What does the 2014 IPPS have in store for you?

What does the 2014 IPPS have in store for you?

Two-midnight rule stirs controversy

Have you read the final rule for the Centers for Medicare & Medicaid Services (CMS) 2014 Inpatient Prospective Payment System (IPPS) yet? Even if the thought of plowing through 2,200 pages of Federal Register documents makes you queasy, it’s something quality managers must do, according to Deborah K. Hale, CCS, CCDS, president and CEO of Shawnee, OK-based healthcare consulting firm Administrative Consultant Services.

Within the pages is what Hale calls "a paradigm shift" in rules related to admission that will require providers to think very differently from how they have in the past. "CMS talks about how the decision to admit is a very complex medical judgment that only a doctor can make, but in the next breath, they talk about the need for a case manager to be available for consultation at all times," she says.

The first thing is for you to read and understand the rule, says Hale, and then to open up a line of communication with physicians to help them understand it. "If you are not clear on this stuff, it’s like playing a game of telephone when you are a kid: You might think you’re giving them the right information, but if you haven’t thoroughly understood it, then you can’t be sure that what you tell them is correct."

The biggest change relates to the new "two midnight" rule, which requires that a patient stay 24 hours that encompass two midnights to be considered for inpatient care. Hale explains the genesis of the rule. "Medicare has always defined an inpatient as someone who has a severity of illness and plan of care that warrant inpatient status. They took into account not just the existing illness, but also comorbidities." The benchmark for inpatient status versus observation or outpatient care was, up until now, 24 hours. If the care required more than 24 hours, then the patient was an inpatient. If less, then the patient was classified as outpatient, and some of that outpatient group was classified as observation patients.

When the Recovery Audit Contractors (RAC) looked at cases, they denied many where the patient stayed only one day because he or she was not expected to need 24 hours of care and the physician should have known that. Hospitals have appealed many of those decisions and have won some 70% of them, Hale says. Hospitals also got very conservative as a result, putting a lot of patients they would in the past have admitted into observation status.

The rule was designed to help decrease the number of long observation stays, as well as very short inpatient stays, according to Hale.

When the two-midnight rule was unveiled in the proposed IPPS, comments quickly accumulated that it’s hard for even a very good physician to estimate a patient’s length of stay. But CMS held its ground and stated that doctors have been required to do this for Medicare patients for some time. The back and forth of comment and response is readily evident in the Federal Register. If a physician can’t estimate the length of stay, then CMS says he or she should continue to treat the patient as an outpatient until there is enough information to determine whether the patient should be admitted. That means that while a patient has to stay two midnights to qualify for inpatient status, a patient could — conceivably — stay longer than two midnights and still be considered an observation or outpatient. However, CMS says the goal is to reduce very long observation stays to near zero.

Hale says many have expressed worries that the change in rules will lead RAC auditors to disallow inpatient payments in an inconsistent way. Some commenters noted that there are other guidelines available for inpatient care from medical societies, healthcare organizations, and commercial entities like Milliman and McKesson. Can providers use those non-CMS manuals to aid their decision making? The final rule notes that they can be used, but not instead of the CMS manual, rather in conjunction with it. In the end, the auditors will come down on the side of that, not InterQual or Milliman Care Guidelines.

While the tenor of information coming from CMS supports the theory that hospitals and providers will gain financially from this — there won’t be any more of the lesser-paying long observation stays; those patients will move to inpatient status, which has higher reimbursement — Hale says it’s hard to believe that will pan out. "Observation status has been overused, and CMS rightly wants to reduce it. But I think they have been too conservative. They say the decision to admit will be easier as the second midnight approaches. And it sounds simple. But knowing how they interpret guidelines, and based on what’s being said in the forums they have held, they are saying that if you admit before that second midnight, you have to meet medical necessity only. You can’t do this because you are waiting for a discharge plan or you have to wait for Monday for a stress test. That’s for the convenience of the patient or hospitals, not medical necessity."

The big problem with that is that it leaves some patients in observation for potentially longer times. "I can’t help but think this will explode," says Hale. "I have taught seminars with a variety of hospitals, and I always poll the audience and ask if this is better or worse or unchanged. So far, they seem evenly split between good and bad. But it will be months before we know how bad."

Hale notes that CMS says that these cases will, in the beginning, be exempt from RAC and MAC audits. Instead, 10 to 25 records from each hospital will be audited between now and the end of this year. That and the fact that there is litigation pending against these changes make her think there will, inevitably, be changes to the two-midnight rule. "To me, this seems like a showdown," she says. "Everyone expected CMS to back down because their own forums showed they didn’t have a lot of answers and said they’d be providing guidance after the rule was put into effect. Everyone is frustrated, and CMS, even though they are unprepared, appears to have dug their heels in."

Your to-do list

As the issue winds through courts and bureaucracy, Hale says there are things to know and do. First, be prepared that the shift in inpatient admissions may affect data. Coders may see that while before, admission indicators kick off with the admission order, now the time and date of admission orders may differ by two days from the time the patient entered the hospital.

Imagine a patient who comes to the ED with dizziness. In observation, that patient falls and breaks a hip. But the patient isn’t admitted yet, so that second condition is present on admission. "You might need a mechanism to better find hospital-acquired conditions."

Hale figures that if a physician could have admitted before the second midnight in the past, he would have, so she is unsure how much will change. That said, hospitals often overuse observation status and something had to give. "The battles between RACs and hospitals can drag on for two to three years. The hope is that this will reduce the number of denials and appeals."

IPPS is just one of a number of huge changes in healthcare — ICD-10 coding comes in next year, there are changes in VBP, and huge efforts to reduce mortality and readmission rates. Hale says hospitals are stretched very thin already. Your best bet to say on top of everything is to be as informed as you can. "Read the rule," Hale says. "Really. Read it all. If you don’t understand something you have read, ask questions at seminars or of peers or experts," she says. "Then talk to the docs where you are and make sure they understand it."

For the full IPPS rule, complete with comments and responses, see the Federal Register at https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-18956.pdf. The explanation of and comments on the two-midnight rule, and responses to those comments begin on page 1,807. The CMS page related to the final rule can be found at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2014-IPPS-Final-Rule-Home-Page.html.

For more information on this topic, contact Deborah K. Hale, CCS, CCDS, President and CEO, Administrative Consultant Service, Shawnee, OK. Telephone: (405) 878-0118.