Q: Under the new 2-Midnight rule, will the amount of time the physician cared for the patient under observation be included in the calculations for transferring the patient to a skilled nursing facility if needed?
A: The Federal Register discusses this in detail. Unfortunately, CMS will still require three acute care days to be considered for a covered SNF stay. I think what makes it confusing is that time spent as outpatient can be “considered” when considering the 24-hour benchmark from the physician’s perspective verses the 24-hour presumption from a medical review perspective. Time spent as an outpatient (ER, observation, etc.) will not be considered “inpatient time” for the purposes of calculating a three-day qualifying stay because an order to admit the patient has not been written. Many commenters on the fiscal year (FY) 2014 IPPS proposed rule wanted CMS to consider observation time but they did not (see page 1711). I hope this helps to clarify. Here are the relevant passages and their related page number from the Final Rule:
- P. 708 – Furthermore, inpatient stays that are denied payment under Medicare Part A remain classified as inpatient stays, and can be billed to Medicare Part B as an Medicare Part B inpatient stay. These inpatient stays that are denied payment under Medicare Part A will typically continue to count as a qualifying inpatient stay for other payment purposes such as qualifying for SNF benefits and Medicare DSH patient days.
- Page 1707 – SNF coverage is affected because a hospital’s observation services are considered outpatient rather than inpatient services, and section 1861(i) of the Act requires a qualifying 3-day inpatient hospital stay for Part A SNF coverage. The importance of a beneficiary’s status as a hospital “inpatient” in terms of qualifying for posthospital SNF coverage has also generated concerns about the need to clarify any potential implications that the inpatient rebilling policy may have in this area. The following discussion presents a summary of the comments that we received on this topic, and our responses.
- Page 1709 – In addition, the status of the beneficiaries themselves does not change from inpatient to outpatient under the Part B inpatient billing policy. Therefore, even if the admission itself is determined to be not medically necessary under this policy, the beneficiary would still be considered a hospital inpatient for the duration of the stay— which, if it occurs for the appropriate duration, would comprise a “qualifying” hospital stay for SNF benefit purposes so long as the care provided during the stay meets the broad definition of medical necessity described above. This is consistent with the applicable statutory language in section 1861(i) of the Act which, in defining “posthospital” SNF services, requires the beneficiary to be a hospital “inpatient for not less than 3 consecutive days”, and the implementing regulations at 42 CFR 409.30(a)(1), which require “medically necessary inpatient hospital . . . care”.
- Page 1711 – The commenters suggested other approaches to addressing the effect of extended observation stays on SNF coverage (that is, eliminating the SNF benefit’s qualifying 3-day hospital stay requirement, counting days spent in observation specifically toward meeting that requirement, or adjusting the definition of inpatient itself to include beneficiaries receiving observation services). We have previously discussed similar suggestions in the FY 2006 SNF PPS proposed rule (70 FR 29098-29100) and final rule (70 FR 45050-45051), and we continue to have the same concerns with those approaches as we expressed in the FY 2006 proposed and final rules. Moreover, as discussed above, we believe that the policies finalized in this FY 2014 IPPS final rule regarding Part B inpatient billing and medical review of inpatient hospital admissions appropriately address the issue of extended observation stays.
- Page 1841 – From the medical review perspective, while the time the beneficiary spent as an outpatient before the admission order is written will not be considered inpatient time, it may be considered during the medical review process for purposes of determining whether the 2-midnight benchmark was met and, therefore, whether payment is generally appropriate under Part A.
by Kimberly Hoy Baker, JD, regulatory specialist for HCPro
In my last blog published on October 8, I outlined the new CMS 2014 IPPS guidelines governing inpatient admission; specifically the “benchmark” and “presumption” requirements related to the 2-midnight rule. The real question is what clinical documentation will be required to support of the physician’s “reasonable expectation” that the patient requires a 2-midnight stay. Furthermore, what happens when the patient is admitted as an inpatient with the expectation of a 2-midnight stay, yet responds quickly to therapy and is safely discharged without a 2-midnight stay. CMS does allow their contractors to consider the documented clinical facts of the case when making their determination of the validity of the physician expectation of a 2-midnight stay.
