Feds to probe hospi­tal ad­mit­ting prac­tices, in­clud­ing how they af­fect Medi­care ben­e­fi­cia­ries’ out-of-pocket costs

Modern Healthcare - - FRONT PAGE - Joe Carl­son

The threat of cease­less au­dit­ing and penal­ties is caus­ing many hos­pi­tals to re­clas­sify Medi­care pa­tients as less-costly “ob­ser­va­tion” cases, and the peo­ple re­ceiv­ing the care say the con­fus­ing change leaves them on the hook for med­i­cal bills that the gov­ern­ment ought to cover.

At the cen­ter of the is­sue are the fed­eral au­thor­i­ties and the pri­vate au­dit­ing firms that work for them as re­cov­ery au­dit con­trac­tors. They’ve made short in­pa­tient hospi­tal stays one of their big­gest tar­gets in the on­go­ing ef­fort to put hospi­tal ex­penses un­der a mi­cro­scope, retroac­tively re­duce re­im­burse­ments and seek dam­ages for claims viewed as fraud­u­lent.

Hospi­tal of­fi­cials say the in­ves­tiga­tive fo­cus on short stays in­creases the pres­sure on them to sec­ond-guess ad­mit­ting physi­cians’ de­ci­sions us­ing the hind­sight of med­i­cal records in cases likely to at­tract the scru­tiny of Re­cov­ery Au­dit Con­trac­tors, some­times us­ing spe­cial­ized soft­ware de­signed to an­a­lyze pa­tient doc­u­ments.

Four­teen se­niors are su­ing the fed­eral gov­ern­ment in a class-ac­tion case in U.S. Dis­trict Court in Bridge­port, Conn., say­ing the pol­icy that al­lows health­care providers to re­clas­sify hospi­tal care from in­pa­tient to ob­ser­va­tion af­ter be­ing ad­mit­ted is il­le­gal and ought to be over­turned.

One of those se­niors is Martha Leyanna, 85, who al­leges she ended up pay­ing $10,600 out-of- pocket for 40 days of re­ha­bil­i­ta­tion care af­ter leav­ing Christiana Hospi­tal in Wilmington, Del., last Novem­ber. The bills came be­cause a hospi­tal com­mit­tee over­turned a doc­tor’s decision to ad­mit her, declar­ing her un­der ob­ser­va­tion and leav­ing her in­el­i­gi­ble to re­ceive Medi­care cov­er­age for her skilled-nurs­ing re­hab care.

“To me, it was no dif­fer­ent than be­ing ad­mit­ted. It was just a word they put on a piece of pa­per,” said Leyanna’s daugh­ter, Mary Smith.

Hos­pi­tals say the gov­ern­ment is forc­ing their de­ci­sions in cases like Leyanna’s. “It puts hos­pi­tals in a very un­com­fort­able po­si­tion,” said Melinda Hat­ton, se­nior vice pres­i­dent and gen­eral coun­sel at the Amer­i­can Hospi­tal As­so­ci­a­tion. “No hospi­tal wants a pa­tient to be de­nied pay­ment for ser­vices they re­ally should have when they need them. But hos­pi­tals, like pa­tients, are the ones who face a penalty when they guess wrong in the eyes of the au­thor­i­ties about whether some­thing should be an ad­mis­sion or an ob­ser­va­tion.”

HHS’ in­spec­tor gen­eral’s of­fice an­nounced in its 2012 work plan that it ex­pects to probe hos­pi­tals’ use of ob­ser­va­tion ser­vices this year, in­clud­ing how the prac­tice af­fects Medi­care ben­e­fi­cia­ries’ out-of-pocket ex­penses. That re­port is tar­geted for re­lease by the end of the year.

Mean­while, bi­par­ti­san bills are pend­ing in the U.S. House and Se­nate that would ad­dress the is­sue of whether Medi­care should cover ben­e­fi­cia­ries’ skilled-nurs­ing ex­penses af­ter an ob­ser­va­tion stay in a hospi­tal, like Leyanna’s.

Cur­rent rules say Medi­care’s hos­pi­tal­iza­tion pro­gram won’t pay for skilled-nurs­ing re­ha­bil­i­ta­tion care with­out three con­sec­u­tive days as an in­pa­tient, but the House and Se­nate bills would count any time spent in a hospi­tal—in­clud­ing time un­der ob­ser­va­tion— to­ward the three-day rule.

