All Entries Tagged With: "observation services"
Provider-friendly change to tracking observation hours
Editor’s note: The following article is adapted from a blog by Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance at HCPro, Inc., that appeared on Medicare Mentor.
In the July OPPS update, CMS made a very provider-friendly manual change to the section on counting observation hours. CMS amended Medicare Claims Processing Manual, Chapter 4 – Part B Hospital (Including Inpatient Hospital Part B and OPPS), §290.2.2 Reporting Hours of Observation, to allow providers to use average times when determining the amount of time to subtract from observation time for other procedures.
Providers have struggled with this issue since CMS added a clarification to the manual in 2008 that requires providers to subtract time for procedures that require active monitoring and interrupt observation care. Providers struggled with determining which procedures required active monitoring and how much time to subtract for these procedures.
In early 2010, CMS published FAQ 9974, addressing the issue regarding which procedures require sufficient active monitoring to necessitate subtraction from overall observation time. The specific question related to drug administration services. CMS said hospitals must determine service-by-service whether a particular drug administration service required active monitoring because services with the same HCPCS code may or may not need active monitoring. It provided examples of an antibiotic infusion as something that doesn’t require active monitoring and a complex drug infusion titration as something that does.
But this left the issue of how much time to subtract once a hospital determined that a service did indeed require active monitoring. The manual indicated that the beginning and end times of observation, or more likely the procedures, would require documentation to calculate total observation time. However, this was problematic for many of these bedside procedures…For instance for a procedure such as a PICC line placement, providers normally document all pertinent details about the procedure, but don’t necessarily document when they entered or left the room.
The most recent change to the manual will be a welcome change for providers who have struggled with this. CMS now allows providers to use an average time for these procedures that interrupt observation. The new manual section give providers the option of documenting start and stop times or using an average time when subtracting these procedures.
Providers who wish to use this new option, should consider putting in place policies indicating which procedures will be deducted and the average time to be deducted for those procedures. This may be as simple as updating an existing policy on observation billing, with an addendum with the procedures and their times.
In developing their listing of procedures and average times, the provider should look for the procedures they provided in conjunction with observation by looking at reports for past billing for observation cases. When determining the average times for those procedures, the provider may need to use several sources including the CPT book, staff interviews and hospital protocols. Though it doesn’t appear required, it will be useful for future updating to note what resource was used to establish the average time for each particular procedure.
One last note about the July OPPS update; CMS manualized a topic I discussed a couple of months ago about inpatient only procedures on an outpatient basis within the three day payment window. At that time, the guidance I was reporting was from the Medical Director of a specific MAC, but CMS has now added this to the Claims Processing Manual, making this a national policy. For more information see my previous post.
MAC settles long-running inpatient billing debate
Noridian Administrative Services LLC, Medicare administrative contractor (MAC) for Montana, North Dakota, South Dakota, Colorado, Utah, and Arizona, has put to rest the question of how hospitals should bill for patients who are improperly referred for observation services when they actually met inpatient criteria.
Noridian provided the answer as part of a list of inappropriate admission orders in a May 6 announcement. The example is as follows:
Initial observation order was determined at later point in time to have been inappropriate as patient should have been admitted as an inpatient. Order is written for inpatient care on different date than referral to observation. Since orders cannot be retroactive, the admission date is the date the inpatient order is written, even if patient could have been inpatient when the observation order was written.
Note: When an admission order is written but the patient status no longer supports the need for inpatient admission, the claim cannot be billed as an inpatient claim.
The statement not only confirms that hospitals cannot backdate inpatient orders, but also answers a longstanding question among hospital utilization review (UR) staff, says Kimberly Anderwood Hoy, Esq., CPC, director of Medicare and compliance at HCPro, Inc., in Danvers, MA.
Some believe that if a hospital discovers that a patient met inpatient criteria on admission but was referred to observation, an inpatient order can be written at later date, even if the patient does not meet inpatient criteria at the time. The hospital would then bill the charges incurred during observation as part of the inpatient stay, under the three-day rule.
For example, a patient admits to the hospital on Friday night. The patient meets inpatient criteria, but the attending physician refers the patient to observation. The patient remains an outpatient until Monday, when the case manager reviews the case and realizes that the patient would have met inpatient criteria on Friday night; however, the patient is now ready for discharge and doesn’t meet inpatient criteria. In this scenario, the Noridian memo indicates the hospital cannot write an inpatient order on Monday and bill the services performed over the weekend on an inpatient claim under the three-day rule, Hoy says.
