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News to Note – June 2022

  • In February, it was noted that 38 hospitals which have 5 stars from the Centers for Medicare and Medicaid Services (CMS) are going to be penalized under the CMS under the Hospital Acquired Condition Reduction Program. The 38 hospitals include one Mayo Clinic hospital, one Cleveland Clinic hospital, Northwestern in Chicago, and Cedars Sinai Medical Center – the hospital to the stars in Los Angeles. How can this be? The first reason may be what all of us have heard at some point, “our patients are sicker than everyone else’s patients.” And, that may be true although the risk adjustment methods are supposed to account for that. The other reason could be that these hospitals are just more diligent at reporting than others. Another explanation is this – we still have no idea how to actually measure quality in health care. Sure, the Yale mathematicians can come up with an incomprehensible formula to calculate the rewards and penalties like you see from the CMS quality program site, but what are we really measuring? Measuring patient satisfaction contributed to the opioid epidemic. Many years ago, the guidelines said every diabetic should have an A1c under 7 and everyone measured that as a quality indicator but it turned out that a target A1c below 7 was more dangerous for some diabetics. Again, how many were harmed trying to achieve high quality care? Yes, we have to get from volume to value, but at what price?
  • The hospice division of NGS released some interesting audit results in March. The audits were of patients who received inpatient hospice services for more than seven days. There were a few take-aways from their results. First, I know it is obvious but it has to be said, when you get a request for records, get the records and send them. If you billed for the service, you are responsible for sending the records, even if the care was provided in a different setting. We see this a lot with physician audits for hospital services where they think the hospital will somehow know to send the records but it also applies to inpatient hospice; the Medicare money is going to the hospice not the hospital so they must send the records. Second, if a patient is admitted for general inpatient hospice and had not previously been enrolled in hospice, be sure all the paperwork to get them qualified for the hospice benefit is done, including the statement of prognosis of less than 6 months. Yes, even if a patient is actively dying and placed in hospice for symptom management, there needs to be a statement that their prognosis is less than 6 months. The majority of the denials were because NGS claims that the beneficiary’s status did not support frequent changes in medications or care plan. This sounds fishy. The inpatient hospice benefit specifies that the patient must be in need of pain control or symptom management that cannot be provided in any other setting but there is no mention of how frequently there must be a change in the care. If you are a hospice organization, you may to take a closer look at this and I would certainly consider fighting those denials.
  • Also in March, NGS posted the results of audits of botulinum toxin used during 2021 in their jurisdiction. They don’t give a lot of details but since the codes they audited were part of the CMS outpatient hospital prior authorization program, we have to assume they were auditing its use in physician offices and ambulatory surgery centers where there was no prior authorization available. They audited over 1,000 claims and there was a 78% denial rate. That’s pretty bad. Now, as always, the real question is, did the doctors use the Botox for medically necessary indications but simply documented it poorly? Or did they actually use it when it was not appropriate? We will never know. But, with a 78% denial rate, CMS should have put in a prior authorization process for Botox used at physician offices and not in the hospital.
  • The inpatient proposed rule for 2023 contains 1786 pages including the usual new technology add on payment proposals and some code changes but the Two Midnight Rule remains intact. There was one big thing – CMS is requesting comments on getting better data on the social determinants of health.
  • There has been a lot of online discussion recently about what is referred to as “outpatient in a bed”. For those unfamiliar, that’s the outpatient who is occupying a bed but does not require hospital care. Maybe it is a patient who needs a guardian appointed, maybe it is snowing and the patient can’t get a ride home, maybe the family abandoned the person in the ED and went off on vacation. Maybe it’s a day or two, maybe it is for weeks. Someone even noted that they convert inpatients who are stuck in the hospital for weeks or months to outpatients in a bed and if they get sick again, they create a new inpatient admission. But, whatever the circumstance, the insurer is not going to pay for the days. Call it what you want but you have to talk to your billing and coding staff and determine how they are handling the coding of these patients. Those patients are occupying a room, they are getting nursing care, they are being given three meals a day, and environmental services is cleaning the room. Those are real costs. When they are inpatient, there is a daily room charge. When they are receiving observation services, there is an hourly charge for that. If they are recovering from an outpatient surgery, there is a charge for recovery room services. But if you have an outpatient in a bed where none of those apply, how does your system track the costs of that care? How does your nurse staffing team know there is a patient that needs to be considered? If you are not getting paid, isn’t this considered charity care that can be reported? And if you want to charge the patient to stay, what do you bill them for? It’s complicated and it is happening more often.
