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After Midnight—or Two

By Cynthia C. Alder, RHIT, CDIP, CHDS, AHDI-F

On August 2, 2013, the Centers for Medicare & Medicaid Services (CMS) issued Final Rule CMS-1599-F, which affects CMS policy on Medicare review contractors who analyze inpatient hospital admissions for reimbursement. This rule states that when a patient enters a hospital for a surgical procedure, diagnostic studies, or any other purpose and the physician expects the patient will require hospital care for two or more midnights, the services provided will be considered appropriate for inpatient payment under Medicare Part A. According to these regulations, stays lasting fewer than two midnights should be treated and billed as outpatient services.

The CMS has delineated circumstances that are not considered appropriate for inpatient admission under the two-midnight rule, including admissions for telemetry monitoring, which the CMS states often is used in outpatient or observation settings. The CMS also clarifies that admission to a specific type of hospital unit is not, by itself, justification for inpatient admission status, and that circumstances must exist that support the expectation of a patient staying in the hospital over at least two midnights.

As with every rule, exceptions do exist, such as cases where treatments may require intensive care in an inpatient setting, such as new institution of ventilatory support.

Medicare review contractors now must evaluate whether, at the time of the admission order, it was reasonable for the admitting physician to expect the patient to need hospital services over a period of time spanning at least two midnights. Note that it is not necessary for a patient to meet level-of-care requirements, only for the admitting provider to deem a two-midnight stay medically necessary.

It is important in these cases that the patient’s condition be accurately documented to include the reason for inpatient admission and the expected duration of inpatient care. Documentation should include all pertinent information with regard to the patient’s past history, comorbid conditions, and severity of illness as well as the risk of an adverse event occurring during the expected hospitalization time.

In cases where the patient improves sooner than expected and is released before the inpatient stay spans two midnights, if the above information is well documented, Medicare still will cover the admission under Part A. The expectation for appropriate documentation of the patient’s condition, comorbidities, and other involved factors is well established in the proper practice of medicine. The provider is not required to submit an attestation of the expected length of stay because this can be inferred from the patient record and the care ordered and provided.

Needless to say, this new rule faced strong opposition from providers and inpatient facilities, who stated that there were many justifiable cases where patients needed inpatient care but did not need it to last two midnights. They felt that instituting this rule would significantly reduce compensation for cases where patients needed intense medical care and observation that could not be provided in an outpatient or observation setting but would span fewer than two midnights. Now, as part of the “doc-fix” rule, the enforcement delay has been extended through March 2015.

Providers and hospital facilities have voiced continued opposition, stating that the rule is unclear, and that it undermines physicians’ medical judgment. On January 28, David Bronson, MD, president of Cleveland Clinic Regional Hospitals, stated that the rule was “arbitrary, difficult to implement, and confusing to all of our staff.”

Medicare administrative contractors (MACs) and recovery audit contractors will perform prepayment patient status reviews for all claims that involve less than a two-midnight stay. It is expected that MACs will review 10 to 25 claims per hospital. Decisions will be based on the physician’s expectation of the necessity of an extended hospital stay. This is another reason it is important for providers to properly and completely document their patients’ conditions, including comorbidities and risk of adverse events.

Additionally, it is important to note that the CMS will not count treatment provided in an outpatient setting as part of a hospital stay. In other words, care provided in an emergency department would not be counted as inpatient care, but the time spent in the emergency department would count in terms of whether the stay met the two-midnight criteria.

The CMS has further stated that if a Part A claim is denied because it is not deemed reasonable and necessary, the services can be rebilled as being medically reasonable and necessary under Part B services.

As with everything in the health care industry these days, documentation truly is the key to avoiding confusion and claims denials. Providers must continue to practice good habits with regard to patient conditions, comorbidities, and other factors that could affect a patient’s long-term prognosis and support the necessity of care provided. Appropriate documentation of care provided and its necessity are vital for improving revenue flow and reimbursement for services provided.

— Cynthia Alder, RHIT, CDIP, CHDS, AHDI-F, is an HIM manager at the University of North Texas Health Science Center in Fort Worth.