“I think people have the backdating thing down, but I have had many people ask about this issue,” Hoy says. “They will say they only want to make the patient an inpatient as of Monday, but this is saying they can’t do that if the patient no longer meets inpatient criteria.”
CMS says providers cannot use condition code 44 to backdate observation services
CMS issued a transmittal that explicitly states providers may not use condition code 44 to retroactively bill for observation services that the hospital provided prior to the physician’s order to change the patient from inpatient to observation.
The transmittal does not change the requirements providers must meet when applying condition code 44. It reiterates Medicare billing rules, which state that providers may not bill for observation services that occur prior to the physician’s order.
The new language is as follows:
When Condition Code 44 is appropriately used, the hospital reports on the outpatient bill the services that were ordered and provided to the patient for the entire patient encounter. However, in accordance with the general Medicare requirements for services furnished to beneficiaries and billed to Medicare, even in Condition Code 44 situations, hospitals may not report observation services using HCPCS code G0378 (Hospital observation service, per hour) for observation services furnished during a hospital encounter prior to a physician’s order for observation services. Medicare does not permit retroactive orders or the inference of physician orders. Like all hospital outpatient services, observation services must be ordered by a physician. The clock time begins at the time that observation services are initiated in accordance with a physician’s order.
While hospitals may not report observation services under HCPCS code G0378 for the time period during the hospital encounter prior to a physician’s order for observation services, in Condition Code 44 situations, as for all other hospital outpatient encounters, hospitals may include charges on the outpatient claim for the costs of all hospital resources utilized in the care of the patient during the entire encounter. For example, a beneficiary is admitted as an inpatient and receives 12 hours of monitoring and nursing care, at which point the hospital changes the status of the beneficiary from inpatient to outpatient and the physician orders observation services, with all criteria for billing under Condition Code 44 being met. On the outpatient claim on an uncoded line with revenue code 0762, the hospital could bill for the 12 hours of monitoring and nursing care that were provided prior to the change in status and the physician order for observation services, in addition to billing HCPCS code G0378 for the observation services that followed the change in status and physician order for observation services. For other rules related to billing and payment of observation services, see Chapter 4, §290 of this manual, and Chapter 6, §20.6 of the Medicare Benefit Policy Manual, Pub. 100-02.
Whether condition code 44 allows facilities to backdate observation services has been a contentious debate on case management blogs, listservs, and message boards. This transmittal may finally end the backdating debate amongst providers, says Sandra McCune BSN, RN, utilization management specialist at Lakeland Regional Health System in St. Joseph, MI. “Finally, a clarification in language we can all understand!”
The transmittal also confirms that hospitals may report outpatient nursing charges and other services that occurred while the patient was incorrectly an inpatient, even though Medicare won’t pay for them, McCune says. “It is important that claims reflect all of our costs,” she adds.
Communication between physicians and case managers reduces patient risk
Case managers continue to struggle with maintaining a balance between doing what is right for the patient and ensuring that their facilities receive proper reimbursement. RAC auditors or a third-party payer may not agree with their patient status decisions, which means their healthcare organization will end up providing free healthcare.
Software programs such as The Milliman Care Guidelines®and InterQual® Criteria, as well as Medicare regulations, help case managers and physicians determine the correct patient status, the appropriateness of continued stays, and appropriate discharges. These tools are only part of what is necessary for the decision-making process.
The key to determining appropriate patient status is considering patients’ physical condition and clinical picture. Remember that patients are either inpatient or outpatient; observation is a service not a status. Ongoing communication and collaboration between physicians, nurses, and case managers is essential to putting all the pieces together to do what is right for patients.
Communication can be difficult as physicians find their time stretched very thin between clinic care and hospital care. Case managers must understand this, but physicians must also understand that assigning appropriate and timely admission status is important. Physicians must give orders in a timely manner to avoid delays in care, which increase LOS and put patients at risk.
Case managers and physicians must come together with a plan to provide appropriate admission status and care in a timely manner. There is no one or two sentence solution to this. It takes is open communication between the two positions. Building a strong relationship between case managers and physicians will reduce the number of patients that are at risk. If we, as a healthcare team, do what is truly right for the patient, everything else should fall into place.
How is the communication between case management and physicians at your organization?
Providers ask CMS to abolish observation services
Several providers suggested CMS abolish observation services during a CMS listening session titled, “Medicare beneficiaries receiving extended observation care as a hospital outpatient” August 24.
The session began with statements from Jonathan Blum, Deputy Administrator and Director, Center for Medicare Management. He said the purpose of the listening session was to understand the increase in extended observation stays and whether CMS needs to change its guidance or regulations or to provide better education for beneficiaries, or both.