  • The recent Office of the Inspector General (OIG) report released in May (see the ACPA Government Affairs Committee letter to CMS about it) involves an audit of Medicare Advantage (MA) plans. They start rather ominously stating “CMS’ annual audits of MA plans have highlighted widespread and persistent problems related to inappropriate denials of services and payment.” In this study, they looked at services or payments that were denied by an MA plan to determine if the service would have been covered under traditional Medicare. They found that 13% of all services were denied inappropriately. And, although we strenuously object when the OIG extrapolates results when they audit providers, I have no hesitancy in noting that this means that all MA plans have likely denied over 100,000 medically necessary services a year. OIG contracted auditors are usually very unreasonable when auditing IRF admissions, often stating patients are too well or too sick for IRF. But here, the OIG faults the MA plans for using the same logic they use in their reviews. The OIG also dipped their toe into the status issue, noting that a patient with a hip fracture was appropriate for inpatient admission. It was interesting to note that in 23% of audited claims, the MA plan reversed their denial as soon as the OIG requested the records. What does that tell us?
  • Also in May, the OIG released a report titled “A Quarter of Medicare Patients Experienced Harm in October 2018.” The media was all over this title suggesting, as we saw in 2000 with the publication of To Err is Human when it was claimed that 98,000 patients a year are killed by medical errors, that hospitals are routinely harming patients. The OIG once again used extrapolation, looking only at 800 admissions of the over 1,000,000 admissions that occurred that month. But, a bigger concern about this report is their characterization of what happened to patients as harm and the implication that this harm is the fault of providers.
  • More audits are coming your way. Cotiviti, one of the two CMS Recovery Audit Contractors (RACs), seems to have taken on a bold business expansion plan. It appears they are contacting every payer they can find to try and sign them up for their services. It appears they have two business models. In their traditional one, they take old claims, already processed and paid by the payer, and audit them for accuracy. They then report errors to the payer for recoupment. That is their traditional model. Then they offer what can be called an enhanced payment integrity model where after a payer processes claims, they send them to Cotiviti who run their own algorithms, and find errors the payer missed before the claim is even paid.
  • Not long ago, our own past ACPA President Dr. Edward Hu from the University of North Carolina Health discovered that CMS released a treasure trove of appeal findings from the part C and part D appeals program – over 300,000 decisions. No one is going to read all of them but it did not take Dr. Ronald Hirsch too long to find evidence that Maximus, the QIC contractor, referred to the case-by-case exception for inpatient admission as a rare and unusual occurrence, they do not appear to understand that Medicare allows certification of inpatient days if an accepting skilled nursing facility cannot be found, and that a long term acute care hospital provides inpatient care. Dr. Hirsch is already in contact with CMS about this.
  • As many know, Medicare pays for Observation as a comprehensive APC, meaning that they pay the hospital one fixed price for the patient who receives eight or more hours of observation no matter what else is done to or for the patient. But there are caveats to that payment. First, for reasons that are still unclear, Medicare won’t pay that Observation APC if the patient has another procedure. For example, if a Medicare patient presented to the Emergency Department (ED) after a syncopal episode with a head laceration that the ED physician repaired and the patient was then placed observation for 30 hours then discharged, if that laceration repair coded as an intermediate repair, that small status T procedure would negate any eligibility for the observation APC. Second, even though Observation is generally paid as a fixed payment, it is not uncommon for Medicare outpatient claims to result in an outlier payment. In fact, in an OIG audit released the other week, they reported that Vanderbilt University Medical Center received over $6,000,000 in outpatient outlier payments in 2018 and based on their audit, over 10% of that was improper. While much of that was related to improper billing of replacement devices and payments for other improperly billed services, the billing of Observation services was included in the list of errors. That means just like all other services, you better be sure your billing of observation hours is compliant. Observation is defined as a set of clinically appropriate services so if you are observing your patient but it is not clinically appropriate to be doing it, then the service you are providing is not observation and you need to bill it in some other way. Likewise, with condition code 44, if you make the change, you start counting hours from when the order for Observation is written; you cannot count the hours prior to that order as Observation.

**The news above in addition to many other points of interest for Physician Advisors and other leaders in health care can be heard weekly during Dr. Ronald Hirsch’s Monday Rounds segment on’s Monitor Monday webcast/podcast. Learn More

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