Observation or inpatient? Get it right up front
January 1, 2012 15 minutes read
Observation or inpatient? Get it right up front
Auditors are carefully scrutinizing your records
As the Centers for Medicare and Medicaid Services ramps up its Recovery Audit Contractor (RAC) program, and other auditors begin scrutinizing hospitals records, it's imperative that hospitals make sure that the patients' level of care is appropriate and that the medical record has adequate documentation to support it. (For more information about the importance of level of care, see story, below)
Hospitals are reporting significant increases in medical records requests and RAC denials. As records requests increased, so do the denials. "There are a myriad of auditors trying to second-guess whether patients should be inpatients or kept as outpatients with observation services. Hospitals' feet are being held to the fire more," says Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK. (For more information about patient status, see story, below)
Brian Pisarsky, RN, MHA, ACM, manager in Huron Healthcare's Clinical Operations Solutions, with headquarters in Chicago, adds that getting patient status right upfront is often a challenge. There are a lot of grey areas in the rules and admission criteria sets don't always apply to every patient.
He reports that there are instances where patients meet medical necessity criteria for inpatient stays but the RACs are denying the stay. "CMS has not given a consistent message regarding whether InterQual and Milliman criteria should be used as a decision-maker on medical necessity. While hospitals have concrete processes for deciding if patients meet admission criteria, the RACs are saying that medical necessity criteria sets are merely tools," he adds.
It's not possible for hospitals to have a physician advisor review every admission, Pisarsky points out. "Admissions should be based on medical necessity criteria, with additional supporting documentation from the physician when that information is required to clearly show the reason for inpatient status. Case management staff can play a critical role in ensuring the level of care documentation is accurate and sufficient," Pisarsky says.
Teresa Fugate, RN, BBA, CCM, CPHQ, vice president, case management services for a seven-hospital system with headquarters in Knoxville, TN, adds that physicians make the decision to admit patients as inpatients or keep them as outpatients with observation services based on the information they have in hand, Fugate points out. For instance, a patient presents to the emergency department in severe pain with a renal stone and the physician prescribes IV antibiotics. The patient meets inpatient criteria but if he passes the stone at 6 a.m. and was discharged, it may appear that it wasn't an appropriate inpatient admission.
"The RAC is likely to pull the case for review and could deny it if the documentation doesn't show that the physician believed at the time of admission that the patient would be in the hospital for a longer period of time," she adds.
Hale says that many hospitals have not done a good job of submitting adequate information for the RACs and other auditors to make a valid decision on medical necessity.
"The problem is not whether or not the patient needed the particular service. It's whether or not the hospital will be reimbursed from Medicare Part A for inpatient services or Medicare Part B for outpatient services," Hale continues.
Insufficient physician documentation makes up a big portion of inpatient hospital payment errors, Hale says. In some cases the physician progress notes, physician orders, diagnostic tests, and examination and treatment records are incomplete or missing, or, in some cases, the documentation was illegible. Case managers should work with physicians to ensure that the documentation is clear and complete and that the level of care is appropriate, she says.
"Physicians should accept advice from a case manager on whether a patient meets inpatient criteria but it's a complex medical judgment that can be made only after the physician has considered what he or she knows about the patient's medical history and how the severity of the signs and symptoms the patient is exhibiting affect the treatment plan and influence the length of stay," Hale adds.
Make sure that your hospital records clearly reflect what level of care the physician intends for the patient. Hospitals and physicians use multiple terms to indicate that the intent is an inpatient admission, but to CMS "admit" means an inpatient admission. Observation is not a status — it's a service, she points out.
Pisarsky suggests having case managers at all points of entry to review all emergency department admissions, direct admissions, and surgical admissions and to make sure that the patient status is appropriate up front, rather than trying to correct it after admissions.
If there isn't enough staff to review cases at the time of admission, hospitals need policies and a clear and consistent utilization review plan describing how and when the review is going to take place, he adds. The documents should include details on how initial reviews and continued stay reviews are performed, how cases are referred to the physician advisor, and how the hospital provides day-to-day reviews as part of the Medicare Conditions of Participation, he adds.
