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RAC Risk Areas: Hospital Patient Status. Robert D. Stone, Esq. Alston & Bird LLP Georgia Hospital Association July 15, 2010.

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rac risk areas hospital patient status

RAC Risk Areas:Hospital Patient Status

Robert D. Stone, Esq.

Alston & Bird LLP

Georgia Hospital Association

July 15, 2010


“In all we do, we must remember that the best health care decisions are made not by government and insurance companies, but by patients and their doctors.”George W. Bush, State of the Union Address

increased payor scrutiny
Increased Payor Scrutiny
  • “Hospitals, insurers battle over downcoding of patient stays” (The Intelligencer, July 6, 2010)
    • “Unashamedly, one of our efforts is to promote more efficient care. No one is saying don’t be careful, don’t take the appropriate precautions. It’s about how do you appropriate pay for that resource, that amount of care that is being rendered.” Don Liss – Independence Blue Cross, Senior Medical Director.
  • Physician’s role in determining patient status
  • Recent enforcement actions
  • Clinical risk areas related to patient status
  • Medicare rules and the use of Condition Code 44
  • The Case Management Assignment Protocol (CMAP) – History & current options
the problem
The Problem
  • Correctly assigning patient status to avoid:
    • Short Stay denials
    • False Claims allegations
    • Inappropriate use of “observation” services
    • Compromising SNF coverage
    • Condition Code 44 “Trap”
medical necessity the treating physician s primary role
Medical Necessity: The Treating Physician’s Primary Role
  • The patient’s treating physician is responsible for determining whether a Medicare beneficiary needs to be admitted to a hospital.
  • “The physician or other practitioner responsible for a patient’s care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient.” MBPM Ch. 1 § 10.
only a doctor can legally admit patients to hospitals
Only A Doctor Can Legally Admit Patients to Hospitals
  • Generally, under state law, only physicians can order the inpatient admission of a patient. Nurses (including care managers) are not legally qualified to make that decision, which is outside their “scope of practice.” See, e.g., Georgia Medicaid Hosp. Manual § 901.1 (req. admissions by “licensed doctors”); 42 CFR 482.12(c)(2) (“Patients are admitted to the hospital only on a recommendation of a licensed practitioner permitted by the State to admit patients to a hospital.”)
  • “In no case may a non-physician make a final determination that a patient’s stay is not medically necessary or appropriate.” See Page 217 of the Medicare State Operations Manual, accessible at http://www.cms.hhs.gov/manuals/Downloads/som107.ap_a_hospitals.pdf.
physician s judgment
Physician’s Judgment
  • By Medicare policy, the physician should consider the following factors in making a determination whether to admit a patient:
    • The severity of the signs and symptoms exhibited by the patient;
    • The medical predictability of something adverse happening to the patient;
    • The need for diagnostic studies; and
    • The availability of diagnostic procedures at the time.


complex medical judgment standard
“Complex Medical Judgment” Standard
  • “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 inpatients and to outpatients, the hospital’s bylaws and admissions policies, and the relative appropriateness of treatment in each setting.” MBPM Ch. 1 § 10.
physician s expectation test
“Physician’s Expectation” Test
  • A patient should be considered an inpatient if the patient was admitted based on the physician’s expectation that an inpatient stay is appropriate. LMRP for Acute Care: Inpatient, Observation and Treatment Room Services (L1281) at 4 (January 1, 2005)
  • “Generally, a patient is considered an inpatient if formally admitted [by a doctor] 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.” MBPM Ch. 1 § 10
24 hour benchmark
24-hour Benchmark
  • While Medicare guidance suggests physicians use a 24-hour benchmark for acute hospital services as a guide, “[a]dmissions of particular patients are not covered or non-covered solely on the basis of the length of time the patient actually spends in the hospital.” MBPM Ch. 1. § 10.
  • What happens after the decision to admit a patient is made by the treating physician can only be used to substantiate, not refute, the validity of the physician’s decision-making. BCBS LMRP at 5.
common published criteria like interqual recognize that a physician s clinical judgment governs
Common Published Criteria, Like InterQual, Recognize That A Physician’s Clinical Judgment Governs
  • “The Criteria reflect clinical interpretations and analyses and cannot alone either resolve medical ambiguities of particular situations or provide the sole basis for definitive decisions. The Criteria are intended solely for use as screening guidelines with respect to the medical appropriateness of healthcare services and not for final clinical or payment determinations concerning the type or level of medical care provided, or proposed to be provided, to a patient.” InterQual, Acute Criteria Review Process, RP-14 (2005).
multiple choice reimbursement issue that has been around for more than a decade means
Multiple Choice: Reimbursement Issue That Has Been Around For More Than A Decade Means:

