Last month, Hospital Peer Review included breaking news about the finalized Outpatient Prospective Payment System (OPPS) rules that included updates to the two-midnight rule that has so plagued hospitals, as well as changes to the recovery audit program that many felt was slanted toward the auditors, with an incentive to find fault and no incentive to resolve disputes quickly.
The changes in the OPPS are supposed to give physicians more flexibility to determine which patients might be considered an inpatient, even if they don’t stay over two midnights.
“I don’t think we can tell if it will be an improvement or not,” says Ann Sheehy, MD, MS, an associate professor in the department of medicine and the division head of hospital medicine at the University of Wisconsin Hospital in Madison. That the CMS maintained it, but gave some flexibility to physicians to allow patients to stay longer than one midnight, but less than two and still be an inpatient, seems great on the surface, she says. However, “the rule may be hard for hospitals to operationalize.”
The new rule also relies on “physician judgment,” but many doctors may wonder whether that will truly be honored, Sheehy says. “And it’s still unclear if even two midnights will hold as an inpatient.” During the recent Medicare Administrative Contractors (MAC) Probe and Educate period, she says there were nine cases reviewed at the University of Wisconsin, and three were initially denied. “All three denials spanned two midnights, and the reason for denial was that our documentation did not support the need for two midnights of care.”
Sheehy says they have contested these cases, but “it remains possible that even two-midnight inpatient stays will be challenged when true auditing returns.” Recovery auditors have been on hiatus for almost two years, she says, so how the rule will be enforced on their return is unclear.
She has a deal of skepticism about how the proposed rule will work in practice, saying it will depend on how it is audited, and how well in turn CMS supervises its auditors. “We know that auditing is necessary in the Medicare program because there is fraud and abuse out there. However, we have generally felt that the Recovery Audit program itself needs to be better regulated, and would benefit from greater transparency in data reporting so that CMS and Congress could see some of the flaws that we see on the hospital level.”
CMS has now made Quality Improvement Organizations (QIOs) the first line of review, she says, and they have largely focused on improvements in clinical care, rather than billing determinations to date. “That is the work they will be asked to do monitoring outpatient and inpatient status determinations, so it is unclear how they will adapt to this new role. It appears that QIOs are not contingency fee-based, which should in and of itself make them a more effective and fair auditing body.”
The contingency fee system is a structure that needs to go, Sheehy says. She points to Senator Debbie Stabenow’s (D-MI) amendment to the Senate Finance committee draft bill, the Audit & Appeals Fairness, Integrity, and Reforms in Medicare Act of 2015 (see the full bill at http://1.usa.gov/1MSr2mP), as a good example of the kind of correction she’s talking about. “We also need improved transparency in Recovery Auditor data reporting, as stated in Senator Ben Cardin’s [D-MD] amendment to the same bill, which passed the finance committee in June. With improved transparency in data reporting, Congress and CMS would be much better able to target problem areas in the Recovery Audit program.”
The problem she sees with the entire focus on observation versus inpatient status is that it has absolutely nothing to do with quality of care. “It’s a billing distinction,” she says. “We recently published our audits data from the University of Wisconsin, the University of Utah, and Johns Hopkins Hospital. Of over 2,500 Complex Part A denials, not a single denial disputed the quality or necessity of care delivered; rather, every denial contested the billing status, inpatient, or outpatient.” Hospital Peer Review looked at that study in the June issue.
“Even though the proposed rule utilizes QIOs,” Sheehy continues, “I do not see this resulting in improved patient care if they are also tasked with surveying billing status.”
Overall, she believes that CMS had good intentions, both with the original two-midnight rule as a means to curb the growing number of long observation stays, and with this proposal to remedy the issues that arose when that rule was implemented. “Part of the problem has always been what CMS intends and how a rule is actually audited. I do not think CMS has done a good job monitoring its auditors, and the contingency-fee payment recovery audit structure has led to overzealous auditing that I don’t think has been beneficial for patients, providers, hospitals, or CMS. Unfortunately, I don’t think any rule CMS issues will be successful without improved transparency and accountability in the audits system.”
Enforcement of the two-midnight rule resumes on September 30. The complete final rule can be found at http://bit.ly/1MYaYwN.
For more information on this topic, contact According to Ann M. Sheehy, MD, MS, Associate Professor, Department of Medicine, Division Head, Hospital Medicine, University of Wisconsin Hospital, Madison, WI. Email: [email protected].
