Ensure that patients are in the correct status up front

Waiting 24 hours to review the case may be too late

From the Centers for Medicare & Medicaid Services' (CMS) perspective, the saying "ignorance is bliss" does not apply when it comes to a patient's status. Hospitals are expected to get patients in the right status up front, not after the fact, says Brenda Keeling, RN, CPHQ, CPUR, president of Patient Response, a Milburn, OK, health care consulting firm.

"Across the nation, hospitals frequently do not have an order for the level-of-care assignment when patients are placed in a bed. If the order merely says 'admit' or 'admission,' the status automatically defaults to inpatient," Keeling adds.

As hospitals struggle to get the level-of-care decision right, there is a lot of confusion about inpatient status vs. outpatient with observation services, adds Deborah Hale, CCS, president of Administrative Consultant Services LLC, a health care consulting firm based in Shawnee, OK.

"The distinction between outpatient with observation services and inpatient status often is not addressed explicitly in the admission order because it's irrelevant to the kind of care the physician will provide for the patient," she says.

There are many reasons for the confusion about inpatient vs. outpatient, Hale says.

"There is a misunderstanding of the relative roles of physicians and other staff in determining the patient's level of care, as well as confusion over the Medicare rules that guide the appropriate level-of-care selection," she says.

In addition, the distinction represents a difference in billing and not medical treatment, Hale points out.

Using observation services as a default patient status is not the solution, she adds.

"CMS has been clear that it is inappropriate to use observation as a default patient status, and hospitals will be penalized for doing so. Placing patients in observation when they meet inpatient criteria penalizes the hospital because the reimbursement is lower for observation services," she says.

Patients also may be penalized financially if they are automatically referred for observation services when they meet inpatient criteria because copays are higher for long outpatient services than for an inpatient admission, Hale adds.

In addition, if patients need post-acute skilled nursing care, their observation stay won't count as an inpatient day or days and they may not meet the three-day inpatient-stay criteria for skilled nursing care, she adds.

Observation services are appropriate for patients who need short-term treatment, assessment, and reassessment before a decision can be made about whether they will require an inpatient admission, or for brief stays following a procedure needed to manage a complication, Hale says.

Condition Code 44 is the billing code that indicates that the utilization review committee or physician advisor has determined that a physician's inpatient order for a particular patient has been determined to be medically unnecessary, she says.

The order may then be changed to an outpatient order if the utilization review decision is made while the patient is still in the hospital, if the hospital has not submitted a claim to Medicare for the inpatient admission, if the attending physician concurs with the utilization review committee's decision, and the concurrence is documented in the medical record, Hale adds.

When acute care is not substantiated

If documentation doesn't substantiate an acute level of care, the case managers should discuss the issue with the admitting physician, involve the physician advisor and/or the utilization review committee, and give the patient written notice, Keeling says.

"A lot of hospital staff are not aware that if they convert the patient from inpatient to outpatient with observation services and implement Condition Code 44, CMS requires that patients be given information in writing about the change-of-care status," she adds.

When patient status is changed from inpatient to outpatient with observation services, there's often confusion about when the hospital can start to bill for observation hours, Hale says.

"Medicare requires an observation order and documentation that supports observation services before the hospital can bill for observation hours. The observation order must be present before the observation clock starts ticking. This validates even more why the patient status has to be correct up front," Keeling says.

For instance, a patient is admitted in inpatient status overnight but the case manager's review determines that the patient doesn't meet inpatient criteria. The case manager's process has to include discussing the issue with the attending physician and the physician advisor. If the attending disagrees with the physician advisor, the utilization review committee or a second physician advisor will need to look at the case.

All this time the patient is in a bed, receiving care, but the hospital won't get paid for an inpatient admission because the patient doesn't meet criteria and the facility can't bill for observation services, as the order hasn't been written, Keeling points out.

In some cases, by the time the case manager gets the order changed to observation services, the patient is stabilized and ready to go home. In these cases, an order for observation and an order for discharge are issued within a short time, and the hospital is in a position of not having any further medically necessary observation hours to bill, Hale says.

"Many times, the utilization review process takes place close to the time the patient is walking out the door. That means that hospitals can't bill for the time the patient is in the bed, but they can bill for the ancillary services ordered for the patient that was supported by medical necessity," she adds.

CMs should educate other staff

Case managers should work with the physician and nursing staff in the emergency and admissions department to keep them educated on what constitutes inpatient vs. observation and the importance of getting it right from the get-go, says Kimberly Gilbert, RN, case management consultant, clinical advisory services for Pershing, Yoakley and Associates in Atlanta.

"The entire hospital staff have to understand that we're all in this together. It's not just the case managers' responsibility. Everybody has to know the regulations and get admission status right in order for the hospital to get paid," she says.

The process has to start from the minute the patient comes in the door, either in the emergency department or through the admissions department when patients are admitted directly, Keeling says.

