By Toni Cesta, PhD, RN, FAAN


Last month, we reviewed the Medicare Conditions of Participation for Utilization Review and how they affect the role of the case manager. This month, we will discuss the Conditions of Participation for Discharge Planning.

To be compliant in the role of utilization manager, one must understand what the term “medical necessity” means. When talking to a physician or patient about care that may not be medically necessary, be clear as to what this means and ensure that the hospital receives reimbursement and that the patient is being cared for in the most appropriate setting. The definition of “medical necessity,” according to the American College of Medical Quality, is as follows:

“Medical necessity is defined as accepted healthcare services and supplies provided by healthcare entities, appropriate to the evaluation and treatment of a disease, condition, illness, or injury and consistent with the applicable standard of care.”

To best understand this definition, we will review the seven components of medical necessity. The overarching message is that a patient should receive neither more nor less than what they require at a specific point in time.

Seven Components of Medical Necessity

1. Determinations of medical necessity must adhere to the standard of care that applies to direct care and treatment of the patient.

2. “Medical necessity” is the standard terminology that all healthcare professionals and entities will use in the review process when determining if medical care is appropriate and essential.

3. Determinations of medical necessity must reflect the efficient and cost-effective application of patient care, including, but not limited to, diagnostic testing, therapies (including activity restrictions, aftercare instructions, and prescriptions), disability ratings, rehabilitating an illness, injury, disease, or its associated symptoms, impairments or functional limitations, procedures, psychiatric care, levels of hospital care, extended care, long-term care, hospice care, and home healthcare.

4. Determinations of medical necessity made in a concurrent review should, when possible, include discussions with the attending provider as to the patient’s current medical condition.

• A physician advisor/reviewer can make a positive determination regarding medical necessity without necessarily speaking to the treating provider if the provider has enough available information to make an appropriate medical decision.

• A physician advisor cannot decide to deny care as not medically necessary without speaking to the treating provider. These discussions must be clearly documented.

5. Determinations of medical necessity must be unrelated to the payer’s monetary benefit.

6. Determinations of medical necessity must always be made on a case-by-case basis consistent with the applicable standard of care and must be available for peer review.

7. Recommendations approving medical necessity may be made by a non-physician reviewer.

• Negative determinations for the initial review regarding medical necessity must be made by a physician advisor who has the clinical training to review the particular clinical problem (clinically matched).

• A physician reviewer or advisor must not delegate his or her review decisions to a non-physician reviewer.

8. The process for evaluating medical necessity should be explained to the patient.

9. All medical review organizations shall have uniform, written procedures for appeals of negative determination that services or supplies are not medically necessary.

It is clear that these components apply to the role of the RN case manager as well as the physician advisor, and should be taken into account when conducting a clinical review or when a physician advisor is reviewing a case.

Hospital-Issued Notice of Noncoverage

Hospital-Issued Notices of Noncoverage, or HINNs, are documents that hospitals may issue to Medicare fee-for-service patients if the hospital intends to hold a patient financially responsible for all, or part, of a bill. The hospital is not required to issue a HINN.

Carefully consider issuing HINNs, as these can result in a negative relationship between patient/families and the hospital staff. Potential problems can be avoided through discussions with patients and families. This is why it is best to have an RN case manager deliver the HINN rather than a clerical person or someone in the patient access department.

When Is a HINN Issued?

The HINN is issued if the care the patient is, or may be, receiving is not covered under the Medicare fee-for-service program. Services may not be covered for any of the following reasons:

• the service is not medically necessary;

• the service in not being delivered in the most appropriate setting;

• the care is custodial in nature.

Before issuing a HINN, the case manager should contact the physician of record for any additional information related to the patient’s case that may change the decision to deliver the HINN. If the patient cannot understand the HINN, his or her representative can receive the document. A HINN may not be issued where the Emergency Medical Treatment and Active Labor Act (EMTALA) applies, such as in the ED. All patient billing must meet CMS billing requirements, although this is not a responsibility of the case manager.

If for any reason the HINN is issued incorrectly, the patient cannot be held financially responsible. Be sure to include the physician advisor any time that the attending physician does not support issuing the HINN.


The other type of notice that you may be required to give is an Advance Beneficiary Notice of Noncoverage (ABN). The difference between the HINN and the ABN is that the ABN is given when outpatient services are not covered. This may include ambulatory diagnostics or procedures that are being denied or may be denied. The HINN is used for inpatient services only.

Types of HINNs

The following are the four types of HINNs:

1. The first is the pre-admission/admission HINN. This HINN is issued when the physician has ordered inpatient care that would usually be covered under Medicare, but the care is determined to not be medically necessary or the level of care being ordered is not appropriate to the patient’s clinical condition.

For example, a pre-admission HINN might be issued when the admission does not meet national or local coverage determinations and would result in nonpayment from Medicare. Another example is if, after review, the case does not meet the level of care ordered.

2. The second type is the HINN 10, or the Notice of Hospital Requested Review. This is used when the hospital determines that the patient no longer needs inpatient care, but the attending physician does not agree. In this case, the hospital would request that the quality improvement organization (QIO) review the case and determine whether the patient still needs inpatient care.

3. The third type is the HINN 11. This is issued when a diagnostic or therapeutic service that is not medically necessary is ordered during an otherwise covered inpatient stay. It may only be used when the published Medicare coverage policy confirms that the item or service is not medically necessary.

