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Medicare Audits and Appeals
Environment:
What Hospitals Need to Know
Jessica L. Gustafson, Esq.
Abby Pendleton, Esq.
The Health Law Partners, P.C.
www.thehlp.com
(248) 996-8510
2 MIDNIGHT RULE
• The 2-Midnight Rule was effective 10/1/2013
• There has been no delay in the implementation of the 2-Midnight Rule
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KEY PROVISIONS OF 2016 OPPS PROPOSED RULE
• Proposed expansion of “Rare and unusual” exceptions to 2-Midnight Rule
• Revised medical review strategy, effective 10/1/2015
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2 MIDNIGHT RULE
• Medicare Part A payment is generally appropriate where the physician expects a beneficiary to require hospital care that crosses 2 midnights and admits a beneficiary based on that expectation
– If an unforeseen circumstance occurs (e.g., beneficiary’s death, election of hospice, transfer, departure AMA), payment may be made under Medicare Part A
– Regulatory Exception
• Admission to undergo IOP
– Existing CMS Sub-regulatory Guidance Exception
• “Newly-initiated mechanical ventilation (excluding anticipated intubations related to minor surgical procedures or other treatment)”
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2 MIDNIGHT RULE
• Medical Review Strategies
– 2 Midnight Presumption
– 2 Midnight Benchmark
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2 MIDNIGHT RULE
• 2 Midnight Presumption
– Inpatient hospital claims with lengths of stay greater than 2 midnights after the formal admission following the order will be presumed generally appropriate for Part A payment and will not be the focus of medical review efforts absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2 midnight presumption.
Authorities:
78 Fed. Reg. at 50952.
Frequently Asked Questions, 2 Midnight Inpatient Admission Guidance & Patient Status Reviews for Admissions on or after October 1, 2013, question Q1.1, available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/Downloads/Questions_andAnswersRelatingtoPatientStatusReviewsforPosting_31214.pdf.
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2 MIDNIGHT RULE
• 2 Midnight Benchmark
– [T]he time spent as an outpatient will be counted toward meeting the 2-midnight benchmark that the physician is expected to apply to determine the appropriateness of the decision to admit. In other words, even though the inpatient admission was for only 1 Medicare utilization day, medical reviewers will consider the fact that the beneficiary was in the hospital for greater than 2 midnights following the onset of care when making the determination of whether the inpatient stay was reasonable and necessary.
Authorities:
78 Fed. Reg. at 50952.
Frequently Asked Questions, 2 Midnight Inpatient Admission Guidance & Patient Status Reviews for Admissions on or after October 1, 2013, question Q2.1, available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/Downloads/Questions_andAnswersRelatingtoPatientStatusReviewsforPosting_31214.pdf.
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PROPOSED EXPANSION OF RARE AND UNUSUAL
EXCEPTIONS POLICY OF 2 MIDNIGHT RULE
• Proposed Expansion of the Rare and Unusual Exceptions Policy
– [A]llow for payment under Part A on a case-by-case basis for inpatient admissions that do not satisfy the 2-midnight benchmark, if the documentation in the medical record supports the admitting physician’s determination that the patient requires inpatient hospital care despite an expected length of stay that is less than 2 midnights
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PROPOSED EXPANSION OF RARE AND UNUSUAL
EXCEPTIONS POLICY OF 2 MIDNIGHT RULE
• Proposed Expansion of the Rare and Unusual Exceptions Policy– In determining whether an IP admission was medically necessary,
despite the admitting physician’s expectation that the beneficiary will not require hospital care that crosses 2 midnights, CMS will consider:• The severity of the signs and symptoms exhibited by the
patient;
• The medical predictability of adverse events; and
• The need for diagnostic studies that appropriately are outpatient services (that is, their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more).
– CMS intends to consider the exact same criteria in determining whether an IP admission is appropriate because (1) the admitting physician expects a patient to require hospital care that will cross 2 midnights or (2) because the admitting physician does notexpect a patient to require hospital care that will cross 2 midnights.
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PROPOSED EXPANSION OF RARE AND UNUSUAL
EXCEPTIONS POLICY OF 2 MIDNIGHT RULE
• Potential Audit Traps
– CMS does not define the term “inpatient hospital care” in the OPPS Proposed Rule
– CMS does not identify specific examples of situations in which a patient may require “inpatient hospital care” despite an expected LOS less than 2 midnights
• Per CMS, “the beneficiary’s required ‘level of care’ is not part of the guidance regarding hospital inpatient admission decisions.”
