A report by the U.S. Department of Health and Human Services Office of Inspector General (OIG), released in December 2016, concluded that hospitals are billing for short inpatient stays that are inappropriate under the Two-Midnight Rule and for long outpatient stays.
The problem with the report is that it was based on data from fiscal 2013 before the Two-Midnight Rule went into effect, and from 2014, the first year of implementation, a time when many hospitals had not yet received education on how to follow the rule, points out Kurt Hopfensperger, MD, JD, vice president of compliance and education at Optum Executive Health Resources in Newtown Square, PA.
“The OIG analysts did not review a single chart. They looked at claims data and had no idea about any unexpected clinical changes that could have affected patient status,” he says.
In addition, the report doesn’t reflect the current rule, Hopfensperger points out. For instance, in the 2016 Outpatient Prospective Payment System final rule, CMS said that short stays may qualify for reimbursement on a case-by-case basis, based on the admitting physician’s judgment.
The OIG auditors eliminated cases where patients received a procedure on the Inpatient Only list, were on mechanical ventilation, left against medical advice, or died. All other short-stay cases were called “potentially inappropriate,” he says.
The report showed variability among the nation’s hospitals in the way they assigned patient status, Hopfensperger says.
For instance, an average of 3.4% of all stays were short inpatient stays. The percentages ranged from 1% at some hospitals and more than 5% at others. Outpatient stays greater than 48 hours ranged from 2% to 11%.
“This variability among hospitals is of significant concern. The OIG report stresses the importance of compliance and consistency. If hospitals aren’t consistent in the utilization review process, they may not be compliant,” he says.
The variability means that a patient could have a 1% chance of being admitted for a short stay at one hospital and a 5% chance of a short admission at a hospital a few miles away. This could mean a difference in the patient’s out-of-pocket expenses for the copay and the deductible, he adds.
In the report, the OIG recommended that CMS analyze hospital billing and target hospitals for review if they have potentially inappropriate short inpatient stays and turn the information over to the Beneficiary Family Centered Care-Quality Improvement Organization (BFCC-QIO) to target the hospitals for larger samples or more frequent reviews.
The OIG also suggested that CMS analyze the effect of counting observation stays toward the three-night requirement for skilled nursing services and that the agency explore methods of protecting patients from paying more for observation services than they would have for an inpatient stay.
Since Oct. 1, 2015, the two BFCC-QIOs, Livanta and KEPRO, have been responsible for conducting reviews of hospital inpatient claims for stays of less than two midnights to determine if they are appropriate for payment under Medicare Part A. But when CMS reviewed the work of the two QIOs, the agency concluded that the QIOs were not following CMS guidance, according to Deborah K. Hale, CCS, CCDS, president of Administrative Consultant Services, a Shawnee, OK, healthcare consulting firm.
“CMS told the hospitals to disregard the denials and that they would be paid for the claims the QIOs denied. They retrained the QIOs and resumed the audits early in 2017,” Hale says.
CMS has directed the QIOs to request 10 records for zero to one-day stays from small hospitals and 25 records for larger hospitals.
After the initial review, the QIOs will provide one-on-one education for hospitals with high error rates, Hale says. “CMS has directed hospitals to delay any appeals until after the one-on-one meeting,” Hale says.
She speculates that CMS is attempting to avoid the huge backlog in appeals that occurred when the RAs were conducting the audits. “My guess is that CMS hopes that once the hospital staff understands the error, they won’t try to appeal,” she says.
The QIOs are charged with completing a round of short-stay audits every six months. They are expected to complete the audits they started last fall and start Round 2 in spring, Hopfensperger says.
“We’ve been seeing denials for reasons similar to the denials in earlier audits. So far, we have not been able to discern a significant pattern of differences between the audits before the QIOs were retrained and more recent audits,” Hopfensperger says.
After the hospitals receive the education from the QIOs, the auditors will review the hospital’s claims again and if they haven’t improved, they can refer the hospital to the Recovery Auditors for further action.
“The QIOs are the gateway to the Recovery Auditors. We don’t know when they’ll start referring hospitals to the RAs for review,” Hopfensperger says.
A report by the U.S. Department of Health and Human Services Office of Inspector General, released in December 2016, concluded that hospitals are billing for short inpatient stays that are inappropriate under the Two-Midnight Rule and for long outpatient stays.
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