“A reasonable expectation”
Let’s start with what CMS terms “a reasonable physician expectation” of a 2-midnight stay. This depends on the physician clearly documenting facts that served as a basis for the medical decision to admit the patient as an inpatient versus observation level of care. It is not enough for the physician to state he/she is admitting the patient with chest pain for possible myocardial infarction (MI) with a reasonable expectation of a 2-midnight stay. The clinical rationale needs to provide a clear outline of the facts complemented by the physician’s clinical judgment, medical decision-making and thought processes.
Traditionally, CDI specialists’ focus is on reviewing the record for principal diagnosis selection and/or secondary diagnosis reporting all in the name of improved reimbursement and case mix for the hospital. Granted, there exists components of quality of care, risks of morbidity and mortality, risks of readmission and safety reporting associated with usual CDI initiatives. Nevertheless, many CDI programs are missing components integral to the documentation in support of a reasonable expectation of a 2-midnight stay including clear articulation of the three key components of the physician’s evaluation and management (E/M) services such as a strong history of present illness (HPI), physical exam, and medical decision making. Let’s take a moment to review what is fundamental to the establishment of medical necessity in and of itself, the effectiveness and completeness of the HPI.
Editor’s Note: For more information regarding 2014 IPPS changes and for a sample “2-Midnight” admission order worksheet look for the October edition of the CDI Journal.
The 2014 IPPS Final Rule includes new guidance on what constitutes medical necessity for inpatient admission. Although, the new guidelines will not be enforced until roughly the turn of the calendar year (CMS announced 90-day delay on September 26), providers are expected to use the next three months to become familiar with the new guidelines and incorporate key elements into their day-to-day workflow.
Previously, an inpatient admission was defined using a 24 hour benchmark as defined in Chapter 1 Section 10 of the Medicare Benefit Policy Manual. Dubbed the “2-Midnight Rule,” the guidelines now require a physician to document his/her reasonable expectation that the patient’s workup and care will take at least two-midnights in the hospital as a benchmark for inpatient admission.
The final rule introduced two key concepts that clinical documentation improvement specialists should take note of. Specifically, these consist of presumption and benchmark.
- A 2-Midnight presumption of inpatient admission states that claims for inpatient services with lengths greater than two midnights after an admission order will generally be presumed to be appropriate for payment under Medicare Part A.
- A 2-Midnight benchmark serves as guidance to admitting practitioners and reviewers when determining whether it is appropriate to admit a patient as inpatient versus observation.
In simple terms, a physician’s reasonable expectation needs clinical documentation in the record to support it. That documentation requires an inpatient order as well as explicitly outlined plan of care, clearly described reason for admission including nature of presenting problem(s) and working and/or definitive diagnoses, and plan for discharge.
Effective physician clinical documentation is essential to support medical necessity in clinical scenarios where initial physician expectations falls short—where the patient miraculously gets better and is discharged after day one. The rule does provide allowances for clinical scenarios such as a patient who expires, leaves against medical advice, or is transferred to another acute care hospital.
According to the rule, Recovery Auditors and other contractors will review the record and consider exceptions only if:
- The physician order for inpatient admission to the hospital and other required elements of the physician inpatient order certification are included in the medical record.
- The record contains medical documentation supporting the expectation that care would span at least two-midnights
- The clinical indicators regarding the patient’s condition support a decision that it was reasonable and necessary to keep the patient at the hospital to receive such care.