– E.g., Admissions to ICU insufficient to justify IP admission
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PROPOSED EXPANSION OF RARE AND UNUSUAL
EXCEPTIONS POLICY OF 2 MIDNIGHT RULE
• Potential Audit Traps
– CMS did not outline specific medical review criteria for IP hospital admissions that are not expected to span at least 2 midnights.
• Proposed Rule invites public comment regarding whether such criteria ought to be adopted, and if so, what those criteria should be.
• “Payment of the claim under Medicare Part A will be subject to the clinical judgment of the medical reviewer.”
– Reopened the door to consider evidence-based guidelines and commercial utilization tools.
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PROPOSED EXPANSION OF RARE AND UNUSUAL
EXCEPTIONS POLICY OF 2 MIDNIGHT RULE
• CMS expressly did not propose revisions to existing 2 Midnight Presumption and 2 Midnight Benchmark policies
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REVISED MEDICAL REVIEW STRATEGY
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Recovery auditors are permitted to resume patient status reviews for dates of admission of 1/1/2016 and after.
REVISED MEDICAL REVIEW STRATEGY
• Instead of using Recovery Auditors or MACs to perform initial inpatient hospital short-stay reviews, Quality Improvement Organization (“QIO”) contractors will perform initial reviews.
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REVISED MEDICAL REVIEW STRATEGY
• KEPRO is the BFCC-QIO for CMS Areas 2, 3 and 4.
• Historically, the BFCC-QIO has been responsible for beneficiary complaints and the discharge appeal process.
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REVISED MEDICAL REVIEW STRATEGY
• Beginning on October 1, 2015, the BFCC-QIOs will assume responsibility from the MACs for conducting initial patient status reviews to determine the appropriateness of Part A payment for short stay inpatient hospital claims
– From October 1, 2015 through December 31, 2015, reviews will be based on Medicare’s current payment policies
– Beginning January 1, 2016, these reviews will be conducted in accordance with any policy changes finalized in OPPS rules and effective in calendar year 2016
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REVISED MEDICAL REVIEW STRATEGY
• CMS will provide monthly samples to the BFCC-QIO
– Sample size will be 10 claims semi-annually for small hospitals and 25 claims semi-annually for large hospitals
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REVISED MEDICAL REVIEW STRATEGY
• Claims excluded from review include the following:
– Claims with the following discharge disposition codes:
• 07 (Left AMA)
• 20 (Expired)
• 02 (DC/transferred to a short term general hospital for IP care)
– Claims involving procedures listed on the CMS IOL
– Indirect Medical Education (IME), Medicare Advantage, and Medicare secondary payer claims
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REVISED MEDICAL REVIEW STRATEGY
• Changes to medical review strategy do not affect reviews performed by CERT or for the purpose of identifying fraudulent behaviors (e.g., ZPIC audits).
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REVISED MEDICAL REVIEW STRATEGY
• BFCC-QIO will review documentation for:
– Medical necessity
• Will use commercial screening tool (InterQual) for initial screening
• Will use physician reviewers for all claims that fail initial screening
• Physician reviewers will use best medical judgment to determine the medical necessity of admission
– Application of 2-Midnight Benchmark
– Quality of care and coding validation
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REVISED MEDICAL REVIEW STRATEGY
• Results stratification
– Minor concern
• Provider with error rate of <10 percent and no pattern of errors
– Moderate-significant concern:
• Provider with an error rate of 10-20 percent
– Major concern
• Provider with an error rate of >20 percent
• CMS has not yet provided direction to the BFCC-QIO regarding the level of concern that would trigger referral to the Recovery Auditor.