"Cleaning up on the back end is a nightmare that causes redundant efforts and is confusing to the staff, physicians, and patients. Hospitals need to understand that getting the patient status right is a process and a system issue. It's not just the responsibility of case management. It's an overall hospital process," she says.

The solution at some hospitals has been to give emergency department physicians admitting privileges, a decision that often causes problems down the road, Keeling says.

"Giving emergency department physicians admitting privileges is not the best way to go. This doesn't fix the problem. It just puts a Band-Aid on it. When emergency department physicians have admitting privileges, it means that they will have to accept full responsibility for patients all night long, or until the attending comes to see the patient," she says.

Furthermore, if the utilization review committee determines that the level of care for the patient is not appropriate, it may be difficult to locate the emergency department physician to discuss the patient status, Keeling points out. She adds that CMS requires that the physician the original level-of-care order be notified when the utilization review committee questions the level of care.

"In cases where the emergency department physician has admitting privileges, the case manager should clarify the patient status with the emergency department admitting physician, not the attending physician, which often is more confusing than helpful," she says.

Just adding more case managers is not the solution to the problem of getting patient status correct up front, Keeling says.

"The best way is to implement a process that involves as many people as possible," she says.

Hospitals should establish a process for case management review that starts when the patient comes in for preadmission registration — through the emergency department or as a direct admission.

"Most hospitals are not going to be able to have case managers in the house 24-7. This means a process should be established in which the bed coordinators and/or nursing supervisors are cross-trained for level-of-care status, where the medical staff are trained on level of care, and the admitting clerks are educated to look at the orders before assigning a patient a bed," Keeling says.

The admissions clerk needs to be aware that he or she should look at the level-of-care order before assigning a bed to the patient. If there isn't a level-of-care order, the clerk should notify the admitting physician for an order.

"Often, the registration or admissions clerk will register patients as inpatient admissions without looking at the order. Level-of-care status needs to be part of the orientation and the accountability for people working in the admissions office. If the level of care is constantly wrong, a review to determine the root cause is indicated. The root-cause [analysis] may reveal an employee accountability or knowledge deficit or a competency problem, rather than a registration process problem. It may be as simple as the admissions clerk is not reading the orders," Keeling says.

Programs in which the house supervisor or whoever functions as an intake nurse is cross-trained in inpatient criteria work best, she says.

A proactive case management program should include representatives from registration, the business office, nursing, and ancillary departments. They should be a part of the daily case management meetings to reinforce the importance of ensuring that patients are in the appropriate level of care, Keeling says.

Gilbert suggests that hospitals staff the emergency department with case managers during peak hours to make sure the patient status is correct at the beginning. Case managers should make observation cases a priority when they come to work each day, she adds.

In addition, review the patients who are scheduled for surgery and identify those who are receiving inpatient-only procedures. Make sure that there is an order in place for an inpatient admission for these patients, Gilbert says.

"Case managers are going to have to review observation cases first thing in the morning to make sure the level of care is correct," Gilbert says.

Case managers should not limit their review of records to Medicare patients, adds Joanna Malcolm, RN, CCM, BSN, consulting manager, clinical advisory services for Pershing, Yoakley & Associates in Atlanta.

Traditionally, third-party payers have followed Medicare's lead, she adds.

"Patient status is getting very difficult to manage, particularly with smaller hospitals. It's hard to navigate the waters because insurance companies, Medicare, and even Medicare Advantage companies have different criteria as to what is appropriate for observation and inpatient," Malcolm says.

While Medicare and many commercial insurers use InterQual criteria as a basis for admissions vs. outpatient, some Medicare managed care companies use Milliman, and other insurers have their own criteria set, she points out.

"Some Medicare managed care companies specify that patients start out in observation and stay for 24 hours. Others specify 48 hours, and some even say that patients can be receiving observation services in the intensive care unit for up to 72 hours," Malcolm adds.

Before a case manager makes a decision as far as patient status is concerned, he or she needs to be familiar with the patient's insurer's criteria set and expectations, she adds.

"Everybody in the hospital has to be in the loop and should communicate about what is going on with the patient. Case managers should be used as a resource to determine what status the patient should be in," Gilbert says.

Medicare has created a publication for consumers that clearly explains the difference between outpatient and inpatient status, Hale says.

The publication "Are You a Hospital Inpatient or Outpatient?" is available at http://www.medicare.gov/Publications/Pubs/pdf/11435.pdf.

(For more information, contact: Deborah Hale, President, Administrative Consultant Services LLC, e-mail: dhale@acsteam.net; Brenda Keeling, RN, CPHQ, CPUR, President, Patient Response, e-mail: brenda@patient-response.com; Joanna Malcolm, RN, CCM, BSN, Senior Consultant, Pershing, Yoakley & Associates, e-mail: JMalcolm@pyapc.com.)