Hospitals should have a written policy stating that patients do not receive a bed until there is an appropriate status order on the chart, Pisarsky says. Train the staff that assigns beds that they can't give a patient a bed until the order is appropriate, he suggests
"If hospitals don't have consistent processes in place for review and documentation, they are leaving themselves open for additional RAC reviews. Auditors are not going away. In fact, more and more auditors are scrutinizing hospital records. Hospitals have to get the status right up front or face continued denials," he says.
Hale recommends that hospitals make sure their case management policies and procedures are consisted with the CMS requirements. Educate the medical staff on admission criteria and conduct inter-rater testing for case managers to make sure they are applying admission criteria consistently, she adds.
Why level of care is so important Inappropriate status hurts hospital, patients The Medicare Recovery Contractors (RACs) are zeroing in on admission status and denying cases because they say the patient was appropriate for outpatient observation services, rather than an inpatient admission. Many times, a patient's level of care doesn't impact physicians' billing or how the patients receive care but it has a dramatic impact on hospital reimbursement as well as the patient's out-of-pocket expenses and/or eligibility for skilled nursing care, says Brian Pisarsky, RN, MHA, ACM, manager in Huron Healthcare's Clinical Operations Solutions, with headquarters in Chicago. Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK, reports that most of the time the best case scenario for observation is a payment of around $1,000. She points out that for many diagnoses, such as heart failure, the payment is higher on the inpatient side if a patient has a complication/comorbidity but the payment for observation is the same regardless of a secondary diagnosis. For instance, outpatient observation payment for a patient with congestive heart failure whether with or without a complication/comorbidity is typically less than $1,000. Hospitals would receive $5,666 for inpatients with a complication/comorbidity and $3,769 for patients without a complication/comorbidity. Both figures are based on a hospital-specific DRG rate of $5,500. Pisarsky points out that since Medicare Part B has a 20% co-pay for patients, those who receive observation services incur out-of-pocket expenses unless their Medicare supplemental insurance covers outpatient co-pays but an inpatient stay would be paid for by Medicare Part A. In addition, when patients receive observation services but, after review, the hospital converts their status to an inpatient admission, their length of stay may not be long enough for them to meet Medicare's three-day requirement to qualify them for a skilled nursing stay, he adds. "If there is a delay in writing an order for an inpatient admission that is clearly justified, the patient may not qualify for a skilled nursing stay," he says. For instance, if a Medicare patient meets inpatient criteria on Day 1 and the date and time of the inpatient admission are on the chart, the patient is qualified to have Medicare pay for a skilled nursing stay if he is hospitalized overnight for three days. If the same patient arrives at night and is put in observation, then it is determined the next day he meets inpatient status, technically he had only two nights as an inpatient and a skilled nursing stay will not be covered by Medicare. |
Is observation always appropriate? Only when patients need more care As the complexity of outpatient procedures continues to increase, more patients are staying for 24 hours but this does not make them observation patients, says Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK. Observation services are commonly ordered for patients who present to the emergency department and require a significant period of treatment or monitoring in order for the physician to make a decision to admit or discharge them. "Observation is required for those who have complications and need additional care, not for those who just need more time to recover. Patients who are appropriate for observation may be exhibiting minor signs and symptoms and the physician wants to reassess them before a decision to admit or send them home is made," Hale says. A 24-hour stay in observation has been the benchmark, Hale says. She advises case managers to get the physician to make a determination before the 24 hours are up. "Something is wrong when patients consistently receive observation services for more than 24 hours. The hospital either is not fast-tracking the patients the way it should be or they should have been admitted in the first place," Hale says. Routine post-operative monitoring or routine preparation for diagnostic testing and the recovery period afterward do not quality as observation. In addition, Observation is not appropriate for medically stable patients who need diagnostic testing or procedures, such as blood transfusions, chemotherapy or dialysis, that routinely are provided in the outpatient setting. When determining whether a patient should receive observation services, physicians should take into consideration only what directly affects the safety and health of the patient and whether the patient's medical needs are such that he or she can be safely treated only in the hospital setting, Hale says. "Physicians should never take into consideration family pressure or what the patient wants. Observation services must be reasonable and necessary and not used as a hotel while the family is making nursing home arrangements," Hale says. According to Brian Pisarsky, RN, MHA, ACM, manager in Huron Healthcare's Clinical Operations Solutions, with headquarters in Chicago, as the