Guide to EHR s Concurrent Commercial. Frequently Asked Questions: 2014 CMS IPPS FINAL RULE

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1 Guide to EHR s Concurrent Commercial Frequently Asked Questions: 2014 CMS IPPS FINAL RULE September 12, 2013

2 FAQ Categories Inpatient Admission Criteria 2 Midnight Rule... 3 Medical Review Criteria... 6 Admission Orders... 8 Certification... 9 Rebilling Miscellaneous

3 Inpatient Admission Criteria 2 Midnight Rule Frequently Asked Questions September 12, 2013 FAQ: 2014 CMS IPPS FINAL RULE What is the 2 Midnight Rule and what is the difference between the 2 Midnight Benchmark and Presumption? The 2 Midnight rule is an attempt by CMS to clarify its medical review criteria for medical necessity and payment issues. The 2 Midnight rule encompasses two concepts: the 2 Midnight Benchmark and the 2 Midnight Presumption. The 2 Midnight Benchmark: In the past, CMS has provided guidance that the expectation of a hospital stay of 24 hours or greater was one of the elements to consider when evaluating a potential admission. CMS has now replaced the 24 hour benchmark with a 2 midnight benchmark under which a physician or other qualified practitioner should order admission if he or she expects that the beneficiary s length of stay will exceed a 2 midnight benchmark or if the beneficiary requires a procedure specified as inpatient only under 42 CFR However, CMS emphasizes that this instruction does not override the clinical judgment of the physician and that the appropriateness of the inpatient admission hinges on a reasonable and supportable expectation [of a 2 midnight stay], not the actual length of care... Additionally, CMS clarifies that [f]or those hospital stays in which the physician cannot reliably predict the beneficiary to require a hospital stay greater than 2 midnights, the physician should continue to treat the beneficiary as an outpatient and then admit as an inpatient if and when additional information suggests a longer stay or the passing of the second midnight is anticipated. The 2 Midnight Presumption: For the purposes of contractor medical review, the Rule establishes a new presumption that, inpatient hospital claims with lengths of stay greater than 2 midnights after formal admission following the order will be presumed generally appropriate for Part A payment. If the stay does not span at least two midnights, the presumption will not apply and Medicare reviewers are directed to review the admission by applying the 2 midnight benchmark. In doing so, the reviewers will focus on the totality of the record; utilizing the time spent receiving services as a hospital outpatient prior to the actual inpatient admission in determining whether the 2 midnight benchmark has been met. Medicare contractors will now focus (in addition to their current focus) on those inpatient claims that fail to meet this benchmark (i.e., hospital stays that span less than two midnights). Claims review will address whether the care was provided efficiently and also whether the care was provided in a manner intending to extend the length of the inpatient stay solely to meet the 2 midnight threshold. 3

4 To what type of hospitals does the 2 midnight rule apply? The 2 midnight benchmark and presumption apply to all hospitals, including inpatient psychiatric facilities (IPFs), except for Inpatient Rehabilitation Facilities (IRFs). CMS states, We believe that all hospitals, LTCHs, and CAHs, with the exception of IRFs, would appropriately be included in our final policies regarding the 2 midnight admission guidance and medical review criteria for determining the general appropriateness of inpatient admission and Part A payment. Due to the inherent differences in the operation of and beneficiary admissions to IRFs, such providers must be excluded from the aforementioned admission guidelines and medical review instruction (50949). When does the clock start toward meeting the 2 midnight rule? Is it dependent on the time the inpatient order is written or based on when care is delivered? Under the Benchmark The clock for the 2 midnight benchmark starts when the beneficiary begins receiving hospital services, whether inpatient or outpatient. Under the Presumption The clock for the 2 midnight presumption starts when the inpatient admission order is issued. Regarding the presumption, CMS states that inpatient hospital claims with lengths of stay greater than 2 midnights after formal admission following the order will be presumed generally appropriate for Part A payment (50952). For this reason, CMS has indicated that the treating physician should issue the inpatient admission order as soon as it can be reasonably predicted that the beneficiary s hospital stay will cross a second midnight (Special Open Door Forum Transcript, p. 11). See below for more on the difference between the 2 midnight benchmark and the 2 midnight presumption. Can the time a patient spends in the Emergency Department or in observation prior to the issuance of an inpatient admission order count toward meeting the 2 midnight rule? Under the Benchmark Yes. CMS states, The starting point for the 2 midnight benchmark will be when the beneficiary begins receiving hospital care on either an inpatient basis or outpatient basis (50952). CMS further states that the physician ordering the admission should account for time the beneficiary spent receiving outpatient services such as observation services, treatments in the emergency department, and procedures provided in the operating room or other treatment area. Under the Presumption No. The starting point for determining whether the 2 midnight presumption is met is the time at which the inpatient admission order is issued. An inpatient admission will be presumed reasonable and necessary and, therefore, reimbursable by Medicare, if the presumption is met. If the presumption is not met, the Medicare review contractor will then apply the 2 midnight benchmark and will take time spent by the beneficiary as a hospital outpatient into consideration. CMS has indicated that it will issue sub regulatory guidance to further address this issue. 4

