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News to Note – September 2022

  • At the end of July, some hospitals were being told by Humana that for Medicare Advantage (MA) patients, if the hospital bills an inpatient admission and Humana denies payment, the hospital must follow Medicare re-billing rules. This meant that Humana would not accept a claim that had observation hours added unless the chart had an order for observation services. While this is appropriate direction for traditional Medicare because Medicare is a federal program and federal regulations have to be followed, MA plans are not federal programs and they believe they can set their own payment policies and procedures. This was illustrated by Humana itself when they issued a memo that the Centers for Medicare and Medicaid Services (CMS) told them that the inpatient-only list does not apply to them and they can also disregard the Ambulatory Surgery Center (ASC)-covered procedure list. Furthermore, we all know that MA plans, including Humana, ignore the Two-Midnight Rule, a federal regulation determining when a physician should admit a patient as inpatient.

    Putting aside the issue of whether a hospital should appeal such an MA denial in the first place, if you are going to accept outpatient payment, the hospital should not settle for omission of billable observation hours. The fact that the hospital provided the patient necessary hospital care is not under dispute. The plan is claiming the hospital does not deserve a DRG payment. Perhaps this is a legitimate determination, but the hospital should still be paid equitably for the care that was provided. That includes room and board, nursing care, housekeeping, routine supplies, and so on. None of those costs are incorporated into the few charges that will be paid – the Emergency Department visit, imaging, and select diagnostic testing – without observation hours.
  • We learned last month that the Public Health Emergency (PHE) will remain in effect at least until January 2023. But, CMS scared some in the middle of August by publishing a “Roadmap to Ending the PHE”. Some thought this was the promised, 60-day notice that would lead to the PHE ending in October. But, this notice was simply an update of many of the CMS COVID-19 documents such as listing waivers with some added information on what will happen when the PHE does end. Be sure your compliance team has seen this document and continue to use the COVID-19 waivers for another few months.
  • The Food and Drug Administration (FDA) will now allow hearing aids to be sold over the counter and online. This is welcome news to many with hearing loss as these devices are quite expensive. But, the final rule is 200 pages so manufacturers will need to review it carefully and be sure their devices and marketing meets the FDA standards so it still might be a while before patients can benefit.
  • Starting January 1st, CMS is eliminating all certificates of medical necessity. These are required now for some durable medical equipment (DME) and oxygen and physicians universally hate them, so this should come as a welcome relief.
  • The last week of August brought the release of another Office of the Inspector General (OIG) audit of an MA plan. The OIG often audits diagnoses submitted to CMS as hierarchical condition categories (HCCs) influence the monthly payment they receive from CMS for each patient. They often find that the MA plans have submitted many unsubstantiated diagnoses resulting in significant overpayments – sometimes into the tens of millions of dollars. In this audit, the OIG found that Cigna’s Florida MA plan, HealthSpring, had a 4% error rate which is outrageously good. In a report of another MA plan last year, the OIG found an 82% error rate.

    Yet, because the OIG attempted to extrapolate the results, Cigna submitted a 33-page rebuttal criticizing almost every part of the audit including the sample size and the use of extrapolation. They even criticized CMS for the Kwashiorkor diagnosis fiasco several years ago, the way CMS mapped sepsis as an HCC, and for CMS’ policy of not allowing documentation from a home health agency or DME supplier to be used for diagnosis validation purposes. And, it worked! The OIG determined extrapolation was not warranted and determined CMS’ overpayment was only $39,000 and not $10 million.

**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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