Ad­mis­sions co­nun­drum

CMS looks to re­duce long ob­ser­va­tion stays, but hos­pi­tals see it as an­other cut

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jessica Zig­mond

Fed­eral of­fi­cials are look­ing to scale back the use of long ob­ser­va­tion stays be­lieved to be a re­sponse to Medi­care au­di­tors crack­ing down on in­ap­pro­pri­ate ad­mis­sions. Hos­pi­tals, though, say the pro­posed fix amounts to an­other pay cut, and ad­vo­cates for ben­e­fi­cia­ries say it won’t help the higher costs se­niors shoul­der when they’re not ad­mit­ted.

The CMS’ pro­posed rule for hos­pi­tal in­pa­tient ser­vices in 2014 in­cludes sig­nif­i­cant changes on how to de­ter­mine whether in­pa­tient ad­mis­sions are rea­son­able and nec­es­sary. Ac­cord­ing to the CMS, the num­ber of Medi­care ben­e­fi­cia­ries who re­ceive ob­ser­va­tion ser­vices for more than 48 hours in­creased to 8% in 2011 from 3% in 2006. Those stays are con­sid­ered out­pa­tient ser­vices that fall un­der Medi­care Part B, even though pa­tients might be un­aware of the dif­fer­ence while they’re in the hos­pi­tal.

The agency noted in the pro­posed rule that hos­pi­tals have re­sponded to the fi­nan­cial risk of ad­mit­ting Medi­care ben­e­fi­cia­ries for in­pa­tient stays that are later de­nied by re­cov­ery au­di­tor con­trac­tors, or RACs, by treat­ing them as out­pa­tients un­der ob­ser­va­tion— of­ten for a long pe­riod of time.

Of­fi­cials also said in the rule that they’re con­cerned by the trend of in­creas­ing ob­ser­va­tion stays be­cause it means higher co­pay­ments for ben­e­fi­cia­ries. And the is­sue can quickly be­come thornier and costlier for those pa­tients, who of­ten end up pay­ing for skilled-nurs­ing care af­ter they leave the hos­pi­tal be­cause Medi­care cov­ers those ser­vices only af­ter in­pa­tient hos­pi­tal stays of at least three days.

To ad­dress the prob­lem, the CMS pro­posed that Medi­care’s ex­ter­nal con­trac­tors would as­sume hos­pi­tal ad­mis­sions are rea­son­able and nec­es­sary for those ben­e­fi­cia­ries who stay in a hos­pi­tal through two mid­nights. That pol­icy change, the CMS es­ti­mates, would in­crease Medi­care in­pa­tient ex­pen­di­tures by $220 mil­lion.

“They’re propos­ing to off­set this by prospec­tively a 0.2% cut to in­pa­tient pay­ments for 2014 and then stay in the base, so it’s a per­ma­nent cut,” Joanna Kim, vice pres­i­dent of pay­ment pol­icy at the Amer­i­can Hos­pi­tal As­so­ci­a­tion, told Mod­ern Health­care. “We strongly op­pose that pro­posal.”

Anna Howard, who has served as Drinker, Bid­dle and Reath’s Medi­care re­im­burse­ment and health pol­icy di­rec­tor since 2012, said this move comes when hos­pi­tals are also fac­ing read­mis­sion penal­ties, dis­pro­por­tion­ate-share hos­pi­tal pay­ments to Medi­care and Med­i­caid, and pay­ment re­duc­tions through se­ques­tra­tion.

“It’s death by 1,000 cuts at the same time there is this move in health­care out of the in­pa­tient set­ting into the out­pa­tient set­ting,” said Howard, who spent 11 years at AARP.

The AHA ex­pects to sub­mit its com­ments this week to the CMS and will sug­gest the agency make changes to the RAC pro­gram rather than use a time-based as­sump­tion to de­ter­mine in­pa­tient ad­mis­sions, Kim said. Specif­i­cally, the as­so­ci­a­tion will rec­om­mend that the CMS in­struct RACs to limit their re­views to in­for­ma­tion in a pa­tient’s med­i­cal record that the physi­cian knew when the pa­tient was ad­mit­ted—and ex­clude any in­for­ma­tion af­ter that.

“When you look back, hind­sight is 20/20,” Kim said. “But if they only had what was in the med­i­cal records when the physi­cian ad­mit­ted the pa­tient, it would be much more fair.” The AHA will also urge the CMS to ask the RACs to fo­cus their au­dits on the sever­ity of signs and symp­toms in a pa­tient, rather than con­cen­trate solely on lengths of stay and out­comes.

And be­cause RACs have a strong fi­nan­cial in­cen­tive to find over­pay­ments, the AHA wants the CMS to im­pose a counter in­cen­tive for in­cor­rectly deny­ing pay­ment for a pa­tient stay.

“Now if a hos­pi­tal ap­peals and wins, the RACs have to re­turn the con­tin­gency fee for that de­nial,” Kim said. “We ask that rather than just that, an ad­di­tional penalty be made,” she said. AHA data in­di­cate that RACs have cen­tered much of their at­ten­tion on hos­pi­tal claims for short hos­pi­tal in­pa­tient stays.

Mean­while, the Cen­ter for Medi­care Ad­vo­cacy isn’t happy with the pro­posal ei­ther. The ben­e­fi­ciary-rights or­ga­ni­za­tion will also sub­mit com­ments this week, ac­cord­ing to Toby Edel­man, the or­ga­ni­za­tion’s se­nior pol­icy at­tor­ney. The CMS will ac­cept com­ments on those and other changes in the in­pa­tient prospec­tive pay­ment pro­posed reg­u­la­tion un­til June 25.

Edel­man said in­pa­tient de­ter­mi­na­tions should be based on what’s med­i­cally ap­pro­pri­ate for the pa­tient, not based on time, as the two-midnight pol­icy would es­tab­lish. And the pro­posed rule does not change cur­rent law that re­quires ben­e­fi­cia­ries to stay three days in a hos­pi­tal as an in­pa­tient be­fore Medi­care will cover ser­vices in a skilled-nurs­ing fa­cil­ity. The or­ga­ni­za­tion sup­ports pend­ing leg­is­la­tion that would amend the So­cial Se­cu­rity Act to ad­dress the mat­ter.

“We want the out­pa­tient time to be counted to­ward nurs­ing home care,” said Edel­man, who said she has lists of peo­ple who were in ob­ser­va­tional sta­tus for five or six days. And in many cases, she said, pa­tients don’t know that they’re in ob­ser­va­tional sta­tus un­til they leave the hos­pi­tal.

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