5 Does the implementation of the 2014 IPPS Final Rule, and specifically the 2 midnight rule, change the need to conduct Utilization Review? No. While, the 2 midnight benchmark and presumption can be used to guide providers in making the admission decision, CMS continues to emphasize that admission is a complex medical decision and that a physician order supported by strong documentation are required to justify the admission decision. As such, it is important for providers to continue to run an effective utilization review process, as required by the Medicare Conditions of Participation for Hospitals, to assist physicians in ensuring that admission decisions are timely and well documented. The [u]se of Condition Code 44 or Part B inpatient billing pursuant to hospital self audit is not intended to serve as a substitute for adequate staffing of utilization management personnel or for continued education of physicians and hospital staff about each hospital s existing policies and admission protocols (50914). What is the CMS position on the use of screening tools such as Milliman and InterQual? At the Special Open Door Forum, George Mills, the CMS Director of Provider Compliance Group, specifically noted that CMS will be issuing sub regulatory guidance on the issue of what happens when there is a conflict with InterQual or Milliman, indicating that Milliman and InterQual would continue to play a role in utilization review. EHR will be providing further comment following the release of additional guidance. 5

6 Medical Review Criteria Under what circumstances will Medicare pay for an inpatient admission where the patient was discharged prior to the second midnight? The 2014 IPPS Final Rule provides for certain exceptions to the 2 midnight rule. CMS states that when an unforeseen circumstance, such as beneficiary death or transfer, results in a shorter beneficiary stay than the physician s expectation of at least 2 midnights, the patient may still be considered to be appropriately treated on an inpatient basis, and the hospital inpatient payment may be made under Medicare Part A (50952). CMS has stated that other exceptions may be made, for example when the beneficiary leaves the hospital against medical advice (CMS Hospital Open Door Forum on August 15, 2013). However, CMS has emphasized that the appropriateness of the inpatient admission hinges on a reasonable and supportable expectation [of a 2 midnight stay], not the actual length of care (50944). CMS has indicated that further sub regulatory guidance on the subject is necessary and forthcoming. In what way does the 2014 IPPS change what constitutes an appropriate inpatient admission? New Benchmark In the past, CMS has provided guidance that the expectation that a hospital stay would exceed 24 hours was one of the elements to consider when evaluating a potential admission. CMS has now replaced the 24 hour benchmark with a 2 midnight benchmark under which a physician or other qualified practitioner should order admission if he or she expects that the beneficiary s length of stay will exceed a 2 midnight benchmark or if the beneficiary requires a procedure specified as inpatient only under 42 CFR (50944). Additionally, CMS clarified that [f]or those hospital stays in which the physician cannot reliably predict the beneficiary to require a hospital stay greater than 2 midnights, the physician should continue to treat the beneficiary as an outpatient and then admit as an inpatient if and when additional information suggests a longer stay or the passing of the second midnight is anticipated (50945). Documentation Requirements Though the 2 midnight benchmark is intended to clarify what constitutes an inpatient admission for the purposes of reimbursement under Medicare Part A, CMS continues to emphasize, as it has in the past, that the decision to admit is a complex medical judgment. CMS stresses that the 2 midnight instruction does not override the clinical judgment of the physician and that the appropriateness of the inpatient admission hinges on a reasonable and supportable expectation [of a 2 midnight stay], not the actual length of care (50944). The admitting physician must still weigh the totality of the patient s circumstances as set forth in the CMS Benefit Policy Manual (chapter 1, section 10), because a reasonable expectation of a stay crossing 2 midnights, which is based on complex medical factors [including evidence based clinical medicine] and is documented in the medical record, will provide the justification needed to support medical necessity of the inpatient admission (50944). Therefore, admission reviews, will continue to play an important role in ensuring that hospitals remain compliant with CMS guidelines. CMS has indicated that it will issue further sub regulatory guidance to address the documentation requirements in more detail. 6

