Inpatient Facility Coding & Compliance Alert

Address the changes that OIG wants to see with these five strategic tips.

Short inpatient stays and your handling of long-term care residents’ care are on the OIG’s radar for 2015, so prepping now to cover any compliance gaps in these and some other key areas will be crucial.

In its work plan released Oct. 31, 2014, the OIG (Office of Inspector General) reviewed 22 hospital-based items and added two new items under Medicare Part A and Part B. Out of these we bring to you the most significant ones.

1. Prepare for Review of the “Two Midnight Rule” on Hospital Billing

In 2014, the OIG identified millions of dollars in overpayments to hospitals for short inpatient stays that should have been billed as outpatient stays. The OIG’s plan for 2015, therefore, is to:

• Review the impact of new inpatient admission criteria on hospital billing, Medicare payments and beneficiary copayments.
• Review how billing varied among hospitals in the 2014 fiscal year.

Background: The new inpatient admission criteria took effect in fiscal year 2014. “While enforcement has been delayed both by CMS and Congress (see H.R. 4302 – Protecting Access to Medicare Act of 2014), hospitals should be transitioning to this modification of the 24-Hour Rule,” explains Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, IA. The OIG states that physicians should admit for inpatient care only those beneficiaries who are expected to need at least two nights of hospital care (the “two midnight policy”). Beneficiaries requiring care that is expected to last fewer than two nights are to be treated as outpatients.

Impact to you: The OIG is expected to issue a report in 2016 on the impact of the new inpatient criteria on hospital billing. This means the OIG will be extracting data from your facility as well on your compliance with the “Two Midnight Rule” and the trends in hospital billing thereafter.

Road ahead: Hospitals should review the new inpatient admission criteria and ensure their actions comply with the two midnight policy. (See Vol. 3, N. 12 of Inpatient Facility Coding and Compliance Alert for the MedPAC’s take on the effect of short inpatient stays.) “Also, there are significant training issues in order to acclimate physicians and clinical staff to the new rule,” adds Abbey. “The OIG review of the implementation of this new rule is really welcomed in light of the challenges with implementation.”

2. Does Your Provider-Based Facility Meet the CMS Criteria?

The OIG intends to review and analyze the extent to which provider-based facilities meet the CMS’s provider-based criteria.

Background: As a refresher, provider-based facilities are hospital outpatient departments and often are located off-campus. The facilities tend to be paid more than freestanding clinics due to higher levels of overhead and infrastructure requisites of a hospital-based facility. Unlike the physician practice clinics, services at a provider-based facility are reimbursed for both a facility fee (for the hospital) and a professional fee (for the physician).

Impact to you: The OIG will review whether the payment sought by the provider-based facility is merited, and whether the facilities have been compliant with the CMS standards. In view of higher costs for similar services, the OIG will compare Medicare payments for physician office visits in provider-based facilities and freestanding clinics to determine the potential impact and feasibility of the provision of these services and whether they are justified.

Road ahead: Hospitals operating provider-based facilities should continue to ensure that they comply with all Medicare provider-based rules. Ensure proper documentation and be ready to demonstrate that the desired quality of a particular service and follow up care provided would only be possible to impart at a provider-based facility.

“A provider-based audit of your facilities’ provider-based clinics and departments will assist in maintaining compliance,” advises Abbey. “In some cases, correctly identifying provider-based operations can be difficult, let alone assuring that all of the requirements are being maintained.”

3. Have You Aligned Your Hospital Wage Data Reporting?

The OIG added a new review of hospital controls over their wage data reporting in this year’s work plan. CMS then uses the reported data to calculate the hospital wage index for Medicare payments in calculations of each hospital’s inpatient prospective payment system (IPPS) payment. Note that the analysis of wage data and the wage index that is performed with IPPS is also used with the OPPS (Outpatient Prospective Payment System).

Background: To determine the wage index, hospitals must report wage data to CMS annually. Prior OIG wage index work identified hundreds of millions of dollars in incorrectly reported wage data and resulted in policy changes by CMS with regard to how hospitals reported deferred compensation costs.

Impact to you: The OIG is reviewing the results of CMS’ policy changes on the Medicare system.

Road ahead: Hospitals should always make sure that they are reporting accurate information to CMS, but this year may be an important time to self-audit and reevaluate wage index information before the hospital submits its next report. “This same caveat can be applied to the cost reporting process in general, given the level of changes in the past several years,” hints Abbey.

4. Beware of Questionable Billing Patterns for Nursing Home Stays

The OIG will investigate questionable billing practices associated with Medicare Part B services provided to nursing home residents during stays that are not paid under Part A (e.g., stays during which benefits are exhausted or stays where the three-day prior inpatient stay requirement has not been met).

Background: A similar investigative report in 2012 said that Medicare inappropriately paid $5 million for home health services in 2010, and suggested strict monitoring and enforcement to address the issue.

Impact to you: The OIG will perform a series of studies to examine broad categories of services, such as foot care, and monitor Part B billing to ensure that facilities are not providing excessive services.

Road ahead: Be vigilant to provide and submit claims for only medically necessary services. Remember to document your services well to support any care that’s given. “Also, be watchful for recovery auditor activities in which an inpatient stay may be deemed not medically necessary and thus a subsequent nursing home stay becomes a non-covered related service,” Abbey cautions.

5. Keep Track of Your Long-Term Care Hospital Adverse Events

The OIG added a new review that will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries receiving care in long-term care hospitals (LTCHs).

Background: LTCHs are inpatient hospitals that provide long-term care with an average length of stay greater than 25 days for their Medicare patients. A Medicare beneficiary typically enters an LTCH following an acute care hospital stay and pays no additional deductible. A beneficiary admitted directly from the community (i.e., not post-hospital stay) is responsible for a deductible.

Impact to you: As LTCHs are the third most common type of post-acute care facility, the OIG is concerned that adverse events in these settings are having a negative impact on a significant number of patients and costing serious dollars. The OIG anticipates determining the extent to which these events are preventable and will provide key factors causing the events. LTCHs will want to implement any changes proposed in these reports in the years to come to avoid preventable harm.

Road ahead: If you have an LTCH, proactively collect data on patient care outcomes and safety events in your hospital and identify performance trends. You could follow the already existing Joint Commission’s safety standards which require that at least every 18 months, the hospital should select one high risk process and conduct a proactive risk assessment.

See Inpatient Facility Coding and Compliance Alert, Vol. 3, No. 11, for insight on the patient safety standards as solicited by the Joint Commission.

Final takeaway: An eclectic approach might be your best strategy for staying clear of the OIG’s radar. Draw from various sources, introspect, and see how others are doing. OIG’s Work Plan should not be the only compliance guidelines one should use for its internal initiatives, but OIG’s focus on specific initiatives can help you shape your practice’s compliance program for the year 2015. “Additionally, look at the OIG work plans from the past several years to identify any trends, and, particularly, any repeated issues,” recommends Abbey.

Resource: To read the OIG 2015 Work Plan, go to http://oig.hhs.gov/reports-and-publications/archives/workplan/2015/FY15-Work-Plan.pdf.