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REVISED MEDICAL REVIEW STRATEGY
• Provider education
– Within 90 days, KEPRO will conduct provider outreach and education
• Opportunity for hospitals to provide additional information which may be used by the BFCC-QIO for final determination
• Following education, BFCC-QIO will send a final results letter to providers
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REVISED MEDICAL REVIEW STRATEGY
• BFCC-QIO will forward all non-compliant claims and/or missing medical record denials to the MAC
– MAC makes financial adjustments
• BFCC-QIO will refer non-compliant providers to Recovery Auditors (RACs) as directed by CMS
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REVISED MEDICAL REVIEW STRATEGY
• Denials made by QIOs under the new short-stay IP review process will be subject to the administrative appeals process set forth in Section 1869 of the Social Security Act
– 5-stage Medicare appeals process:
• Redetermination
• Reconsideration
• Administrative Law Judge
• Medicare Appeals Council
• Federal District Court
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REVISED MEDICAL REVIEW STRATEGY
• Although Recovery Auditors are prohibited from reviewing claims for patient “status” for dates of admission prior to January 1, 2016, they still may review claims for other reasons (e.g., DRG validation, determining whether a procedure was medically necessary)
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REVISED MEDICAL REVIEW STRATEGY
• Recovery Auditors (RACs) are companies contracted by Medicare, tasked to identify and correct Medicare improper payments
– Compensated on a contingency-fee basis, currently between 9-12.5 percent
• Pursuant to the Medicare Program Integrity Manual (CMS Internet-Only Pub. 100-08), Ch. 1, § 1.3.5, “In general, Recovery Auditors are responsible for reviewing claims where improper payments have been made or there is a high probability that improper payments were made.”
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REVISED MEDICAL REVIEW STRATEGY
• RACs are permitted to attempt to identify improper payments resulting from:
– Incorrect payments
– Non-covered services (including services that are not reasonable and necessary)
– Incorrectly coded services; and
– Duplicate services
• RACs conduct nearly 5 times as many reviews as CERT contractors, MACs, and ZPICs combined
– See Medicare Program Integrity: Increasing Consistency of Contractor Requirements May Improve Administrative Efficiency, GAO-13-522, July 23, 2013
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REVISED MEDICAL REVIEW STRATEGY
• Targeted review – RAC audits are not random
– RACs use proprietary data techniques to determine claims likely to be overpayments
• Types of reviews:
– (1) Automated review
• A review of claims data without a review of the records
– (2) Complex review
• A review of records (45 days to submit)
– (3) Semi-automated review
• A review of claims data without a review of records
• If an error is identified, a Notification Letter is generated to the provider explaining the potential billing error and granting the provider 45 days to submit documentation to support the original billing.
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REVISED MEDICAL REVIEW STRATEGY
• Targeted review – RAC audits are not random
– RACs use proprietary data techniques to determine claims likely to be overpayments
• Types of reviews:
– (1) Automated review
• A review of claims data without a review of the records
– (2) Complex review
• A review of records (45 days to submit)
– (3) Semi-automated review
• A review of claims data without a review of records
• If an error is identified, a Notification Letter is generated to the provider explaining the potential billing error and granting the provider 45 days to submit documentation to support the original billing.
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REVISED MEDICAL REVIEW STRATEGY
• Recent Updates – CMS Recovery Audit Program
– July 10, 2015 - Effective June 4, 2015, CMS has withdrawn the Requests for Quotes for the next round of Recovery Auditor contracts. CMS plans to update the Statement of Work and release new Requests for Proposals shortly. In the meantime, the current Recovery Auditors will continue active recovery auditing through at least December 31, 2015.
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REVISED MEDICAL REVIEW STRATEGY
• Future Changes
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REVISED MEDICAL REVIEW STRATEGY
• Future Changes
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REVISED MEDICAL REVIEW STRATEGY
• Future Changes
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MEDICARE APPEALS ENVIRONMENT
• What can hospitals expect if appeals are necessary?
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MEDICARE APPEALS ENVIRONMENT
• Currently, a 20-24 week delay in docketing new requests into the OMHA case processing system
• ALJ Appeal Status Information System (AASIS)
– www.hhs.gov/omha/Appeal_Status_Lookup/index.html
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MEDICARE APPEALS ENVIRONMENT
• Can anything be done to expedite pending appeals?
– Settlement conference facilitation (“SCF”)
• Phase III of SCF Pilot will include Part A appeals (2016)
– Statistical sampling initiative (“SSI”)
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QUESTIONS?
Jessica L. Gustafson, Esq.
Abby Pendleton, Esq.
The Health Law Partners, P.C.
www.thehlp.com
(248) 996-8510
• (248) 996-8510
37