7 If a procedure is on the Inpatient Only List, yet the physician expectation is that the patient will be discharged prior to meeting the two midnight presumption, will Medicare cover the inpatient admission? Procedures that are on the Inpatient Only list are exempted from the 2 midnight rule, because CMS will only reimburse these procedures when they are performed in the inpatient setting. Of course, the procedure itself must have been medically necessary for the beneficiary s condition and the order for services must be present prior to the services being provided. CMS states that services designated by the OPPS Inpatient Only list as inpatient only would continue to be appropriate for inpatient hospital admission and payment under Medicare Part A (50952). 7

8 Admission Orders How has the 2014 IPPS changed the key components of a valid inpatient admission order? In a departure from previous CMS policy, which allowed for the inference of an inpatient admission order in certain circumstances, the 2014 IPPS Final Rule mandates that an inpatient admission order be present in every inpatient medical record. Furthermore, while in the past an order that stated admit or admit to would generally be presumed to indicate an inpatient admission, the Final Rule states that the admission order must specify admission to or as an inpatient (50942). Therefore, admit to case management or admit to utilization review may no longer be considered sufficient. Who can write an inpatient admission order? CMS states in the 2014 IPPS Final Rule that the order does not have to be signed by the physician responsible for the patient s care; rather, the practitioner signing the order must be knowledgeable about the patient s course, the plan of care, and the current condition of the patient, in addition to having admitting privileges. It is important to recognize that the determination regarding whether a particular practitioner is permitted to write an order is dictated by a multitude of factors. Federal rules, state rules, medical staff by laws, and medical staff policies and procedures all play a role in addressing which practitioners are able to write orders. CMS indicated during the Open Door Forum that it intends to issue subregulatory guidance to clarify who may sign admission orders. Will Medicare continue to accept verbal orders? Yes. CMS states, A verbal order is a temporary administrative convenience for the physician and hospital staff but it is not a substitute for a properly documented and authenticated order for inpatient admission. A verbal order must be properly countersigned by the practitioner who gave the verbal order. We intend to further discuss and develop our requirements regarding verbal orders for inpatient admission in our sub regulatory guidance (50941). It is important to recognize that the determination regarding whether a particular practitioner is permitted to write an order is dictated by a multitude of factors. Federal rules, state rules, medical staff by laws, and medical staff policies and procedures all play a role in addressing which practitioners are able to write orders. 8

9 Certification What is a certification? A physician certification is generally comprised of those medical records that evidence that the services ordered, rendered, and billed to Medicare were medically necessary and provided in accordance with applicable regulations. A physician certification is and has been required under the Medicare Conditions for Payment (found at 42 CFR 424). What are the components of a valid certification for inpatient admission? The physician certification requirements for inpatient hospital services are found at 42 CFR The Final Rule amends some of the language contained in this section to clarify that the certification is required for all inpatient hospital stays. Specifically, the certification must contain: 1. The order for inpatient admission, which must be supported by admission and progress notes; 2. The reasons for [h]ospitalization of the patient for inpatient medical treatment or medically required inpatient diagnostic study (or, for cost outlier cases, the reasons for special or unusual services ); a. This should include the primary diagnosis. 3. The estimated time the patient will need to remain in the hospital; 4. The plans for post hospital care, if appropriate; 5. Must include evidence that services were provided in accordance with 42 CFR (admission requirements)(see below); 6. Certification must be signed and documented in the medical record prior to the hospital discharge (if delayed reason must be documented). Who must complete and sign the certification and when must the certification be completed? Under 42 CFR (c)(1), certifications and recertifications must be signed by the physician responsible for the case, or by another physician who has knowledge of the case and who is authorized to do so by the responsible physician or by the hospital's medical staff. Certification must be completed before the patient is discharged from the hospital. The Final Rule creates a new paragraph at 42 CFR (b), which will state, For all hospital inpatient admissions, the certification must be completed, signed, and documented in the medical record prior to discharge. Does the certification have to take a certain form? CMS does not require that the physician certification take any particular form in order to be valid. The Final Rule states, The certification and recertification statements may be entered on forms, notes, or records that the appropriate individual signs, or on a special separate form. While a separate document does not need to be used, if information is in different places (i.e. progress notes, H+P) the certification statement should indicate where it may be found within the record (probably best to cite to specific pages if available). 9