Additionally, CMS calls on its contractors to consider complex medical factors that support a reasonable expectation of the needed duration of the stay including:
- The patient’s medical history and comorbidities
- The severity of signs and symptoms
- Current medical needs
- The risk of an adverse event
A two-midnight stay does not imply the inpatient stay is, and of itself, medically necessary; instead it presumes appropriateness of the inpatient stay provided the clinical documentation throughout the record demonstrates the need or medical necessity for inpatient admission. In essence, while Medicare has clarified the presumption for inpatient admission, what has not changed is the categorical need for complete, accurate, and effective clinical documentation reflective of the physician’s clinical judgment, medical decision-making, thought processes and provisional diagnoses at the time of the decision to admit the patient as an inpatient.
As CDI specialists, it is incumbent upon us to understand the elements of an emergency room note, history and physical, consultant notes, and progress notes necessary to capture the physician expectation of a two-midnight stay that is reasonable and necessary.
In my next blog, I will share some thoughts and ideas on this very topic through analysis of two actual case studies where a hospital received a medical necessity denial for inpatient admission by the Recovery Auditor. In the interim, keep in mind clinical documentation from a perspective of requiring a 2-midnight stay as part of your daily duties and responsibilities of inpatient chart review, remaining cognizant of the fact you will encounter a plethora of cases undoubtedly lacking enough detail and substance to pass the litmus test.
In the meantime, here is some additional reading: http://cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/InpatientHospitalReviews.html
CMS finalized a major change to its inpatient admission guidelines as part of the 2014 IPPS final rule, released August 1.
As part of the rule, CMS finalized the two-midnight presumption for inpatient admissions. If a patient the physician expects a patient’s treatment, testing, or surgery to require an inpatient stay covering two midnights, and admits the patient based on that belief, CMS will presume that the stay is be medically necessary.
CMS emphasized that the physician must formally order an inpatient admission, but added that the physician can consider the time the patient has already spent in the ED or observation when deciding whether to admit the patient.
CMS made the change in part to reduce long outpatient or observation stays.
CMS also finalized the timely filing requirement for Part A to Part B rebilling. In March, CMS released a ruling and a proposed rule allowing hospitals to rebill Part A inpatient services as Part B outpatient services if the inpatient stay was not medically necessary and the services would have been covered in the outpatient setting. The ruling, which went into effect in March, did not including a filing timeframe. Under the final rule, hospitals will have one year from the date of service to rebill claims.
CMS finalized the criteria to rank hospitals with a high rate of hospital-acquired conditions (HAC). Hospitals in the lowest quartile for HACs will see a payment reduction of 1%.
Editor’s Note: This article first appeared on HCPro.com.
If you’re not already actively using your hospital’s PEPPER (Program for Evaluating Payment Patterns Electronic Report), you’re missing out on a lot of valuable data. Data—including coded data—drives pay-for-performance, meaningful use, auditing targets, and more. Being ‘in the know’ about what your hospital’s data says in terms of the care provided is essential.
PEPPER provides Medicare claims data statistics for areas that the OIG, Quality Improvement Organizations, Medicare Administrative Contractors (MAC), and Recovery Auditors (RA) identify as being at risk for improper payments. It uses aggregated data to allow hospitals to see how they stack up against others in the state, jurisdiction, and nation.
The report, published by TMF Health Quality Institute, identifies potential over- and underpayments that hospitals can focus on internally. It also prioritizes specific target areas and provides guidance in terms of auditing and monitoring those targets.
Coding target areas include the following:
- Stroke and intracranial hemorrhage
- Respiratory infections
- Simple pneumonia
- Unrelated operating room procedures
- Medical DRGs with CC or MCC
- Surgical DRGs with CC or MCC
- Excisional debridement
- Ventilator support
- Single CC or MCC
PEPPER also targets the medical necessity of various conditions. In addition, it includes 30-day r-eadmissions to the same hospital or elsewhere and short stays (i.e., one- and two-day stays).
A hospital has an outlier if its percent in a particular target area is at or above the 80th percentile or is at or below the 20th percentile.
Various hospitals have shared information about how they’ve used PEPPER proactively. The PEPPER Web site provides testimonials about how hospitals are using the report.
