Medicare Inpatient Admission Standards: Two Midnight and Physician Certification Rules. Healthcare Financial Management Association. Diane Signoracci Bricker & Eckler LLP 100 South Third Street Columbus, OH 43215 614-227-2333 firstname.lastname@example.org. Overview.
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Healthcare Financial Management Association
Diane SignoracciBricker & Eckler LLP100 South Third StreetColumbus, OH email@example.com
Medicare Benefits Policy Manual, Chapter 1, Section 10 – Definition of “Inpatient”
“An Inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as an inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight. . . . The physician or other practitioner responsible for a patient’s care is responsible for deciding whether the patient should be admitted as an inpatient. Physicians should use a 24-hour period as a benchmark. However, the decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient’s medical history and current medical needs, the types of facilities available to inpatientsand to outpatients, the hospital’s by-laws and admissions policies, and the relative appropriateness of treatment in each setting.”
Medicare 2014 Final IPPS Rule (CMS-1599-F) (August 19, 2013) introduces the “Two Midnight Rule” as the new Medicare inpatient payment standard: Surgical procedures, diagnostic tests, and other treatments are generally appropriate for inpatient hospital payment under Medicare Part A only when:
Scope of Rule: Acute Care Hospitals, CAHs, LTCHs, Inpatient Psychiatric Hospitals; Traditional Medicare (not Medicare Advantage; not Ohio Medicaid)
Exceptions to the Two Midnight Requirement for Inpatient Admission – Unforeseen Circumstances
Unforeseen circumstances may result in a shorter beneficiary stay than the physician’s expectation (that the beneficiary would require a stay greater than two midnights)
Such claims may be considered appropriate for hospital inpatient payment.
The physician’s expectation and any unforeseen interruptions in care must be documented in the medical record.
In certain cases, the physician may have an expectation of a hospital stay lasting less than two midnights, yet inpatient admission may be appropriate in the following circumstances:
The Two Midnight Rule creates both a benchmark and a presumption—
Physicians use the Two Midnight Benchmark to determine inpatient status
Medicare Auditors use the Two Midnight Presumption to select inpatient claims for audit
The Two Midnight Benchmark describes the physician’s expectation at the time of admission and how CMS will review claims under the Two-Midnight rule
Two-Midnight Benchmark “clock” starts when hospital care begins, and includes time spent receiving medically necessary care in
The following time is not counted toward the benchmark
How will claims be selected for review under the two-midnight rule
The Two-Midnight Presumption starts with the inpatient order and formal admission.
“Remember that while the total time in the hospital may be taken into consideration when the physician is making an admission decision (i.e. expectation of hospital care for 2 or more midnights), the inpatient admission does not begin until the inpatient order and formal admission occur.” MLN Connects January 14, 2014 Presentation
Medicare 2014 IPPS Final Rule
See CMS Guidance: “Hospital Inpatient Admission Order and Certification” issued on September 5, 2013 and updated on January 30, 2014
Content of Physician Certification
Note: Inpatient Rehab Hospitals have separate (more rigorous) certification requirements, see 42 CFR 412.606
Certification begins with the inpatient admission order
The Certification must be completed, signed, dated and documented prior to patient discharge
CMS notes that “generally good medical record documentation may fulfill components required for certification.”
No specific procedure or format is required or provided by CMS
CMS indicates that certification components may be found in various parts of the medical record (i.e., physician progress notes, etc.)
Although no specific statement as to “certification” is required, referencing certification and all content components will be helpful
But Note: “[T]here must be a separate signed statement for each certification.” CMS Hospital Inpatient Admission Order and Certification Guidance
Encourage physicians to sign a separate statement that summarizes the information from the medical record supporting the certification components, i.e., the reasons supporting the physician’s decision that inpatient services were medically necessary and consistent with the two-midnight rule.
2014 Final IPPS Rule adopts 42 CFR 412.3
“[A]n individual is considered an inpatient of a hospital if formally admitted as an inpatient pursuant to an order for inpatient admission…This physician order must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A.”
The Admission Order must be written by a qualified physician/practitioner with “sufficient knowledge” of the patient’s condition--
Example: ED physician without admitting privileges must have order countersigned by admitting physician prior to patient discharge
Who has “sufficient knowledge” to write the admission order?
Note: If a verbal order is not authenticated then the “hospital stay may be billed to Part B as a hospital outpatient encounter,” because patient was never an inpatient.