10 The certification requirements mandate that services were provided to the beneficiary in accordance with 42 CFR What does section cover? Section of Title 42 sets forth new admission criteria under the FY2014 IPPS Admissions. (a) For purposes of payment under Medicare Part A, an individual is considered an inpatient of a hospital, including a critical access hospital, if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner in accordance with this section and (c), (c), and (a)(4)(iii) of this chapter for a critical access hospital. This physician order must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A. In addition to these physician orders, inpatient rehabilitation facilities also must adhere to the admission requirements specified in of this chapter. (b) The order must be furnished by a qualified and licensed practitioner who has admitting privileges at the hospital as permitted by State law, and who is knowledgeable about the patient s hospital course, medical plan of care, and current condition. If the practitioner delegates the decision (order) to another individual who is authorized by the State and medical staff to admit patients, the order must be co signed by discharge or earlier according to hospital bylaws. (c) The physician order also constitutes a required component of physician certification of the medical necessity of hospital inpatient services under subpart B of Part 424 of this chapter. (d) The physician order must be furnished at or before the time of the inpatient admission. (e) (1) Except as specified in paragraph (e)(2) of this section, when a patient enters a hospital for a surgical procedure not specified by Medicare as inpatient only under (n) of this chapter, a diagnostic test, or any other treatment, and the physician expects to keep the patient in the hospital for only a limited period of time that does not cross 2 midnights, the services are generally inappropriate for inpatient admission and inpatient payment under Medicare Part A, regardless of the hour that the patient came to the hospital or whether the patient used a bed. Surgical procedures, diagnostic tests, and other treatment are generally appropriate for inpatient admission and inpatient hospital payment under Medicare Part A when the physician expects the patient to require a stay that crosses at least 2 midnights. The expectation of the physician should be based on such complex medical factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event. The factors that lead to a particular clinical expectation must be documented in the medical record in order to be granted consideration. (2) If an unforeseen circumstance, such as a beneficiary s death or transfer, results in a shorter beneficiary stay than the physician s expectation of at least 2 midnights, the patient may be considered to be appropriately treated on an inpatient basis, and hospital inpatient payment may be made under Medicare Part A. 10

11 Rebilling When can a hospital rebill a claim denied by a Medicare contractor? A hospital can rebill under Part B when a claim for inpatient services is denied because a Medicare review contractor has determined that the inpatient admission was not reasonable and necessary and that the beneficiary should have received hospital outpatient services rather than hospital inpatient services (50907). If, however, a hospital does not bill under Part B in a timely manner, in accordance with section 1866(a)(1)(A)(i) of the Act, the hospital may not charge the beneficiary for the costs related to the Part B items and services furnished, if the beneficiary would otherwise be entitled to have Part B payment made on his or her behalf. Finally, in instances where the beneficiary is not enrolled in Medicare Part B, we encouraged hospitals and beneficiaries to recognize the importance of billing supplemental insurers and pursuing an appeal of the Part A inpatient claim denial, as appropriate. (50918). When can a hospital rebill claims as a result of self audit? What is the process for rebilling a claim denied as a result of a self audit? Hospitals may rebill pursuant to self audit beginning on the effective date of the 2014 IPPS Final Rule (that is, for claims with a date of admission of October 1, 2013, or later). CMS states, [P]ayment of Part B inpatient services may be made if a hospital determines under (d) or after a beneficiary is discharged that the beneficiary s inpatient admission was not reasonable and necessary, and the beneficiary should have been treated as a hospital outpatient rather than admitted as an inpatient, provided the beneficiary is enrolled in Medicare Part B and that the hospital submits the Part B inpatient claim by the deadline for timely filing (50914). CMS emphasizes that the self audit process should conform to existing utilization review requirements under the Conditions of Participation for Hospitals (50913). Before submitting the Part B inpatient claim, the hospital must submit a no pay/provider liable Part A claim. CMS notes that [i]f both the no pay/providerliable Part A claim and the Part B claim(s) are submitted simultaneously, the Part A and Part B claims would overlap as duplicates in the processing system (50914). For what services can a hospital rebill? Are observation hours excluded from rebilling? Under the 2014 IPPS Final Rule, hospitals can rebill those Part B inpatient services that would have been reasonable and necessary if the beneficiary had been treated as a hospital outpatient rather than admitted as an inpatient (50914). Services that specifically require an outpatient status, such as observation services, outpatient DSMT, and hospital outpatient visits are excluded from rebilling (50912) under Medicare Part B inpatient. However, services such as emergency department visits and outpatient observation may be eligible for Medicare Part B outpatient rebilling if the appropriate orders have been issued. For example, in the scenario where a beneficiary comes into the emergency room, is stabilized and then placed in observation and is then subsequently determined to be appropriate for an inpatient admission, but following discharge a utilization review it is determined that inpatient admission was not appropriate, it is possible that the emergency room visit and the observation hours may be rebilled on a Part B outpatient claim. 11

