News to Note – November 2024

  • The Medicare Advisory Panel on Hospital Outpatient Payment reviews the Medicare Outpatient Payment System and advises the Centers for Medicare and Medicaid Services (CMS) on areas that need improvement. They hear presentations from interested parties and then vote on whether they think CMS should adopt that party’s suggested change. 
    • One presentation asked that the code for placement of a pelvic fixation device be removed from the inpatient only list.
    • Other presentations asked for changes in payment status indicators.  This included a prolonged discussion on the payment for Chimeric Antigen Receptor-T cell (CAR-T) therapies led by national experts, John Settlemyer and Jugna Shah.  The payment rules for this therapy are very bizarre.  With CAR-T, the patient has to undergo apheresis to collect their immune cells, then those cells are sent off to the company that produces the CAR-T cells which are then infused back into the patient as the therapy.  But, the facility which collects the cells does not get paid for the collection at all.  As the rules are written, that service cost is built into the payment for the facility providing the treatment, only.  If things don’t work out and the patient never receives the cells, then there is no payment at all.  This makes no sense, especially if the patient gets their cell collection at a facility other than where the treatment will be administered.  The presentation asked CMS to reassess the payment structure for cell collection and all of the nuances of CAR-T treatment.  These complex, costly treatments are only going to grow in type and volume.  Ensuring payment is fair so that patient access is not limited, is crucial.
    • Another presentation was given by our own ACPA Update Editor, Dr. Ronald Hirsch.  He discussed the bundling rules for outpatient hospitalizations with observation services.  As the rules currently work, if a patient has a status T procedure performed, such as a laceration repair, nasal packing, or endoscopy, the observation payment is not made.  Best-case scenario, the hospital might be paid $1,000 less than if the patient did not have the T procedure and at the other end, the hospital patient could approach receiving $2,000 less.  Doing more and getting paid less makes no sense.  When considering Diagnosis-Related Groups (DRGs) and Ambulatory Payment Classifications (APCs), doing more will not result in more payment in most instances but doing more certainly should not result in a lower payment.  Dr. Hirsch made the case to the committee and the only comment was that the Medicare payment structure is designed so the hospitals’ win some and lose some.  As such, getting paid less is a feature of the system and not a flaw.  But, the committee member asked CMS staff to use claims data to determine how often an observation patient has one of the status T procedures which resulted in a lower payment to the hospital so there is optimism that this might change.  
  • Screening criteria have a very important role in determining if hospital care is necessary and if so, the proper admission status.  But, these are tools to help with the decisions, they are not the absolute determinant.  As we all know, Inpatient hospitalization under the Two-Midnight Rule requires a clinician’s expectation of two midnights of necessary hospital care, not simply passing inpatient admission criteria.  In many cases, those can be one and the same, but it is possible to pass inpatient criteria and not warrant inpatient hospitalization.  Let’s take, for example, an elderly patient covered by Medicare presenting with worsening confusion compared to their baseline. 
    • CT scan of the brain unexpectedly reveals a subacute subdural hematoma. 
    • The patient is also found to have significant cellulitis of the leg with an elevated white blood cell count and lactate.  The Emergency Department (ED) physician starts two intravenous antibiotics and follows the sepsis protocol to the letter.  Per the screening criteria, Inpatient status is supported.
    • The patient’s family and power of attorney (POA) arrives to the ED and after a thoughtful discussion involving the medical team with consideration of the patient’s quality of life prior to this episode and the patient’s previous wishes, the POA decides that comfort care and a referral to hospice is the best plan of care.
    • While commercial inpatient criteria were met and aggressive care was begun, at the time of the status decision, the plan of care did not support two midnights of necessary hospital care.  As such, it would not be appropriate to hospitalize the patient in Inpatient status.  
  • Last month, Medicare finalized a new appeal process for “traditional” or Medicare Fee-for-Service beneficiaries.  It is a very limited opportunity for only two, very tiny categories of patients:
    • Those who have Medicare Part A and not Part B, who are hospitalized as Inpatient but then have their status changed to Outpatient and receive observation services. 
    • Those who are admitted as Inpatient, have their status changed to Outpatient, receive observation services, and then remain hospitalized for a total of three or more midnights.  Since these patients are hospitalized for three midnights but have no qualifying stay for Part A coverage of a skilled nursing facility stay, they will have the right to appeal their change from Part A to Part B billing.

We don’t anticipate this new appeal process starting until early 2025 so for now, sit back and wait for more instruction from CMS. 

  • In recent weeks, commercial and managed plans have been denying Inpatient admission and hospital care for patients who do not meet their commercial criteria because the rate of their intravenous (IV) fluids is not high enough.  Normally, this would be their right to use criteria if the hospital contract allows it, but we are in the middle of a national IV fluid shortage due to the catastrophic flooding from Hurricane Helene which shut down one of the largest suppliers of IV fluids in the U.S. based in North Carolina.  As a result, physicians have been very judicious in their use of IV fluids, hoping that a lower rate of IV fluids plus oral hydration will suffice.  These payors are denying appropriate payment to hospitals because the criteria rate of IV fluid was not ordered. This is inappropriate, given the national crisis affecting hospitals everywhere. The payors should not be using commercial criteria to deny payment when physicians and hospitals are doing everything they can to mitigate this national crisis. 
  • UnitedHealthCare (UHC) recently sent out a notice about their review process in regard to the Medicare Two-Midnight Rule.  
    • They stated correctly that time alone does not suffice for an Inpatient hospitalization to be covered; the two midnights must be reasonable and necessary without delays or convenience time.  They also acknowledge that they follow the Medicare Inpatient-Only list regardless of the length of stay but they do note that the surgery must be medically necessary.
    • But then they state, “CMS has explained that hospital stays under 24 hours rarely qualify for payment as an inpatient stay.” They go on to cite CMS review guidelines published in November 2015 where not once is 24 hours mentioned.  The CMS guidelines DO state one-midnight stays as the rare and unusual exceptions to the two-midnight expectation, which at that time was only newly initiated mechanical ventilation.  It was not until 2016, after publication of this CMS memo, that CMS adopted the case-by-case exception for patients where the physician determines inpatient admission is warranted despite an expected length of stay that is less than two midnights.  In the 2016 Outpatient Prospective Payment System (OPPS) Final Rule, CMS clarified that the addition of this exception, “does not define inpatient hospital admissions with expected lengths of stay less than 2 midnights as rare and unusual.  Rather, it modifies our current ‘rare and unusual’ exceptions policy to allow payment on a case-by-case basis.”
    • UHC went on in their notice to argue they can use InterQual criteria to make Inpatient admission decisions because CMS does not have specific criteria for making medical necessity admission decisions and therefore, CMS allows them to adopt internal criteria.  However, CMS does have specific criteria for Inpatient admission decisions at 42 CFR 412.3, which we all know as the Two-Midnight Rule with the two-midnight expectation and the two-midnight benchmark.  If the physician’s judgement is rational, represents the medical standard of care, is documented, and the care is medically necessary hospital care, then InterQual criteria cannot override that. 
    • This UHC notice comes on the heels of reports that they are no longer allowing hospitals to bill for observation hours when UHC denies an Inpatient hospitalization, institution of new rules requiring prior authorization for any outpatient therapy services, and a report from the Office of the Inspector General (OIG) that UHC was paid improperly over $3.7 billion in 2023 for diagnoses that were only reported from an in- home risk assessment.