CMS 2 Midnight FAQ 2.2
Ohio Medicaid Rules on Inpatient Admission:
See Permedion’s Ohio Medicaid Quality Monitor, Spring 2012
CMS directed contractors to begin a “probe & educate” prepayment review of a small number of inpatient claims for inpatient admissions of less than two midnights beginning with admissions on October 1, 2013.
The MACs are to use the probe review as an educational tool; but inpatient admissions not meeting the new guidelines will be denied Part A payment.
CMS has extended this prepayment “probe and educate” period through September 30, 2014.
Prepayment Review under new Admissions Standards
Medicare Administrative Contractors will conduct patient status reviews using a “Probe and Educate” process for acute care, LTCH and inpatient psychiatric facilities for dates of admission on or after October 1, 2013 but before September 30, 2014
Results of the initial probe audit may lead to increased prepayment review, based on error rate:
See MLN Matters Number: SE1403
CMS Guidance: While UR committees may continue to use commercial screening tools to help evaluate the inpatient preadmission decision, the tools are not binding on the hospital, CMS or its review contractors. “We are anticipating that most hospitals will choose not to use Interqual or Milliman to make the decision about whether or not to write the inpatient order. Instead, we’re expecting that most hospitals are going to look to the guidance in this rule about the physician’s expectation of a 2-midnight or more stay in the hospital requiring the hospital-level of care.”
But See CMS FAQ (“2 Midnight Inpatient Admission Guidance & Patient Status Reviews for Admissions on or after 10/1/2013”) Q4.1—What documentation will Medicare contractors expect to support expectation of 2-midnights? A4.1: Expected LOS and underlying medical necessity of care at hospital must be supported by complex medical factors such as history and comorbidities, severity of signs and symptoms, current medical needs and risk of adverse event.
Note: Other payers may continue to apply commercial screening tools.
CMS 2-24-24 Update to “Selecting Hospital Claims for Patient Status Reviews: Admissions On or After 10/1/2013”
Post-Payment Patient Status Reviews
Note: CMS withdrew Transmittal 505 (2/5/2014) which would have provided new authority to deny a claim for professional services based solely on the conclusion that the related inpatient claim or diagnostic test claim was not reasonable and necessary
MACs, Recovery Auditors and the Supplemental Medical Review Contractor will continue other types of inpatient hospital reviews including:
Recovery Auditor post-payment inpatient hospital patient status and medical necessity reviews may continue, but are limited to claims meeting the following criteria:
Available Hospital Options for Obtaining Payment for Inpatient Claims denied by Medicare contractors or self-denied
Level 1 – Redetermination to the Hospital’s Medicare Administrative Contractor – File within 120 days of initial determination (i.e., denial)
Level 2 – Reconsideration to the Qualified Independent Contractor (Maximus Federal) – File within 180 days of Level 1 decision; Record must be complete at this level
Level 3 – Appeal to Administrative Law Judge – File within 60 days of QIC decision (Note: Office of Medicare Hearing and Appeals 12/24/2013 Letter-- Effective on July 15, 2013, OMHA temporarily suspended assignment of requests for ALJ hearings for at least 24 months)
Level 4 – Appeal to Medicare Appeals Council – File within 60 days of ALJ decision
Level 5 – Appeal to U.S. District Court – File within 60 days of Medicare Appeals Council decision
Condition Code 44
CMS Transmittal 299 (September 10, 2004) Condition Code 44 - See Medicare Claims Processing Manual, Chapter 1, Section 50.3. Condition Code 44 permits the hospital to change the status of the patient from inpatient to outpatient and to submit an Outpatient Claim (Bill Type 131) for all services provided during the hospitalization.
CC 44 may be used only if all the following requirements are met:
One physician member of the UR committee may make the determination for the committee that the inpatient admission was not medically necessary if that physician is different from the “concurring” physician.
CC 44 does not permit retroactive physician orders. For example, observation requires a physician’s order. Changing patient status per CC 44 will not infer an order for observation.
If hospital changes patient status, then the patient’s treating physician should make a similar change to make hospital and physician claim submission consistent.
Q:May a hospital change a patient’s status using Condition Code 44 when a physician changes the patient’s status without utilization review (UR) committee involvement?