Medicare Recovery Audit Contractors (RAC) turn their attention to surgical admissions as well as medical admissions, hospitals need someone with expertise to review surgical orders and make sure the patient status is correct at the time of surgery, (For details on how surgical case managers work at two hospitals, see related articles, below). Hale points out that if hospitals don't have an order to admit prior to the performance of a procedure on Medicare's Inpatient Only Surgery List, the hospital can't be paid but the surgeon is reimbursed. "The inpatient only list has been a key component of the Outpatient Prospective Payment System since the proposed rules were developed 1998, Hale says. The provider community has continuously asked CMS to get rid of the list or allow for appeals due to special circumstances but CMS has refused to do so. CMS says that the Inpatient Only list doesn't block the procedure from being performed in the outpatient setting but Medicare will not pay for it if it is. "Hospitals have the responsibility to educate physicians about the Inpatient Only list and to make sure there is a process in place to ensure that there is an order to admit prior to the performance of the procedure," Hale says. A patient who is scheduled for outpatient surgery and converted to a procedure on the inpatient only list during the surgery is an outpatient. "CMS has not addressed this scenario in written regulations but stated in a 2007 Open Door Forum that a physician may give an order to admit as an inpatient immediately following the procedure and still bill the claim as an inpatient claim," Hale points out. An example is a patient who was scheduled for a laparoscopic cholecystectomy and after the surgery begins, the surgeon must change the planned procedure to an open cholecystectomy (a procedure on the inpatient only list). "The surgeon should not wait until discharge to order an inpatient admission," she says. Sources For more information, contact:
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Proactive approach predicts patient status Surgical case manager reviews all procedures Sherman Hospital in Elgin, IL takes a proactive approach to ensuring that surgical patients are placed in the proper status by asking physicians to fill out a surgical reservation form before the surgery is scheduled. The form includes space for the name of the surgical procedure, the CPT code and the ICD-9 code for the diagnosis. It has space for insurance and pre-authorization information and boxes where physicians can check to indicate if they predict that the patient will be an outpatient, be admitted as an inpatient, or require an extended recovery. In addition, the hospital has dedicated a case manager to the surgical unit to review all scheduled surgeries and ensure that they are in compliance with Medicare and other payer guidelines. "There's too much money at stake not to do this. We want to get the patient status correctly established up front to avoid having the Recovery Audit Contractors (RACs) take back the whole payment for surgeries done in the wrong setting," says Ronald Hirsch, MD, FACP, medical director of care management for the 255-bed hospital, and physician advisor in case management for B.E. Smith healthcare consulting firm with headquarters in Lenexa KN. The surgical reservation form, which is available on the Sherman Health Documents website reminds physicians that observation services must be ordered after surgery and only if there is a medical reason to monitor the patient. It instructs them that Extended Recovery should be chosen for non-medical patient stays that are for the convenience of the physician or patient. The Sherman Health document library also has a copy of the Medicare Inpatient Only List and instructs surgeons that if a procedure is on the list, they should order an inpatient admission and that if procedures are not on the list and surgeons want to admit the patient, they must document the reasons on the medical record. The website also includes a page describing outpatient, inpatient, and extended recovery and when each is appropriate. Once the physician fills out the form, he or she faxes it into the scheduling department. The scheduling nurse reviews it to determine if the procedure is on the Medicare Inpatient Only list and, if so, to make sure the doctor has ordered an inpatient admission. If not, the nurse contacts the physician and asks for new orders. When the patient gets to the surgical unit, Heather LaCoco, RN, BSN, surgical care case manager reviews the record to make sure the orders are appropriate and the documentation is complete. "A big part of my job is educating the surgeons and their office staffs about the difference between observation services, inpatient admissions, and extended recovery to help them understand the appropriate admission status for their patients. Surgeons just want to be doctors and surgically fix their patients and safely send them home. Case managers are the glue that puts it all together to make sure patients receive the care they deserve, that insurance and Medicare regulations are followed, and the hospital is capturing the information it needs to be appropriately paid for the care we deliver," LaCoco says. The post-operative order sheet gives surgeons three choices: they can leave the status they designated pre-operatively, change it to an inpatient admission, or order observation services for the patient. "We've worked hard to educate the physician that observation is indicated only when patients need monitoring beyond the usual recovery," Hirsch adds. The hospital created the information sheets and forms for physicians after reviewing the RAC rules and records, and determining that in many cases, observation was not appropriate. "We also realized that some