A. The rules aren’t very clear

B. There are a lot of judgment calls where reasonable minds can differ

C. The “decider” and the “biller” aren’t the same

D. The problem often happens late at night, on weekends, holidays or in an “emergency”

E. All of the above

multiple choice reimbursement issue that has been around for more than a decade means1
Multiple Choice: Reimbursement Issue That Has Been Around For More Than A Decade Means:

A. The rules aren’t very clear

B. There are a lot of judgment calls where reasonable minds can differ

C. The “decider” and the “biller” aren’t the same

D. The problem often happens late at night, on weekends, holidays or in an “emergency”

E. All of the above

a short history of short stay enforcement
A Short History Of “Short-stay” Enforcement

Issue in OIG Work Plans for at least 10 years

Saint Barnabas Case (2005): False Claims Act utilized in patient status case

Saint Joseph’s Health System (2007): Qui Tam action brought by a former case manager

Areas of Focus

1-day stays

“zero-day” stays

3-day inpatient stay with discharge to SNF

2 and 3-day inpatient stay where reimbursement > billed charges

ESRD cases where patient missed dialysis due to blocked access sites

government enforcement and short stay admissions us ex rel ramsey v saint joseph s
Government Enforcement and Short-Stay Admissions: US ex rel. Ramsey v. Saint Joseph’s
  • Qui Tam action brought by former case manager who was employed only for a few months
  • Relator’s complaint based largely on anecdotal case stories
  • Case ultimately based upon large statistical analyses
  • Case evidences areas of particular risk
other enforcement cases
Other Enforcement Cases

Khyphoplasty Cases: Medtronic Spine (2008), HealthEast Care System (2009)

Yale-New Haven: procedure-related admissions (2009)

Wheaton Community Hospital (2010): medically unnecessary admissions

RAC Program

QIO Initiatives

areas of risk
Areas of Risk

Chest Pain and Cardiac DRGs

Payments Exceeding Charges

SNF Discharges

ER Point of Entry Cases

Cases related to patients presenting after outpatient tests or procedures


the false claims act and short stay admissions
The False Claims Act and Short-Stay Admissions

“Knowledge” Factors

Hospital Audits (or lack thereof) and Work Plan/Corrective Action

Education of Medical Staff and Case Management Staff

PEPPER Reports

Administration Response to Feedback from Case Management

Administrative Reports and Internal Data (Average Length of Stay, for example)

auditing patient status issues
Auditing Patient Status Issues

Inpatient Admission Coverage Criteria

Observation Services Coverage Criteria

Condition Code 44

Hospital UR Condition of Participation

causes of patient status errors
Causes of Patient Status Errors

Differences of opinion (medical necessity)

Medical record documentation issues

Unclear orders

Unclear supporting documentation

Timing of orders/authentication/ implementation

medicare rules very simplified
Medicare Rules (very simplified)

Admission Following Observation

Effective at time of the admitting order

After Inpatient Admission

Unless Condition Code 44

No APC billing, even if Admission is denied

“Part B only” services

cms physician order interpretations
CMS Physician Order Interpretations

“Admit” = Inpatient

“Admit as inpatient” = Inpatient

“Admit for observation” = Inpatient

“Admit to observation” = Outpatient

“Place in observation” = Outpatient

“Admit to Case Management Protocol” = None

condition code 44 criteria
“Condition Code 44” Criteria

Admission does not meet inpatient criteria

By 1 UR Committee member and the attending physician

Decision documented in medical record

Changed before discharge and any billing

condition code 44 cms views
Condition Code 44 – CMS Views

No substitute for utilization management staffing or continued medical staff education

“[T]he need for hospitals to correct inappropriate admissions and to report condition code 44 should become increasingly rare.”