A:No, the policy for changing a patient’s status using Condition Code 44 requires that the determination to change a patient’s status be made by the UR committee with physician concurrence. The hospital may not change a patient’s status from inpatient to outpatient without UR committee involvement. The conditions for the use of Condition Code 44 require physician concurrence with the UR committee decision. For Condition Code 44 decisions, in accordance with 42 C.F.R. 482.30(d)(1), one physician member of the UR committee may make the determination for the committee that the inpatient admission is not medically necessary. This physician member of the UR committee must be a different person from the concurring physician for Condition Code 44 use, who is the physician responsible for the care of the patient. For more information, see the Medicare Claims Processing Manual (Pub. 100-04), Chapter 1, Section 50.3.2.
CMS RULING 1455-R
Historically, CMS took the position that if a hospital’s Part A claim for inpatient admission was denied, the hospital was not permitted to bill an outpatient bill and could only submit a Part B inpatient claim (Bill Type 121) for certain limited diagnostic services.
ALJ and Medicare Appeals Council decisions permitted hospitals appealing Part A denials to recover Part B outpatient reimbursement for medically necessary services
CMS Ruling 1455-R (March 13, 2013) allows for some expansion of Part B rebilling and applies to--
CMS Ruling 1455-R does not apply to self-disallowed Part A claims
CMS 1455-R: The Process for rebilling denied Part A claims:
CMS 1455-R: The Process for rebilling denied Part A claims, cont’d
Rebilling Option Per the Final Rule 1599-F (October 1, 2013 and after)
The Final Rule adds a new regulation, 42 CFR 414.5, “Hospital services paid under Medicare Part B when a Part A hospital inpatient claim is denied” applicable to inpatient admissions on and after October 1, 2013, that were--
MLN Matter No. SE1333-Part A to Part B Billing of Denied Hospital Inpatient Claims
Part A to Part B rebilling requirements:
Hospitals must submit a “Part A Provider Liable Claim,” which indicates the following information:
After the inpatient claim has processed and a Remittance Advice has been issued, a Part B inpatient claim (TOB 12X) can be submitted. Note: Part B rebill must be submitted within 1 year of date of service.
For Part A Inpatient admissions denied as not reasonable and necessary or self-denied, hospitals shall submit a qualifying Part B Inpatient Claim (TOB 12X)
Note: The numeric string “12345678901234” is a placeholder and should be replaced with the original claim DCN/ICN numbers from the inpatient denial.
Per 42 CFR 414.5(a), CMS will allow Part B payment of all hospital services that were furnished and would have been reasonable and necessary if the beneficiary had been treated as an outpatient rather than admitted as an inpatient—
Inpatient Part B Services do not encompass:
See MLN Matter Number SE1333 for a list of Revenue Codes not covered under Inpatient Part B Medical Necessity Denials.
The AHA and certain hospitals have joined in filing two lawsuits in the U.S. District Court for the District of Columbia challenging the 2014 IPPS Final Rule
Case 1:14-cv-00607 challenges the validity of the 0.2 percent hospital inpatient payment reduction in FY 2014 based on the CMS “estimate” that the two-midnight rule will increase hospital inpatient reimbursement. The complaint claims that the CMS payment reduction is based upon flawed methodology and assumptions and implemented outside the regulatory process. (Note: 0.2% payment reduction also subject to PRRB individual or group appeal)
Case 1:14-cv-00609 challenges—
Any Co-Insurance or Deductible collected for the Part A claim must be refunded to the beneficiary.
CMS in the preamble to the Final Rule refused to provide authority for hospitals to
Patient Protection and Affordable Care Act, P.L. 111-148, Section 6402, 42 U.S.C. 1320a-7k(d)
Reporting and Returning of Overpayments—
In general. If a person has received an overpayment, the person shall—
The term “overpayment” means any funds that a person receives or retains under title XVIII (i.e. Medicare) or XIX (i.e. Medicaid) to which the person, after applicable reconciliation, is not entitled under such title.
Question: Is existing CMS guidance clear and consistent enough to “identify” an overpayment under the Two-Midnight and Physician Admission/Certification Rules?
Note: 2015 Proposed IPPSRule asks for public input on an alternative payment methodology for short stay inpatient cases that also may be treated on an outpatient basis, including how to define short stays
Conundrum: Self-deny and rebill Part B claims or potentially lose ALL reimbursement under the one-year timely filing deadline
Build a team of medical, legal and IT personnel for educating providers and ensuring compliance:
Diane M. SignoracciBricker & Eckler LLP100 S. Third StreetColumbus, OH firstname.lastname@example.org