CMS released proposed updates to the hospital Outpatient Prospective Payment System (OPPS) that will impact the existing Two-Midnight Rule beginning January 2016.

While a more in-depth look at the proposal and its possible impact on hospitals will appear in the September Hospital Peer Review issue, here is a quick run-down of CMS’s proposals and those for which it is seeking commentary.

The existing rule resulted in “significant feedback from the stakeholder community,” says CMS in its factsheet on the topic. The stakeholder community provided “significant feedback”, according to CMS, which led to the changes outlined in the proposed rule.

The proposed updates include a change to the standard by which inpatient admissions generally qualify for Part A payment to emphasize physician judgment. It also changes the enforcement of the standard so that Quality Improvement Organizations (QIOs) will oversee the majority of patient status audits, with the Recovery Audit program focusing on only those hospitals with consistently high denial rates.

For stays expected to last less than two midnights, CMS proposes the following:

• Physician judgment will be favored for admission and payment under Medicare Part A on a case by case basis if: 1) the doctor thinks the patient needs to stay less than two midnights, 2) the procedure is not on the inpatient only list, and 3) it is not listed as an exception.Documentation in the medical record must support that an inpatient admission is necessary, and is subject to medical review.
• CMS reiterates the expectation that it would be rare and unusual for a beneficiary to require inpatient hospital admission for a minor surgical procedure or other treatment in the hospital that is expected to keep him or her in the hospital for a period of time that is only for a few hours and does not span at least overnight. CMS will monitor the number of these types of admissions and plans to prioritize these types of cases for medical review.
• For hospital stays that are expected to be two midnights or longer, there is no change in policy.
• To address hospitals’ concerns that they do not have the opportunity to rebill for medically necessary Medicare Part B services by the time a medical review contractor has denied a Medicare Part A claim, CMS is changing the recovery auditor “look-back period” for patient status reviews to six months from the date of service in cases where a hospital submits the claim within three months of the date that it provides the service.
• CMS will limit documentation requests ADRs based on a hospital’s compliance with Medicare rules, incrementally applied ADR limits for providers that are new to recovery auditor reviews, and diversified ADR limits across all types of claims for a certain provider.
• CMS also announced a requirement for auditors to complete reviews within 30 days. Failure to do so will result in the loss of the contingency fee, even if an error is found.
• Finally, CMS will require recovery auditors to wait 30 days before sending a claim to the MAC for adjustment. This 30-day period allows the provider to submit a request for a discussion period before the MAC makes any payment adjustments.

Other elements of the proposals related mostly to outpatient hospital services but which may have an impact on quality departments include:

• OPPS rates will decline by 0.1%. The change is based on a projected total hospital increase of 2.7% minus both a 0.6% adjustment for productivity and a 0.2% adjustment required by law. There is also a 2% adjustment for inflation proposed, related to excess packaged payments for lab tests that are paid separately. In total, CMS estimates a decrease of 0.2% in payments under OPPS for the calendar year 2016.
• Separate codes adopted for chronic care management services for patients with two or more significant chronic conditions are clarified in the proposal.
• CMS is proposing to package a limited number of ancillary services, as they did in the last calendar year. For 2016, the focus is on certain minor procedures and pathology services, and on payment for a few drugs that function as supplies in a surgical procedure.
• Partial Hospitalization Program services related to psychiatric care will have new rate setting to align with actual costs.

Quality Reporting Program changes for 2017-2019 include a reduction of 2% in fees for failure to meet outpatient quality reporting program requirements. There will also be two new measures. For 2018, the addition includes one on external beam radiotherapy (EBRT) for bone metastases. Facilities will need to send data on the percentage of patients with painful metastases and no previous history of previous radiation who receive EBRT with an acceptable dosing schedule. For 2019, the new measure relates to communication in Emergency Departments. Facilities will need to collect and transmit data on the percentage of patients transferred to other facilities medical record documentation indicated that administrative and clinical information was communicated to the receiving facility in an appropriate time frame.

• One quality measure will be removed: use of brain computed tomography in the emergency department for a traumatic headache. CMS is also looking at whether hospitals could have the option to voluntarily submit data for OP-18: Median Time from ED Arrival to ED Departure for Discharged ED Patients electronically beginning with the CY 2019 payment determination.

The entire proposal can be downloaded from the Federal Register at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-16577.pdf. Comments are encouraged until August 31, 2015.