“We have very broad-based sup­port,” said U.S. Rep. Joe Courtney (D-conn.), one of the House spon­sors. “If it doesn’t cost any­thing, this is some­thing that should be easy, even in this Congress.”

How­ever, it’s not clear the change wouldn’t cost any­thing. Courtney said the CMS’ ac­tu­ar­ies have pre­lim­i­nar­ily an­a­lyzed it and found the change would not in­crease bud­get costs for Medi­care nurs­ing re­hab care, be­cause those costs are al­ready fac­tored into the sys­tem. The in­creased au­dit­ing that hos­pi­tals say is driv­ing the use of ob­ser­va­tion was never in­tended as a

way to de­crease skilled nurs­ing costs, he said.

CMS of­fi­cials de­clined to com­ment for this story on whether they have an­a­lyzed the costs or if they could make such changes ad­min­is­tra­tively with­out re­quir­ing acts of Congress.

In a July 7, 2010 let­ter, act­ing CMS Ad­min­is­tra­tor Marilyn Taven­ner ad­dressed claims by the hospi­tal in­dus­try at the time that RAC au­dit­ing was lead­ing to in­creased use of ob­ser­va­tion sta­tus. “There has been no change in CMS pol­icy for how hos­pi­tals should ap­proach such cases,” the 2010 let­ter says.

Hos­pi­tals, how­ever, say the fed­eral gov­ern­ment “does not speak with one voice on this is­sue,” the AHA wrote in an April 27 am­i­cus brief filed in the Con­necti­cut class-ac­tion law­suit against the CMS.

Fed­eral prose­cu­tors have been fil­ing False Claims Act cases against hos­pi­tals un­der the the­ory that hos­pi­tals are in­creas­ing Medi­care re­im­burse­ments by ad­mit­ting pa­tients who could have re­ceived more ap­pro­pri­ate care in less-ex­pen­sive out­pa­tient set­tings. A prom­i­nent and on­go­ing ex­am­ple is the na­tional in­ves­ti­ga­tion into the spinal re­con­struc­tion pro­ce­dure kypho­plasty, which has re­sulted in $39 mil­lion in set­tle­ments from 40 hos­pi­tals.

For­mer em­ploy­ees of spinal surgery kit-maker Kyphon said in a whis­tle-blower law­suit that the com­pany specif­i­cally coun­seled hos­pi­tals on how to in­crease re­im­burse­ment by per­form­ing the pro­ce­dures on an in­pa­tient ba­sis as a way to cover the cost of the tools and ma­te­ri­als.

Kyphon, which was sub­se­quently pur­chased by Medtronic, set­tled the case for $75 mil­lion in 2008 but de­nied the al­le­ga­tions. The U.S. at­tor­ney’s of­fice in Buf­falo, N.Y., has also been fil­ing de­mands for med­i­cal records with hos­pi­tals, along with law­suits in cases across the coun­try. Hos­pi­tals—which face the prospect of triple dam­ages and ex­pul­sion from Medi­care if found li­able for False Claims Act vi­o­la­tions—have set­tled the cases with­out ad­mit­ting wrong­do­ing. Some have specif­i­cally de­nied any il­le­gal­i­ties in in­ter­views.

In its am­i­cus brief in the class-ac­tion law­suit, the AHA notes that prose­cu­tors like those pur­su­ing the kypho­plasty cases ex­plic­itly en­cour­age hos­pi­tals to sec­ond-guess the med­i­cal judg­ment of ad­mit­ting physi­cians based on the in­for­ma­tion ac­cu­mu­lated in pa­tient charts since the ad­mis­sion.

“The gov­ern­ment ac­knowl­edges the value of the in­di­vid­ual physi­cian provider decision in ini­tially as­sess­ing the level of care,” wrote Wil­liam Hochul Jr., the U.S. at­tor­ney in Buf­falo, in a re­quest for in­for­ma­tion sent to a hospi­tal in a kypho­plasty case, ac­cord­ing to an ex­hibit in the AHA’S fil­ing.

“The physi­cian provider decision is the start of the anal­y­sis and not the end of the anal­y­sis. The hospi­tal pos­sesses an in­de­pen­dent duty to as­sess the med­i­cal ne­ces­sity of the site of ser­vice de­ter­mi­na­tion through, amongst other reg­u­la­tory au­thor­ity, Con­di­tion Code 44,” Hochul’s de­mand let­ter says.