If you haven’t already visited the PEPPER Web site, check out the following links:
- PEPPER User’s Guides for specific providers
- National-level data reports
- Medical necessity coding and audit tools to prevent improper payments
Auditors have been reviewing medical necessity for inpatient services for years and Recovery Auditors (RA) have recouped millions of dollars in overpayments. Now outpatient providers are beginning to see more and more medical necessity audits, especially in the ED and for evaluation and management (E/M) levels.
CMS continues to monitor E/M levels and indicated in the 2013 OPPS Final Rule that level distribution remains fairly normal and relatively stable distribution. CMS also notes a slight shift of Level 4 and 5 visits in relationship to Levels 1, 2, and 3.
“This is something we certainly want to keep our eye on and maybe take a second look at our criteria and the medical necessity for the services that we’re coding and billing,” says Caral Edelberg, CPC, CPMA, CAC, CCS-P, CHC, AHIMA-Approved ICD-10-CM/PCS Trainer,president of Edelberg Compliance Associates of Baton Rouge, La. “When you see something in final rules or regulations or any of the transmittals that CMS is sending out, it tells you that CMS is going to be taking a closer look and that could mean audits for all of us.”
Overcoding in the ED is less of a problem than undercoding, Edelberg says.
CMS and RAs are increasingly scrutinizing short inpatient stays and observation services, says Joanne M. Becker, RHIT, CCS, CCSP, CPC, CPC-I, AHIMA approved ICD-10-CM/PCS Trainer. Becker is associate director in the Joint Office for Compliance at the University of Iowa hospitals and clinics in Iowa City.
Because of the increased scrutiny on one-day stays, many facilities are instead placing patients in observation, Becker says. The next logical step for RAs then is to focus on observation. “We even have heard that some RAs are looking at observation visits as to whether or not the patient should have even been there at all,” she says.
Editor’s Note: This article is an excerpt from JustCoding.com.
Editor’s Note: CMS released the Inpatient Prospective Payment System fiscal year (FY) 2014 proposed rule on Friday, April 26. ACDIS members received a full-length synopsis of the proposal via email earlier this week.
As usual, CMS plans to implement a Documentation and Coding Adjustment (DCA) this time of 0.8%, with hopes to continue adjustments through FY 2017 in order to recoup $11 billion as mandated in the American Taxpayer Relief Act of 2012. However, hospitals may see an overall net increase in payments of the same amount.
As always, some MS-DRG weights increased, while others decreased. Facilities should review the relative-weight change tables included in the proposed rule.
CC/MCC changes include adding diagnosis code 575.0 (acute cholecystitis) to the CC Exclusion List when reported as a secondary with principal diagnosis code 574.00 (calculus of gallbladder with acute cholecystitis without mention of obstruction).
CMS also proposes removing the following diagnosis codes from the CC Exclusion List for diagnosis code 440.4 (chronic total occlusion of artery of the extremities):
- Atherosclerosis codes 440.20-440.32, 443.22, and 443.29
- Aneurysm codes 441.00-441.03, 441.1-441.7, 441.9, 442.0, 442.2, 442.3, 442.9
The proposed rule does not include any revisions to the CC/MCC Exclusion List based on ICD-9-CM code changes.
CMS proposes moving stroke cases with ICD-9-CM code V45.88 (status post administration of tPA [rtPA] in a different facility within the last 24 hours prior to admission to current facility) as a secondary diagnosis from MS-DRG 066 to MS-DRG 065. CMS would change the title of MS-DRG 065 to Intracranial Hemorrhage or Cerebral Infarction with CC or tPA in 24 hours. Hospitals who receive patients undergoing a stroke-in-evolution who had tPA given at an outside facility demonstrated higher costs and lengths of stay in all stroke MS-DRGs without tPA (MS-DRG 64-66), particularly if there was a MCC.