12 Is a hospital s ability to rebill claims under Part B a substitute for the use of Condition Code 44 (CC44)? How are rebilling and CC44 related? Part B rebilling does not replace Condition Code 44. As quoted above, rebilling subsequent to self audit may only be utilized when the hospital determines after discharge that the beneficiary should have been treated as an outpatient. The use of Condition Code 44, on the other hand, requires that the determination regarding the necessity of the inpatient admission be made prior to discharge. To properly utilize CC44, CMS requires the following: 1. Status change prior to discharge/release, with Beneficiary notification of status prior to discharge 2. No inpatient claim submitted 3. Practitioner(s) responsible for patient s care and UR committee concur with decision 4. Concurrence documented in medical record CMS has stated that the use of both Part B rebilling subsequent to self audit and the use of Condition Code 44 should be increasingly rare and that [u]se of Condition Code 44 or Part B inpatient billing pursuant to hospital self audit is not intended to serve as a substitute for adequate staffing of utilization management personnel or for continued education of physicians and hospital staff about each hospital s existing policies and admission protocols (50914). The use of CC44 presents a better opportunity for involvement of both the physician and the beneficiary in the care of the beneficiary and to make sure the admission status is correct prior to discharge with proper notification to the beneficiary. For more information on Condition Code 44, please see the document entitled Answers to Your Most Frequently Asked Condition Code 44 Questions in the EHR Compliance Library. What are the rebilling timeframes? Hospitals will be permitted to follow the Part B billing timeframes established in the interim Ruling (CMS 1455 NR) after the effective date of the Final Rule, provided (1) the Part A claim denial was one to which the Ruling originally applied; or (2) the Part A inpatient claim has a date of admission before October 1, 2013, and is denied after September 30, 2013 on the grounds that even though inpatient services were not reasonable and necessary, hospital outpatient services would have been reasonable and necessary (50935). All other claims must be submitted in accordance with existing timely filing requirements for new claims (i.e. within one year of the date(s) of service). CMS has declined to provide any exception to the timely filing requirement for claims that are retrospectively denied by a Recovery Auditor more than one year after the date(s) of service. 12

13 Miscellaneous What is an Acknowledgement Statement and must it be included in the medical record for each patient? An Acknowledgement Statement is a statement signed by the attending physician indicating that he or she has received the following Medicare notice: Notice to Physicians: Medicare payment to hospitals is based in part on each patient s principal and secondary diagnoses and the major procedures performed on the patient, as attested to by the patient s attending physician by virtue of his or her signature in the medical record. Anyone who misrepresents, falsifies, or conceals essential information required for payment of Federal funds, may be subject to fine, imprisonment, or civil penalty under applicable Federal laws. (50965) An Acknowledgement Statement need not be included in each medical record, but rather the hospital must have on file a signed and dated acknowledgement from the attending physician (50965). This acknowledgement must be completed by the physician at the time that the physician is granted admitting privileges at the hospital, or before or at the time the physician admits his or her first patient. Existing acknowledgements signed by physicians already on staff remain in effect as long as the physician has admitting privileges at the hospital (50965). Copyright 2013 Executive Health Resources, Inc. All rights reserved. No part of this document may be reproduced or distributed. Permission to reproduce or transmit in any form or by any means electronic or mechanical, including presenting, photocopying, recording and broadcasting, or by any information storage and retrieval system, must be obtained in writing from Executive Health Resources. Requests for permission should be directed to The information and content in this document is solely for general educational and informational purposes and is provided to you AS IS. It does not constitute legal, financial, or medical advice or a legal or medical opinion. Nothing that you read in this newsletter should be used as a substitute for the advice of competent legal counsel or a health care professional. EHR makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in this newsletter. EHR, its employees, agents, and affiliates will not be liable or responsible to you for any claim, loss, injury, liability, or damages related to your use of this newsletter or reliance on the information contained therein. 13

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