The ab­struse-sound­ing Con­di­tion Code 44, it turns out, is the source of much of the an­i­mos­ity on the part of pa­tients.

On Sept. 10, 2004, HHS re­leased an ad­di­tion to its CMS On­line Man­ual Sys­tem de­scrib­ing how hos­pi­tals could use Con­di­tion Code 44 to change in­pa­tient ad­mis­sions to out­pa­tient ob­ser­va­tions in cases where a hospi­tal’s uti­liza­tion re­view com­mit­tee de­ter­mines that pa­tient files don’t sup­port a physi­cian’s decision to ad­mit a pa­tient for care. How­ever, Medi­care Part A has al­ways re­quired a full three-night stay as a hospi­tal in­pa­tient be­fore the pro­gram will cover the kind of re­ha­bil­i­ta­tion ser­vices that se­niors com­monly re­ceive from a skilled­nurs­ing fa­cil­ity af­ter acute care.

A pa­tient’s co­nun­drum

In Martha Leyanna’s case, she was in so much pain fol­low­ing her Nov. 16-22 stay at Christiana Hospi­tal that she felt she had to get re­hab care, even if Medi­care wouldn’t pay for it, her daugh­ter Mary Smith said.

On the morn­ing of Nov. 15, Leyanna rose from bed, flung off her sheets and blan­kets and then lost her bal­ance, hit­ting her head on a wall and her shoul­der on the night­stand. She was treated in the Christiana emer­gency room and re­leased the next day, but at home, she kept grab­bing at her chest and com­plain­ing about the pain, Smith said.

Leyanna re­turned to the ER later on the 16th and was for­mally ad­mit­ted to the hospi­tal to be­gin a se­ries of tests to see if she had any bro­ken bones re­lated to her os­teo­poro­sis or any is­sues re­lated to her pace­maker, ac­cord­ing to Smith and state­ments in the law­suit.

Tests failed to find the sus­pected crack in her ster­num or any car­diac prob­lems, and on Nov. 20, the hospi­tal no­ti­fied her that her sta­tus had been changed from in­pa­tient to out­pa­tient ob­ser­va­tion. All the while, she re­ceived aroundthe-clock care from nurses, slept in a nor­mal hospi­tal bed and ate hospi­tal food, Smith said.

Christiana of­fi­cials de­clined to com­ment on Leyanna’s case or the is­sue of ob­ser­va­tion sta­tus.

No one knows how many class-ac­tion plain­tiffs could be cov­ered by the law­suit in which Leyanna is a mem­ber if a class is cer­ti­fied. Toby Edel­man, se­nior pol­icy at­tor­ney for the Cen­ter for Medi­care Ad­vo­cacy, one of two law firms rep­re­sent­ing the plain­tiffs, said the num­ber is likely well over 10,000. Edel­man said the plain­tiffs are seek­ing to over­turn the CMS rule al­low­ing ob­ser­va­tion sta­tus, along with a re­cov­ery of pa­tients’ out-of-pocket ex­penses since Jan. 1, 2009, and at­tor­ney’s ex­penses.

The AHA isn’t sup­port­ing ei­ther side in the lit­i­ga­tion, but rather is hop­ing for an across­the-board set of rules gov­ern­ing ob­ser­va­tion sta­tus that prose­cu­tors and au­di­tors would also agree to fol­low dur­ing en­force­ment. Hat­ton said: “Our ideal sce­nario would be for CMS to come up with a process to help pa­tients and hos­pi­tals make this judg­ment more clearly, and to have law en­force­ment agen­cies com­mit to fol­low­ing that process, so that hos­pi­tals and pa­tients aren’t sec­ondguessed when they need med­i­cal care.”

Martha Leyanna, right, is one of 14 peo­ple su­ing HHS to over­turn the agency’s rules al­low­ing hos­pi­tals to move in­pa­tients into “ob­ser­va­tion” sta­tus. Her daugh­ter, Mary Smith, left, says Leyanna had to pay $10,600 af­ter a lo­cal hospi­tal de­clared her un­der ob­ser­va­tion.

Sources: MEDPAC, AHA RACTRAC Sur­vey, Cen­ter for Medi­care Ad­vo­cacy

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