An example of when the HINN 11 might apply would be when a patient who is undergoing medically necessary bowel surgery asks the surgeon to also perform a tummy-tuck at the same time. In this case, the tummy-tuck would not be a covered service and the HINN would be delivered to the patient while the QIO reviews the case.

4. The fourth type is the HINN 12, which applies when the patient initially met an inpatient level of care, but the hospital, with the concurrence of the physician or the QIO, determines that the patient no longer needs inpatient care and the physician plans to discharge the patient. In this case, the HINN would be delivered while the QIO reviews the record.

The HINN 12 is the most commonly used of the four types of HINNs. It is issued when a patient is ready to be discharged to a lower level of care such as subacute or skilled care, but the patient and/or family refuses to cooperate with the discharge decision.

Part of the Patient’s Financial Experience

Because utilization management and compliance are so intertwined, they can affect the patient’s financial picture during current or future hospitalization. Therefore, it is critical that the patient and/or his or her representative are kept in the loop regarding any payer-related issues or concerns. Examples of these areas include the following:

• The Important Message from Medicare;

• Advance Beneficiary Notice;


• Benefits — reimbursement for non-covered services;

• Medicare Outpatient Observation Notice (MOON);

• patient choice list;

• discharge limitations related to payer issues.

We will discuss these areas in a future issue covering compliance. For now, we will turn our attention to the Conditions of Participation for Discharge Planning, the other critically important Condition of Participation most greatly affecting case management.

Conditions of Participation for Discharge Planning

The Conditions of Participation (CoP) for Discharge Planning (Section §482.43) focus on the process of care coordination for discharge and transitional planning. According to these regulations, hospitals are expected to do the following:

• Create a discharge planning process applicable to all patients. The related policies and procedures must be made available in writing.

• Identify the patients in need of discharge planning and post-discharge services at an early stage of hospitalization.

• Provide a timely discharge planning evaluation for patients who require it and for those who request it, regardless of need.

• Have a licensed professional, such as an RN, social worker, or other appropriately qualified professional develop or supervise the development of the discharge planning evaluation.

• Include a timely evaluation of the patient’s likelihood of needing post-hospital services, and arrange for the services before discharge to avoid unnecessary delay.

• Evaluate the patient’s capacity for self-care or the possibility of returning to the pre-hospital environment.

• Document the patient’s discharge plan in the medical record.

• Share the discharge plan with the patient or designee for approval and counseling.

• Assess the patient’s discharge needs on an ongoing basis while hospitalized, revise the plan when necessary, and prevent discharge delays.

• Refer or transfer the patient to other facilities and providers as needed for follow-up care and share the necessary information.

Expanded Discharge Planning Rules

In November 2015, CMS published proposed changes to the discharge planning rules. The following is a list of the proposed changes and their potential effect on case management:

• Patients discharged from critical access hospitals, long-term acute care hospitals, inpatient rehab hospitals, observation service, EDs, and ambulatory surgery, as well as patients receiving procedures that require sedation or anesthesia, will require a discharge plan before leaving the hospital. This change would necessitate adding case management to these areas, and/or expand the role of the staff nurse.

• The discharge plan will be required to start within 24 hours of admission. Case management departments will need to staff adequately to perform discharge planning assessment promptly.

• Post-acute quality measures should be provided to patients. CMS recommends that these measures come from its star ratings. It is also required that hospitals document in the medical record that the list was presented to the patient or an individual acting on the patient’s behalf.

The star ratings can be found on the Nursing Home Compare and Home Health Compare websites.

• Patient information should be shared with next level of care providers. It is recommended that this information is shared both verbally and electronically.

• The practitioner responsible for the patient’s care must be involved in the discharge planning process and participate in the documentation of the plan. It is not always common for the physician to document the discharge plan in the medical record, so this expectation may require physician education and a standardized documentation template.

• Patients discharged home should have a copy of their discharge summary sent to their community-based physician within 48 hours of discharge. Pending lab results should be sent within 24 hours of discharge. This process should be an automatic interphase when possible.

• The discharge planning process must be written and approved by the hospital board (both initially and routinely). The discharge planning process can be approved when the utilization review plan in approved and should take place annually.

• Patient or family caregiver capability and availability must be considered. Case management departments should consider adding a family caregiver assessment to the admission assessment when a family caregiver is involved.

• Availability and access to non-healthcare services must be considered. This includes home and physical environment modifications, assistive technologies, transportation services, meal services, household services, and housing for homeless patients. Case managers should be sure to document this information in the medical record.

• The discharge plan must address the patient’s goals of care and treatment preferences and document these in the medical record. Case management documentation must be comprehensive enough to include this information.

• The discharge planning process must be reassessed on a regular basis. The process should be reviewed by case management leadership via a sample of discharge plans each month.

Staffing Patterns

The expanded rules most likely will require that your department reassess its staffing patterns, including:

• days of the week that require full staff support rather than a minimal staff (skeleton);

• hours of staff coverage;

• changes in volume of staff that will be needed to cover additional clinical areas such as ambulatory procedures, ambulatory surgery, observation, and the ED.

In addition, you will need to address IT solutions that may be needed for transfer of data to post-acute providers and other settings, as well as discharge planning summaries and diagnostic test results.


This month, we completed our discussion of utilization review compliance and began our review of compliance with the conditions of participation for discharge planning. We will continue our compliance series next month with more on the discharge planning CoPs and review the other areas of compliance required by case managers and case management departments.