“I am grateful that CMS proposes to allow hospitals accepting patients with stroke-in-evolution who receive tPA at an outside facility to have code V45.88, in essence to count as a CC if a CC is not otherwise documented,” says James S. Kennedy, MD, CCS, CDIP, managing director of FTI Healthcare in Brentwood, Tenn.
CMS proposes reassigning the following diagnosis codes from MS-DRG 794 to MS-DRG 795:
- V64.00, vaccination not carried out, unspecified reason
- V64.01, vaccination not carried out because of acute illness
- V64.02,vaccination not carried out because of chronic illness or condition
- V64.04, vaccination not carried out because of allergy to vaccine or component
- V64.06, vaccination not carried out because of patient refusal
In addition, all of the diagnosis codes currently assigned to MS-DRG 794 would be added to the “only secondary diagnosis” list for MS-DRG 795.
By Mark N. Dominesey, RN, BSN, MBA, CCDS, CDIP
What follows below is applicable to a program or organizational perspective, not all who read the ACDIS Blog are interested in this type of program management discussion.
Hospitals that base CDI pay on nursing or HIM pay scales may not be taking into account the value of CDI to the bottom line. We, as CDI professionals, have to continually advocate for the value we bring to the organization. CDI Staff are “value-add,” not “net-loss” employees. It is understandable for a hospital to offer a lower salary for a person new to CDI, but within 1-2 years, that employee becomes very valuable in the CDI world.
Let’s make this easy for the accountants and the chief financial officers in our hospitals to understand (let’s talk quality afterwards, the numbers guys and gals want “hard financial numbers” to justify their investment in CDI).
Think about it this way…. The Advisory Board Company (a Washington, D.C., based global research company) states that a high performing CDI specialist (someone with roughly 2 years’ experience) brings about $1.4 million in revenue to a 250-bed hospital. An “average” CDI specialist brings about $700,000 in revenue, according to a 2012 webinar titled “Creating Top Tier CDI Capabilities.”
Let’s do some math. (All salary numbers are assumptions, not based on mine or any other numbers.)
Costs: Let’s assume 30% overhead on salary for benefits, space, utilities, education costs etc. and build this in to the salary equation. Let’s assume three employees working at a given facility all earn the same salary and the manager earn about 20% more in additional salary. It appears that the national “going rate” (advertised salaries) for a CDI specialist is $75,000; and roughly $90,000 for a CDI manager. (For additional rates review the ACDIS “2012 CDI specialist Salary Survey,” published in the CDI Journal.) So far, for costs we have:
- $315,000 for personnel
- $94,500 for overhead
- $60,000 for software/hardware
- $40,000 for part-time physician advisor salary (This assumes a hospitalist who makes roughly $200,000-$250,000 salary would be paid about a 1/4th or 1/5th of their time).
Revenue: Again these are assumptions, but let’s say that a high performing team (which includes our staff of three and their manager) can earn the facility roughly $1.4 million each with the manager who reviews records part-time earning roughly $700,000 for a total of about $4.9 million. If we consider this in reference to the previous mentioned webinar and within context of anecdotal earning from consulting firms, this looks about right (other organizations say a 250-bed hospital can make as much as $5 million/year with a great CDI program). Let’s say that an average performing team of the same make up earns about $2.45 million.
Return on investment (ROI): Let’s calculate the return-on-investment using the following equation: ROI equals payback after investment divided by that investment or ROI=(payback – investment/investment). So for our high-performing team in the above example the equation would be ($4.9M-$509.5k)/$509.5k=8.62
Some financial people like to see and present ROI in percentages. So multiply the number by 100 and add the percent unit, or 862%, and be described this way: “The potential return on investment for a high performing CDI team is 862%.”
Assuming we have an average performing team ROI = 3.8. In percentage form: 380%
So, don’t you think we easily justify our existence from a financial standpoint? A CDI team represents at minimum a 4 to 1 ROI with the potential being much greater!
Let’s give our staff members’ raises of about 10% to make our team have better standing in competitiveness and retention.
