Medicare patients increasingly fall into a "medical necessity" gray area between inpatient admission and observation/outpatient designation.
Often, however, and much to the chagrin of hospital providers, this becomes more of a payer/contractual status designation than a clinical choice. The clinical determination of "medical necessity" as decided by attending physicians frequently tends to fall to established criteria, which appears to ignore contractual or regulatory implications regarding the designation and frequently leads to requests for more specific documentation from hospital staff (such as coders or HIM).
This poses an increasingly high-risk area under current regulatory expectations because RACs have let it be known that this is a significant focus for them. And, to make matters worse, they aren't the only ones focused on it. Others are watching you, too.
Seven Ways to Watch Your Claims
There presently are at least seven (7) government entities focused on payment integrity in the Medicare Program, intent on returning to Medicare any payments they deem inappropriate. Since you're reading this, you are probably already familiar with the RACs, but here is a short description of the six other entities also focused on your claims:
• MACs, or Medicare Administrative Contractors, replace FIs and Carriers nationwide and are focused on both "pre" and "post" payment reviews, plus provider education.
• NCDs, or National Coverage Decisions, represent continued implementation of policies that link payments to quality, such as the so-called Hospital Acquired Conditions (HACs) and Never-Events, which seek to block Medicare payments for "preventable errors and conditions."
• ZPICs, or Zone Program Integrity Contractors, actually are intended to oversee the RACs, but to insure their accuracy, they will be looking at hospital claims data as well.
• CERT, or Comprehensive Error Rate Testing, is tasked with measuring the accuracy of Medicare Fee For Service (FFS) claims. They also have begun "observing" all inpatient claims.
• QIO, or Quality Improvement Organization, officially is tasked with oversight of the HACs, and will concentrate on overpayments concerning higher weighted DRGs. And last, but certainly not least...
• OIG/DOJ, or the Office of Inspector General / Department of Justice, is the enforcement end of this spectrum, tasked with enforcing accuracy in payment and preventing fraud and waste in Medicare dollars. These are the agencies with the FBI in their corner.
A Serious Risk
How serious is this risk area for hospitals? Let's just talk about the RAC: should a RAC deny claims where either the medical record documentation or the patient condition appears to fail to meet standardized admission criteria, it can seek to recoup 100 percent of the claim, which includes all of the ancillary services and subsequent billings. The denial (demand) is rendered to the facility provider in question, the only entity that can appeal the initial denial - not that an appeal likely will achieve a positive outcome. Such denials, concerning an absence of sufficient documentation for medical necessity, are never overturned on appeal. The documentation is either present, or it is not.
Additionally, CMS has made it clear up to this point in time that a provider only can re-bill for some Inpatient Part B services (and only those services that appear on the list in the Benefit policy Manual, Chapter 6, Section 10. Find the document here, try pg 10, ff.). Also, re-billing for any service only will be allowed by CMS if all claim processing and timeline rules are met, with no exceptions. The time limit for re-billing claims is 15-27 months from the date of service (find the appropriate Claims Processing Manual, Chapter 1, Section 70, here).
To complicate matters, the rules for inpatient versus outpatient designation generally are not well understood, and unfortunately, least of all by the persons writing the orders for admission: the physicians themselves.
How and Why the Change Occurred
Late in 2008, CMS changed designations for certain inpatient procedures to outpatient, a move that carries significant reimbursement implications for hospitals and physicians. Such procedures, for example, include certain cardiac procedures, such as Post Cardiac Implant (PCI), which previously have been considered to be appropriate for inpatient admission but now are considered to be safely managed in an outpatient setting.
The driving force behind the CMS decision to change these designations is certainly economics. However, proper patient risk screening is (and always was) necessary to identify patients whose conditions (i.e., their ‘medical necessity') are appropriately cared for in the outpatient versus inpatient setting. Provider liability will continue to require accuracy in screening and adequacy of documentation to support the status and the resultant billing of the services.
This blog originally appeared at RACMonitor.com.
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Taking the RAC Not-So-Open-Door Policy to Washington
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