Executive Summary
A multidisciplinary team at Northwestern Lake Forest (IL) Hospital developed a way to change the admissions process to comply with the CMS’ two-midnight rule.
• The team specified that patient status should be based on expected length of stay, severity of illness, intensity of expected services, and risks for the patient and had the information integrated into the medical record as a reminder for physicians.
• Case managers screen all patients for medical necessity before registration and recommend that patients who do not meet inpatient criteria receive observation services.
• The case management department gives patients receiving observation services a letter explaining their status, potential copays, and out-of-pocket expenses.
When the CMS issued the two-midnight rule in 2013, the case management department at Northwestern Lake Forest (IL) Hospital began an initiative to change the admission process to comply with the new regulations, says Jennifer Prescia, MSN, RN, ACM, CCDS, director of case management.
“Instead of basing patient status on medical necessity criteria, we had to base it on a definition from CMS and the expected length of stay. Clearly, we had to step back and look at whether what we were doing was correct and educate ourselves on the new rule,” Prescia says.
A multidisciplinary team began meeting to review the new CMS regulations and develop strategies for compliance. The team reviewed the hospital’s Recovery Auditor experiences and identified diagnoses that were frequently denied and not overturned on appeal and drilled down to find the reason. They met with representatives from the vendor for the hospital’s medical necessity criteria decision support software to learn about their upgraded admissions criteria guidelines.
The team collaborated with the hospital’s utilization review committee on ways to help the case management staff understand the new rules and regulations on observation versus inpatient status and to determine the best way to help them explain the new requirements to physicians and Medicare beneficiaries, Prescia says.
“We identified that our physicians had a big educational deficit about what should be documented in the medical records and the level of detail the documentation must include. We did a lot of physician education, mostly one on one,” Prescia says.
The team developed a minimum definition of what patient status should be based on expected length of stay, severity of illness, intensity of expected services, and risks for the patient. The definition was integrated into the electronic medical records as a reminder for physicians when they write an admission order, Prescia says.
Now when patients come into the hospital, emergency department case managers use revised inpatient criteria to screen them for medical necessity before the patient is registered. The case managers apply inpatient criteria to every patient at the time of registration, eliminating the need to change patient status in the future. They recommend that those who do not meet inpatient medical necessity requirements receive observation services, Prescia says.
“This approach does work. It helps us avoid just automatically putting patients into observation and it takes the onus off the case managers to have to screen patients for inpatient and then make sure they meet requirements for observation. By attempting to make everyone meet inpatient criteria, we are giving all beneficiaries a fair chance at being admitted as inpatients,” Prescia says.
The team created a form in the electronic medical record with a place for the case manager to write the recommended level of care. “The physicians have been educated that for every new admission, they have to write the level of care order stating their expectation that the patient will need inpatient services for two midnights or longer and to include the medical reasons for the admission, the services the patient is expected to receive, and the discharge planning expectations,” she says.
When patients meet medical necessity criteria but stay over only one midnight, the case managers make sure that the physician documents the intensity of services the patient needs and the reasons they did not stay the expected two overnights, Prescia says.
For instance, patients with diabetic ketoacidosis require insulin drips, IV fluids, laboratory work every hour, and consume thousands of dollars of services, Prescia says. “They get better and go home the next day, but it still costs the hospital far more than reimbursement for observation services. We fight denials on these cases. It comes down to making sure the documentation reflects the intensity of services that indicate an inpatient stay,” she says.
When the Medicare Administrative Contractor (MAC) conducted its initial Probe and Educate audits of the hospital’s records, it denied about half of the audited cases. “We started digging deeper and found it was a billing error and the third audit came back with no problems,” Prescia says.
The team continues to refine the process and analyze patient records to make sure they meet the CMS requirements.
“We do a lot of audits to make sure we are being fair to the beneficiaries and to make sure that patients who are admitted meet inpatient guidelines,” Prescia says.