Costs: Specialists $83k x 3 + Manager $100k = $349k + 30% (overhead) = $454k; add $60k (software) + $40k (adviser) = $554k. ROI= 7.84 or 784% for a high-performing staff and 3.42 or 342% for an average performing staff.
How many other departments in the hospital show an ROI as good as this?
The main point of this exercise is to show that most of us CDI practitioners have advanced training and we are in a very competitive and fast-growing career field. Thus, by presenting the value we bring in financial terms, we should be able to justify to administration our higher pay in relation to our nurse and HIM colleagues.
Editor’s Note: Mark N. Dominesey, RN, BSN, MBA, CCDS, CDIP, is the manager of Clinical Documentation Excellence at Sibley Memorial Hospital in Washington, D.C., and a frequent contributor to CDI Talk, where this post originated. Contact him at email@example.com.
by Debbie Mackaman, RHIA, CHCO
We’ve been on quite a ride since the start of the Recovery Auditor (RA) efforts. In 2012, RAs continued to expand. This report examines how providers have adjusted their approach in the past year, and it looks forward to some new initiatives and proposals that could alter the state of RAs as a whole.
The Revenue Cycle Institute’s 2013 Recovery Auditor Benchmarking Survey had 325 respondents, representing both small and large hospitals, from all four RA regions. These respondents represented a number of different departments, including compliance, HIM, PFS, case management, and clinical documentation improvement.
The main theme of this year’s survey is the growing state of the RAs, and the fact that they only seem to be gaining speed.
The percentage of providers that have had recoupments from automated reviews rose by 14% this year. In addition, the amount of providers that have seen record requests for complex or semi-automated reviews has increased from 82% to 91%. This may not be shocking, as CMS continues to approve more issues and the scope of the RAs continues to expand, but it highlights the fact that the audits are ever-changing and will force providers to stay on their toes.
Another item providers need to pay attention to is the arrival of the prepayment RA reviews. As of right now, only two issues have been approved—MS-DRGs 312 and 069—with short inpatient hospital stays looming, and only 11 states are in the prepayment demonstration, but that does not mean that providers are unfamiliar with the prepayment review process. According to our survey, 74% of respondents have seen a prepayment review either from their MAC (52%), their RA (6%), or both (16%). A total of 52% said that they are not specifically changing any internal processes related to prepayment concerns but 33% said they’ve heightened awareness in departments affected by RAs. However, almost half of the respondents have felt the need to revise internal processes to meet auditor scrutiny, which appears to be increasing from year to year. As the RA program expands, providers need to be flexible to adjust to current issues and anticipate upcoming reviews.
Another RA-related demonstration project is the Part A to Part B rebilling demonstration. While only 380 hospitals are participating in this demonstration, 28 responded to the survey. Of these, the majority (62%) have been able to rebill and get reimbursed. Only 14% have not rebilled anything yet, but were planning on doing so in the future. This demonstration project will last three years, and although it could assist facilities in recouping some of their costs for inpatient stays that were deemed not medically necessary, it is certainly not an answer to resolving the daily operational issues facilities face.
The third recent development is the complaint filed by the American Hospital Association (AHA) against RAs. As you all probably know, the AHA, along with several other hospitals, issued a lawsuit against the RAs for unfair Medicare practices. Based on this bold move, I was curious what respondents thought about the initial action. Sixty percent think that something will happen as a result of the complaint, but 43% of those think that it will only involve very minor changes. On the other side, 17% think that nothing will happen, while 25% are just happy to see the RAs being called out on their current practices. This will be an interesting topic to follow and may set a precedent for other audit processes. Although respondents appear to be pessimistic regarding the potential outcome of the lawsuit, the fact that RAs are being challenged should give providers hope for changes going forward.
Editor’s Note: Debbie Mackaman, RHIA, CHCO, is a Regulatory Specialist with HCPro, Inc., and teaches its Medicare Boot Camps. This post is an excerpt from the benchmark report. To read the entire report, visit The Revenue Cycle Institute.