surgeries that were on the Medicare Inpatient Only list were being performed as outpatient procedures and that there were instances where older patients with comorbidities needed inpatient care after routine procedures that were not on the list. The orders were not appropriate and we were being poorly compensated for the services we provided," Hirsch says. The hospital has created an Extended Recovery status for patients who need to stay overnight but their condition doesn't warrant observation services or an inpatient stay. An example is a patient who has a procedure that Medicare has deemed to be outpatient surgery but the physician isn't comfortable sending the patient home after a four-hour recovery. "The hospital gets no additional payment for patients in extended recovery but it keeps the surgeons happy and the patients appreciate it," Hirsch says. LaCoco reports spending a lot of time educating physicians and office staff about the need for accurate documentation and making it simple for them to get the right patient type, so the hospital can capture the services it is providing for patients and get paid appropriately. For instance, a laparoscopic colectomy might be a simple outpatient for some patients but not for an 82-year-old patient with heart failure, chronic obstructive pulmonary disorder, and diabetes. "In this case, we need to educate the surgeon and the office staff to document that due to his comorbidities and risk factors, the patient needs to be admitted after surgery for close monitoring and medical management. This way we are capturing patient needs and are able to bill accurately for the care we provided," she says. Sources/Resource For more information contact:
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Dedicated case managers review surgery schedule Inpatient vs. outpatient is the focus At Port Huron Hospital in Port Huron, MI, a full-time case manager is dedicated to the surgery department and reviews the cases of all patients scheduled for surgery to make sure they are in the proper status. Hospitals must walk a fine line when it comes to determining if surgical patients who need more than normal recovery times should be admitted or remain as outpatients with observation services, says Rochelle Schiller, RN, MBA, director of care management at the 186-bed community hospital. Hospitals lose money if they provide observation services for patients who meet admission criteria. On the other hand, if they have a lot of one-day inpatient stays, it attracts the attention of the Medicare Recovery Audit Contractors (RACs), she adds. "We determined that we needed someone on site to prospectively conduct a clinical review of surgical cases. We knew we needed an RN case manager with expertise in admission criteria to make sure the patients are in the proper status. A case manager dedicated to the surgery department was the solution," she says. Working with the hospital administration and the business office, Schiller conducted an analysis of surgical cases over the course of 12 months. The analysis showed that in some cases, procedures were ordered as outpatient procedures but the patients were being transferred from recovery to the inpatient unit for a variety of reasons. "Some had clinical issues. Others were social admissions, and some simply didn't belong there," Schiller says. In all cases, the hospital was getting paid only for the outpatient services and not for the inpatient stay, she says "We were losing revenue on some patients who met medical necessity criteria but were kept overnight as outpatients. We also determined that there were a lot of outpatients in beds when their care was not reimbursable," she says The case management department worked with the business office to track all of the write-offs because the patients were treated as outpatients but the procedure was on the Medicare Inpatient Only list. "We were missing the boat on some inpatient procedures. The procedures were being booked as outpatient procedures and the patients were being kept in observation so we weren't getting paid," she says. The case management team looked for trends and picked the 15 most common procedures where there were problems, then educated the surgeons about the Inpatient Only List, starting with those who performed the most common procedures. In addition, the surgical case manager compares the procedures scheduled for Medicare recipients to the Inpatient Only list and makes sure that an inpatient stay is ordered. We want to admit patients if they are having procedures on the Inpatient Only list so we can get paid correctly," she says The hospital's RAC recently issued 44 requests for records on patients receiving cardiac catheterizations. "Cardiac catheterizations typically booked as an outpatient procedure but when something happens during the procedure, the physician orders the patient to stay over as an inpatient. We're working to ensure that the physicians document the reason for the admission so we can be paid appropriately and have the information in place to withstand a RAC audit," she says. As part of their initiative to place patients in the correct status, Port Huron Hospital created an outpatient extended stay level for patients who need to stay overnight for non-clinical reasons, such as they don't have a ride home or the doctor doesn't discharge them until the next day. The extended stay level enables the hospital to put patients in a bed overnight without billing Medicare. "It doesn't generate a room charge so it doesn't count as a one-day stay and there's no red flag for the RACs. We have compassion for patients who can't get home late in the day but it's not appropriate for us to bill for those services," she says. Source For more information, contact
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