Inpatient Facility Coding & Compliance Alert

Check with the QIOs for your denied claims status before you take to appeals.

In a yet another twist of events related to the implementation of two-midnight rule, CMS recently asked the Beneficiary and Family Centered Care-Quality Improvement Organizations (BFCC-QIOs) to pause conducting the initial short stay reviews of Medicare claims. Read on to know the pros and cons of this recent CMS announcement.

Background: With the revision in the OPPS final rule last October (see box), CMS involved the Quality Improvement Organizations (QIOs) to conduct “Revised Determination Reviews” (42 CFR 405.980) on hospital short-stay Medicare Part A claims. QIOs were to conduct patient status reviews to determine the appropriateness of Medicare Part A payment for these short-stay inpatient hospital admissions, in accordance with section 1862(a)(1)(A) of the Act.

QIO reviews: CMS later became aware of inconsistencies in the BFCC-QIOs’ application of the two-midnight policy for short hospital stay reviews. In order to help the BFCC QIOs improve the quality, CMS decided to educate the agency on practical nuances of the two-midnight rule. Concurrently, CMS also asked QIO to pause the short stay patient status reviews for some time to help standardize the review process.

“CMS is trying very hard to find a way to implement their two-midnight rule so that the number of short-stay inpatient admission appeals will be minimal,” says Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, IA. “We still have a backlog (apparently still in the 100,000’s) of appeals from past years to resolve.”

In fact, as per the CMS announcement on June 6, 2016, this current pause will help the QIOs concentrate on conducting re-reviews of denied claims dating from October 2015 onward, so as to ensure that the medical review decisions were made in accordance with current Medicare policies.

 The Rule that has been…

The two-midnight rule became effective three years back, in October 2013.This rule supplants the 24-hour rule (or benchmark) that stipulated a stay of less than 24 hours would be considered as an outpatient, or most likely an observation, stay and more than 24 hours would be considered as inpatient.

The two-midnight rule, however, indicates that if the patient should be in the hospital over two midnights, then the inpatient admission is presumed proper. Vice versa is also true: if the provider expects the patient to stay for fewer than two midnights, the services should be classified as outpatient.

Issues galore: While some seem to be talking about the pause, there are others looking forward to guidelines to get audit ready.

“One of the issues is the auditing guidelines that the QIOs are to use when reviewing short-stay inpatient admissions,” says Abbey. “If everybody (i.e., CMS, QIOs, RACs, and hospitals) all have the same auditing guidelines, then compliance can generally be achieved. Thus the auditing and/or training materials used for the QIOs should be made so that they are readily available to hospitals and auditors.”

How Long Is the Pause?

On May 4, 2016, CMS temporarily suspended short stay reviews by QIOs, “in order to promote consistent application of the medical review of patient status for short hospital stays” and to borrow “time to improve standardization in the BFCC-QIO’s review process,” says CMS.

The pause is temporary, and the QIOs will resume claim reviews once they have completed retraining on the two-midnight policy, completed the re-review of previously denied claims. According to CMS, the QIOs will be back to their routine within 60 to 90 days and CMS will inform the stakeholders as soon as the pause ends.

“Another issue is that of how far back the QIOs can go in reviewing cases,” say Abbey. “In theory this all started Oct. 1, 2015, but there have been reports that the QIOs are looking at cases prior to October 1.”

Take Hope—Your Claim May Be Under Re-review

In case you were about to appeal against a claim denial, stop before you follow through.

Here’s why: CMS has asked hospitals to “work with your BFCC-QIO (KEPRO at https://www.keproqio.com/ or Livanta, LCC, http://bfccqioarea5.com/and http://bfccqioarea1.com/) to see if denied claims have been re-reviewed (undergone a final determination) before you appeal a claim denial.” For that matter, QIOs will send letters to hospitals whose denied claims are undergoing a re-review, and the results thereof. In case the re-review decision is different from the original, this would be communicated to the relevant payment departments.

Changes with the OPPS Final Rule 2016 Effective 

Jan. 1, 2016

The exceptional circumstances could now be determined by the provider on a case-by-case basis. However, every case can still be subjected to a medical review.

The issues of inpatient short stays would no longer be scrutinized by the Medicare administrative contractors (MACs). As per the updated rule, Quality Improvement Organization contractors would review these, effective Oct. 1, 2015. This could be a probable move to cut down on contingency funds.

Nevertheless, CMS continued to uphold that stays under 24 hours would rarely qualify for an exception to the two-midnight benchmark. 

Gear Up for the Challenge

There are more issues linked to this scenario than what meets the eye.

“There is another issue, one that is more subtle,” contemplates Abbey. “The two-midnight rule was developed as a payment benchmark. In other words, if the patient needed (medical necessity) to be in the hospital over two midnights, then payment for the inpatient stay is justified. Now if the physician documents (prospectively) that an over two-midnight stay is justified (medically necessary), does that mean that an inpatient admission should occur? The hospital may be using InterQual or Milliman to determine whether or not (the hospital’s) admission criteria are met, but this may not correspond to the necessity for keeping the patient over two midnights.”

Steps to follow: So, while we still have the time, how does one prepare for the QIOs next round of reviews? Are they going to inspect along the same lines as MACs, or do the hospitals need to prepare for a different perspective? The QIO website (http://www.keproqio.com/twomidnight/ ) seems to offer quite a handful of information, whether it is FAQs related to the two-midnight rule, fact sheets, rules, or information on claims.

“We need to latch onto anything that might be used by the QIOs,” advises Abbey.

Furthermore, the QIOs have recently put up a “Policy Decision Guideline flowchart,” or a BFCC QIO 2 Midnight Claim Review Guideline, on www.qioprogram.org which you may use to understand the guiding principles behind the payment decision process.

“Note that CMS has removed the ‘rare and unusual’ language so that even this flowchart is somewhat suspect,” cautions Abbey. “However, it is this sort of thing that indicates why it is so important to have the audit guidelines and training materials. What hospitals need are the audit guidelines that will be used by the QIOs, or at least the training material that was used to train the QIOs.”

The road ahead: You need to be all ears to the QIO updates as they come in.

“Be watchful for further events in this area,” says Abbey. “At some point the auditing guidelines and/or educational materials used to train the QIOs should be made available to hospitals. Also, watch for any cases that may be reviewed prior to Oct. 1, 2015. Once hospitals have access to the audit guidelines, then hospitals can perform their own internal reviews before claims are filed for the short-stay inpatient admissions.”