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News to Note – May 2023

  • Unless you’ve been living under a rock for the last few weeks, you already know the Centers for Medicare and Medicaid Services’ (CMS) proposal last December to codify the requirement that Medicare Advantage (MA) plans all follow the Two-Midnight Rule was put into a Final Rule April 5th. What does the rule say?

    • First and foremost, the Two-Midnight Rule does apply to MA plans. No more claims from them that Observation services can go on for days and days. However, the two-midnight presumption does not apply to MA plans. In other words, while with fee-for-service Medicare a patient who stays as Inpatient for two midnights is presumed to be appropriate and those admissions will not be audited by the QIO, the MA plans are free to audit them to ensure the care for both midnights was medically necessary.
    • Second, CMS specified that the case-by-case exception to the Two-Midnight Rule applies to MA plans.
    • Third, the Medicare inpatient only list applies to all MA plans. No more making their own lists or allowing Medicare inpatient only surgeries to be done in surgery centers. However, they are still allowed to require prior authorization to ensure they are medically necessary.
    • CMS is also allowing the MA plans to continue to use InterQual and MCG criteria as guides but is specifying the evidence used to develop the guidelines must be publicly available. It remains to be seen how that will play out. Remember, the criteria can help you understand how care can effectively be delivered which perhaps differs from how your doctors are practicing.
    • One big uncertainty of the new rule is when it takes effect. Some are of the opinion that since CMS is codifying existing rules, it is effective immediately. Others, including some lawyers, disagree. Hopefully, we will get some clarification from CMS, soon.
  • Several payers have adopted a so-called policy that they will review hospital billing for facility fees involving Emergency Department (ED) visits and use their proprietary tools to automatically downgrade those visit codes based on the diagnoses and services listed on the claim. However, CMS guidance dictates hospitals should develop their own guidelines on choosing a facility code and stick to it. It does not say that payers can arbitrarily adjust that code. Unfortunately, this has not stopped payers from doing just that. Last month, Blue Cross of North Dakota announced they were going to do this with physician billing for office and ED visits billed with level 4 or 5. They will look at the diagnoses on the claims and automatically downgrade the code to a lower level whenever they want even though visit codes are not selected based on diagnoses, they are based on the physician’s medical decision making. And, the only way to assess the medical decision making is to read through the medical record. They have announced they will not request the record for review nor will they inform the provider their code was downgraded. The doctor will simply get paid the lower amount. If these physician offices do not have software that compares the expected payment per contract to the amount actually paid, they will be none the wiser.
  • Sometimes, you think you have heard everything then something new pops up. An MA patient was hospitalized as inpatient and the hospital compliantly provided the initial and follow up copies of the Important Message from Medicare (IMM). The patient was stable for discharge and they were informed this was the case. The patient called their QIO to appeal the discharge but the QIO informed the hospital that they, the QIO, contacted the MA plan. The MA plan informed the hospital that the patient’s stay was approved for two more days and the QIO stated they were not going to review the case. Instead, they insisted the patient must be permitted to remain hospitalized and the hospital could attempt to discharge the patient again in two days. It is important to note that this was not appropriate procedure. Payer determination of approved days does not have any standing in a discharge appeal. Since most contracts pay inpatient admissions as DRGs, the MA plan could authorize every single day regardless of medical necessity up until the claim hits the contracted outlier status since they pay not one additional cent until then. But, that’s not how the system works. The QIO’s determination should be based solely on medical necessity for hospital care. The hospital involved is in the process of pursuing this issue with CMS and if the same happens at your facility, you should, too.

**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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