for FY 2015• Questions?

References• CMS: Selecting Hospital Claims for Patient Status Reviews:

Admissions on or after 10/1/13 (last update: 2/24/14) • CMS: Inpatient Hospital Reviews, Update 3/12/14• CMS FAQs, Update 3/12/14• CMS: MLN Matters Number MM8586, 1/24/14; revised 4/8/14• CMS Fact Sheets: FY 2015 Policy & Payment Changes for Inpatient

Stays in Acute Care Hospitals and Long Term Care Hospitals, 8/4/14• New Jersey Department of Health and Senior Services, N.J.A.C., Title

8, Chapter 43G-32.21

Edward J. Niewiadomski, MDSenior Medical AdvisorBESLER ConsultingThree Independence Way, Suite 201Princeton, NJ 08540Direct Phone: (609) 514-1400 e-mail: doctored.com@gmail.com

Jeff LampmanVice President of Client DevelopmentBESLER ConsultingThree Independence Way, Suite 201Princeton, NJ 08540Direct Phone: (732) 392-8223 e-mail: jlampman@besler.com

Laureen A. RimmerDirectorBESLER ConsultingThree Independence Way, Suite 201Princeton, NJ 08540Direct Phone: (732) 392-8226e-mail: lrimmer@besler.com