42 c f r 482 30 utilization review committee
42 C.F.R. § 482.30/Utilization Review Committee
  • Defines the process for hospital determination that an “admission . . . is not medically necessary.”
  • Consultation with treating physician or opportunity for treating physician to be heard is required
  • Physician members of UR Committee have power to change status
  • 3 Notifications Required when patient status changes
  • Condition Code 44 distinguished
case management assignment protocols
Case Management Assignment Protocols

“Florida Protocol”

Case Management Assignment Protocol (CMAP)

Standardized decision making process

Individual or standing orders to UR personnel

Assign status using recognized criteria

case management assignment protocol
Case Management Assignment Protocol

Physician determines need for hospital care

Orders: “Admit to CMAP”

“Hold” status (e.g., 2, 6, 12 hours)

Default to Outpatient (Observation)

If assigned Observation, physician re-evaluates within 24-48 hours for inpatient admission or discharge

simplified cmap flow diagram
Simplified CMAP Flow Diagram

Physician Orders “Admit to Case Management Protocol”

Outpatient /Observation Service



Admitting Status Hold

Case Management Assigns Status

Inpatient Service


summary of cmap demonstration project
Summary of CMAP Demonstration Project
  • Involved 16 hospitals in six western states
  • Only 35% of the records reviewed at the end of the project had evidence of use of the CMAP – but still showed measurable results overall
  • Variability in implementation of the protocol
  • Percentage of unnecessary short stays admissions decreased from 26.4% to 12.4%
  • Overall, the rate of short stays remained the same or increased for most hospitals
lessons learned from the cmap demonstration project
Lessons Learned from the CMAP Demonstration Project
  • Use of CMAP resulted in reduction in denial rates but NOT in short stays.
    • Shift from longer IP admission to observation status + short stay.
    • More accurate
    • Less expensive for CMS
    • Focus on decrease in denial rates notdecrease in short stays
  • Possible nurse staffing issues with observation units
  • Training in use of protocol
  • Need to identify missed billing opportunities, particularly in the ED (may require additional training)
  • Need for a physician champion
lessons learned cont d
Lessons Learned, cont’d.
  • Mandatory versus optional
  • Case management staffing issues
    • Improved accuracy on front-end may reduce costs involved in appealing denials
  • Indirect benefits from use (or even attempted use) of protocol
    • Increased communication
    • Increased feedback
    • Increased sensitivity to patient status issues
    • Opportunities for education related to status issues
    • After initial resistance, physicians relieved to have case managers with expertise available
    • Suggests opportunities for improvement exist, even without full implementation of CMAP
apparent cms concerns about cmap
Apparent CMS Concerns about CMAP
  • “Removes physician from the process”
    • The physician . . . responsible for a patient's care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient
    • But does it really?
      • Patient’s physician determined need for hospital
      • Medical staff physicians selected criteria
apparent cms concerns about cmap1
Apparent CMS Concerns about CMAP
  • “Defaulting to observation” (i.e., outpatient)
    • “General standing orders for observation services following all outpatient surgery are not recognized.”
  • Long-standing distrust of “standing orders”
    • But see Memo to State Survey Agency Directors re: “Standing Orders” in Hospitals (Oct. 24, 2008)
why isn t everyone using cmap
Why Isn’t Everyone Using CMAP?

NOT yet CMS approved

CMS position re “Admit to CMAP” orders

Standing or patient-specific

Supports neither Inpatient Admission nor Outpatient Observation

MACs cannot approve proposed CMAPs

modified case management approach
Modified Case Management Approach
  • No standing orders
  • No default to Outpatient/Observation
  • Case management reviews/recommends
  • Provides recommendation to physician
  • Requires separate order accepting the recommendation after it is made
    • Written signoff or properly noted telephone order should be sufficient
problems with modified approach
Problems With Modified Approach
  • Additional Expense
  • Physician hassle factor
    • Having to sign twice
  • Delay –
    • Time before the second order does not count
      • 8 hour minimum for Observation
      • 3 day Inpatient stay for SNF coverage
current cmap conclusions
Current CMAP Conclusions
  • Sooner or later RACs will audit
  • CMAP actually works
  • Nevertheless, not CMS approved
  • Reliance on CMAP could lead to 100% denials
    • No orders for services
  • Modified CMAP approach may help
saint joseph s response systems improvement
Saint Joseph’s Response: Systems Improvement
  • Proactive Response to Strengthen Case Management
    • Training
    • Mandatory Credentialing
    • Independent Review of Performance
  • Addition of Physician Advisor
  • Strengthening of UR Committee Function and Performance
  • Administration Support
  • Compliance Program Involvement
saint joseph s response a unique cia
Saint Joseph’s Response: A Unique CIA
  • HHS-OIG approves use of “Admit to Case Management Protocol” as part of CIA
  • First case authorizing protocol by CIA
  • Outside of 6-state pilot
  • Allows Case Management Involvement with Physician at Front End of Process
  • Physician must still order status
  • Status held until consultation
rac risk areas hospital patient status1

RAC Risk Areas:Hospital Patient Status

Robert D. Stone, Esq.

Alston & Bird LLP

Georgia Hospital Association

July 15, 2010