Proposed rule clarifies admission policies

CMS beefs up quality programs

In the Inpatient Prospective Payment System proposed rule for fiscal 2014, the Centers for Medicare & Medicaid Services (CMS) clarified its long-standing policy on how Medicare contractors review inpatient admissions for payment purposes and continued its emphasis on basing reimbursement on quality.

CMS proposes implementing a new Hospital-Acquired Condition Reduction Program that would penalize the lowest-performing hospitals and expanding the readmission reduction program and value-based purchasing program. (For more about the proposed quality initiatives, see related article on page 96.)

The most sweeping change proposed by CMS is to revise medical review criteria to presume that inpatient status is appropriate if there is a physician order and the patient receives care over the span of at least two midnights. Admissions of fewer than two midnights will be presumed to be inappropriate for payment under Medicare Part A unless there is documentation in the medical record that the admitting physician believed that the patient would need care for at least two midnights and an unforeseen circumstance resulted in a shorter stay than the physician expected.

If the proposed rule goes into effect, the inpatient stay would begin when the patient is in an inpatient bed, not when the admission order is issued, and only a physician or other practitioner licensed by the state to admit patients to the hospital would be able to issue the order.

CMS says it has proposed the change to provide guidance on inpatient admissions because of an ongoing concern about the number of patients receiving observation, because hospitals are uncertain about Medicare reimbursement if the patients are admitted.

On the surface, the rule seems clear that when patients stay over two midnights and there is an order to admit from a physician, the hospital stay will be presumed to qualify as an inpatient admission and that shorter stays (fewer than two midnights) will be presumed to be outpatient stays.

“The challenge is in the definition of the word ‘presumption.’ What does ‘presumption’ really mean? My interpretation is that the Recovery Auditors [RAs] and other Medicare auditors will continue to focus on inpatient stays of 0 and 1 day and will expand their scrutiny to two and three day stays,” says Ralph Wuebker, MD, MBA, chief medical officer for Executive Health Resources, a Newton Square, PA, physician advisor company.

CMS also proposes that the inpatient stay will begin at the time that the patient is moved to the bed in the hospital in which he or she will receive care, not at the time the order is written as now is the case, adds Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK. It doesn’t count the time that patients may stay in the emergency department receiving treatment and waiting for a bed. “If this rule is enacted, it means that patients and the hospitals will be financially penalized when the hospital is at capacity. In the past, CMS has said that inpatient care doesn’t mean care in a specific geographic location,” she says.

The proposal also could have implications for patients who require a skilled nursing stay, Wuebker points out. The proposed rule doesn’t discuss the net effect on the three-day stay mandate for a skilled nursing stay to be covered under Medicare, he adds. “If a patient starts out as an outpatient and is converted to inpatient, it could have a big impact,” he says. In addition, patients who are admitted in the evening but don’t get into a bed until after midnight could also lose their eligibility for a skilled nursing stay, he says.

The rule also could have the potential effect of artificially pushing the payment system in a way that could have adverse financial implications for hospitals, Wuebker says. For instance, currently there are some one-day stays and two-day stays that are appropriate for an inpatient admission. “The DRG system is set up so that some patients in the same DRG stay one day while others may stay three or four days and it all evens out in the DRG payment. The proposed rule appears to remove short stays from the equation without modifying the DRG payment,” he says.