The observation problem defined
According to Chapter 4 of the Medicare Claims Processing Manual, CMS defines observation services as:
“specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.”
However, many of the comments made during the August 24 call indicated that facilities do not use observation services in that manner.
Pressure from government auditors (such as the recovery audit contractors) has forced facilities to use observation services as a “safety net” level of care. In many cases, extended observation patients are too sick to go home but nevertheless do not meet admission criteria, callers stated. Although physicians feel the patients require hospital care, facilities expect Medicare will deny the payment.
Several callers expressed frustration with the fact that inpatient admissions hinge on admission software products such as InterQual and Milliman. A medical director of care management in Florida said these admission criteria products use arbitrary definitions that are often vague and difficult to understand. He also stated that the difference between inpatient and outpatient can sometimes be “two or three points in their sodium level.”
Although a physician’s medical judgment trumps admission criteria, a caller from Maryland stated it is often difficult to obtain documentation that supports a physician’s medical decision making.
The solution?
Commenters agreed that the observation issue is confusing, and one of the more popular suggestions was for CMS to eliminate of observation services altogether.
One caller presented Oregon Health Plan’s (OHP) policy as an alternative. OHP does not ask hospitals to make level of care determinations. Instead, OHP pays hospitals for outpatient services if patient is in the hospital less than 24 hours and pays inpatient rates for any stay that exceeds 24 hours.
Other commenters pointed out that, eliminating of observation services could lead to more complications such as emergency department overcrowding and complications with qualifying for a Medicare covered SNF stay.
Do you think observation services should be eliminated?
Look for more information in the November issue of Case Management Monthly
Inpatient admissions decision fuels RAC uncertainty
Editor’s Note: This post originally appeared on the HCPro’s Revenue Cycle Institute website.
Recent approval of a RAC issue for inpatient hospital claims review has initiated uncertainty, thus putting an emphasized onus on providers to lean on CMS guidance and policy manuals.
The issue, “inpatient admissions without a physician’s inpatient admit order,” can be referenced in the Medicare Claims Processing Manual, Section 50.3 where it states that “patients are admitted to the hospital as inpatients only on the recommendation of a physician or licensed practitioner permitted by the State to admit patients to a hospital.” While the posting of this issue may have come as a bit of surprise, it has always been one of the basic premises of accurate billing, according to Deborah Hale, CCS, CCDS, president and CEO of Administrative Consulting Service, LLC in Shawnee, OK.
“There’s so much written in the Medicare Benefit Policy Manual stating that the decision to admit as inpatient is a complex medical judgment that can only be made after a physician has taken into consideration a number of clinical and safety factors,” she says. “It [the manual] stresses the importance of the physician making a conscious decision to admit as inpatient, and that is the foundation for everything in this process.”
One of the things that may confound facilities is the fact that many have dubbed it the first official medical necessity issue approved by CMS. While technically it may not be, and though some may argue this point, this new RAC issue is in fact consistent with establishing medical necessity for services provided, according to Hale.
“While this is technically not a medical necessity issue as most hospitals define medical necessity (i.e., the case may meet necessity for inpatient admission), if they don’t have an order, they don’t have a billable inpatient admission,” she says.
In addition to the medical necessity argument, a number of MACs have been providing information that is contrary and inconsistent to CMS guidance, according to Hale. One example of this is telling providers that the admit order can be rolled back if the patient was in observation first. Yet Hale points out that this is not in compliance with CMS. In fact, a CMS representative addressed the issue of rolling back an admit order during an Open Door Forum last fall, stating that: “The hospital cannot “roll back” the time or date of admission. If the inpatient stay began with the physician’s order at 8:00 a.m. on Tuesday and the patient was admitted directly from observation, the observation charges are included on the inpatient bill. Since the observation is included on the inpatient bill and paid as part of the DRG, there is no separate payment for observation.”
Providers receiving inaccurate or contrary information should contact their MAC in writing, and give them the appropriate references from CMS, the Benefit Policy Manual, or the Claims Processing Manual, and ask why their instruction is contradictory to CMS. “This will at least call for some accountability,” according to Hale.
“The number one thing I would say to providers is to be sure that you’ve got a properly worded order for admission, and number two, be sure that you’re not rolling the date of admission back” she says. “Also, be sure to have an internal process set up for looking at presence of a properly worded admission order and documented medical necessity of admission from the beginning of the stay, not just based on screening criteria, but also physician advisor review if screening criteria are not met.”
