Defined as inpatient stays with a duration of one day or less, short stay inpatient claims will begin facing increased scrutiny due to the Office of Inspector General (“OIG”) November 2020 Audit Plan. [1] The OIG’s stated intentions are to audit short stay inpatient claims since the implementation of, and revisions to, the Two-Midnight Rule to determine if they were billed correctly.
Prior to the Two-Midnight Rule taking effect, the OIG identified millions of dollars of overpayments due to inappropriate level of care determinations. However, since the inception of the Two-Midnight Rule in 2014, the Center for Medicare and Medicaid Services (“CMS”) and the OIG have not conducted inpatient level of care reviews. Rather, to promote consistent application of the Two-Midnight Rule, CMS tasked Medicare Administrative Contractors (“MAC’s”), and later the Quality Improvement Organizations (“QIO’s”), with performing probe reviews and education for short inpatient admissions.
Just prior to the OIG’s announcement, the Program for Evaluation Payment Patterns Electronic Report (“PEPPER”) announced it had added inpatient Total Knee Replacements as an area of focus. [2] Total knee replacements, if completed on an inpatient basis, often encompass one midnight of care. This new report category will highlight the inpatient versus outpatient outlier status for Total Knee Replacements, signaling potential short stay audits for those facilities identified as outliers.
The OIG’s announcement, combined with the additional reporting category on the PEPPER Report, is a clear signal to facilities that they should evaluate short inpatient stay records to ensure appropriate support for the exceptions outlined under the Two-Midnight Rule.
Regulatory Background
The Medicare Program Integrity Manual, Chapter 6, Section 6.5.2 A, states hospital claims are payable under Part A if the MAC identifies information in the medical record supporting a reasonable expectation on the part of the admitting practitioner at the time of admission, that the beneficiary would require a hospital stay that crossed at least two midnights. If the care is expected to last less than two midnights, documentation must support one of the exceptions to the Two-Midnight Rule as follows;
Procedure identified on the “Inpatient Only” list
“National” identified exception, currently limited to newly initiated mechanical ventilation
“Case by Case Exception”
The “Inpatient Only” and mechanical ventilation exceptions mean that despite an inpatient claim spanning less than two midnights of care, the claims are appropriate for Part A payment.
In 2016, CMS updated the Two-Midnight Rule with the “Case by Case Exception”, providing Part A payment can be made if the medical record supports the admitting physician’s judgement that the beneficiary required hospital inpatient care despite the lack of a two midnight expectation. This “Case by Case Exception” was instituted after physicians voiced their concern about placing patients with more severe medical conditions in outpatient status simply because the expectation was for a less than two midnight stay.
In MedLearn Matters MM10080 [3], CMS stated contractors were to assess these short stay cases considering complex medical factors that include, but are not limited to, the severity of signs and symptoms, current medical needs, and the risk for an adverse event to support the need for a short inpatient stay. In essence, the documentation must “connect the dots” between the patient’s condition and why inpatient status is required.
Case by Case Exceptions - Short Stay Review
Based on the guidance articulated by CMS pertaining to short stay reviews, it is imperative that the medical record, primarily the initial assessment and plan, carry a reasonable expectation that the admitting practitioner believes the care will require two midnights OR fall into one of the exceptions. Some examples of “Case by Case Exception” risks include:
Inpatient encounters less than twenty-four (24) hours “rarely” qualify for an exception to the two-midnight benchmark, and as such may be prioritized for review. Documentation practices which utilize templates and/or processes that routinely place short stay (less than two midnights) cases into an inpatient status may leave the claims at risk.
Total Knee Replacement and other orthopedic procedures removed from the “Inpatient Only” list prior to 2020 are not subject to exemption from medical review. For many procedures previously on the “Inpatient Only” list, the expected length of stay is less than two midnights and often, documentation protocols that were in place when the procedure was on the “Inpatient Only” list may not support the “Case by Case Exception”.
“Inpatient Only” Developments
“Inpatient Only” procedures are an exception to the Two-Midnight Rule. In determining if the encounter qualifies for this exception, CMS directs reviewers to make an initial determination of whether a medically necessary inpatient only procedure is documented within the medical record. If so, and if the other requisite elements for payment are present, then the reviewer will deem Medicare Part A payment to be appropriate without regard to the expected or actual length of stay.
Prior to Calendar Year 2020 procedures removed from the “Inpatient Only” list, such as Total Knee Replacements, were not excluded from the “Case by Case Exception” review. However, the 2020 Outpatient Prospective Payment System (“OPPS”) Rule granted a two-year waiver to procedures removed from the “Inpatient Only” list. Also, in the 2021 OPPS Final Rule [4], CMS ordered an indefinite suspension of certain medical review activities, for all “Inpatient Only” procedures removed on or after January 1, 2021;“until such a time that the Secretary determines that the service or procedure is more commonly performed in the outpatient setting.” CMS also confirmed in the 2021 rule, the gradual elimination of the “Inpatient Only” list in its entirety over the next three (3) calendar years.
Some of the common “Inpatient Only” risks we have identified include:
Procedures scheduled as “Inpatient Only” which convert to a non “Inpatient Only” procedure without the appropriate status change are at risk for denial without supporting documentation. This includes Total Knee Replacements that have been removed from the “Inpatient Only” list.
Procedures that remain on the “Inpatient Only” list must meet medical necessity criteria as outlined in National and Local Coverage Determinations. Many facilities have not coordinated with physician practices to gather documentation to support medical necessity as outlined in the coverage determinations for the procedure.
Total Hip Replacements, and six additional spinal procedures were removed from the inpatient only list in 2020 and given a two-year reprieve from audits. As 2022 approaches, physicians may be unaware that their documentation practices for inpatient cases need to evolve toward supporting a “Case by Case Exception” should they continue to perform hip replacements in an inpatient status.
As procedures are removed from the “Inpatient Only” list, the hiatus on audits may not encourage physicians to update their documentation practices to support the “Case by Case Exception”. Continuing to routinely perform procedures removed from the “Inpatient Only” list on an inpatient basis, without consideration that some procedures could be performed on an outpatient basis, could lead to future denials once the audit hiatus is lifted.
SunStone offers claim review and education services geared specifically toward short stay admissions. If you have any questions or would like assistance please contact Vonda Moon and Laura Ehrlich.
[1] Office of the Inspector General Work Plan Archives, Monthly Update, November 2020. <https://oig.hhs.gov/reports-and-publications/archives/workplan/index.asp>
[2] Short-Term Acute Care PEPPER Users Guide, Thirty-First Edition. <https://pepper.cbrpepper.org/Portals/0/Documents/PEPPER/ST/STPEPPERUsersGuide-Edition31-508.pdf>
[3] CMS MLN Matters Number MM10080, Clarifying Medical Review of Hospital Claims for Part A Payment, effective 6/13/2017.< https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10080.pdf>
[4] CMS Outpatient Prospective Payment System 2021, Federal Register/vol.85, No. 249/ Tuesday, December 29, 2020/Rules and Regulations, page 85869, <https://www.govinfo.gov/content/pkg/FR-2020-12-29/pdf/2020-26819.pdf>