1. Changes to the Hospital IPPS: Two Midnights & More
Andrew B. Wachler, Esq.
Wachler & Associates, P.C.
210 E. Third St., Ste. 204
Royal Oak, MI 48067
State Bar of Michigan Health Care Law Section
November 20, 2013

2. History of Part A to Part B Rebilling
Part B billing in the initial demonstration program ( )
Meetings with CMS ( )
A/B Rebilling Demonstration Program (2012)
ALJ and Medicare Appeals Council decisions
Technical Direction Letter (TDL-12309) (July 13, 2012)
CMS Proposed Rule (CMS-1455-P) and Administrative Ruling (CMS-1455-R)
CMS Final Rules (CMS-1455-F; CMS-1599-F)
Rebilling under Part B
Definition and criteria of inpatient status

3. CMS Interim Ruling (CMS-1455-R)
Timeliness of filing requirements waived
Pending appeals of denied Part A payment:
Hospitals have 180 calendar days from the receipt of the final or binding unfavorable appeal decision to submit the Part B claim
If appeal is withdrawn, hospitals have 180 days from the date of receipt of the dismissal notice to submit Part B claim
Applies to determinations made by Medicare review contractors only (i.e., submitting Part B claims following self audits not permitted)

4. Hospitals affected by the Final Rule
All hospitals, Long-Term Care Hospitals (LTCHs), and Critical Access Hospitals (CAHs), with the exception of Inpatient Rehabilitation Facilities (IRFs), are included in the final policies regarding the inpatient admission guidance and medical review criteria for determining the general appropriateness of inpatient admission and Part A payment.
IRFs are excluded due to the inherent differences in the operation of and beneficiary admissions to IRFs.

5. Final Rule: Part B Payment Policies
Effective Oct. 1, 2013
Hospitals may now receive Part B payment if an inpatient admission is determined to be not reasonable and/or necessary after discharge
Provided that the beneficiary is enrolled in Medicare Part B
Hospitals file an “Inpatient Part B bill,” and an outpatient Part B bill for those services specifically requiring an outpatient status, such as observation services, outpatient DSMT, and hospital outpatient services, including certain emergency department visits
Importantly, hospitals may follow timeframes from CMS-1455-R regarding filing Part B claims after a Part A appeal denial or withdrawal of appeal after the effective date if:
The Part A inpatient claim denial was one to which the ruling originally applied, OR
The Part A inpatient claim has a date of admission before Oct. 1 and is denied after Sept. 30 (on the grounds that the medical care was reasonably and necessary, but the inpatient admission was not)

6. Final Rule: Part B Payment Policies
1-calendar year time limit from the date of service to the billing of Part B services
RACs may audit claims with DOS within the prior 3 years.
Claims typically reviewed by the RACS are most often > 1 year old
This may leave most, if not all, of a hospital’s denied Part A claims ineligible for re-billing if the 1-year time limit to file for Part B service expires before RAC reviews of Part A inpatient claims are completed

7. Final Rule: Self-Audit
Hospitals may self-audit to correct billing errors
Final Rule permits Part A to Part B rebilling when a hospital determines that an inpatient admission was not reasonable and necessary (provided that the Part B claim is submitted within the one-year timely filing restriction).
The self-audit process has to conform to the utilization review rules under the conditions of participation (CoPs)
Should not function as substitution of adequate staffing of utilization management personnel or continued education of physicians and hospital staff about the hospital’s existing policies/ admission protocols

8. Final Rule: “Inpatient” under Part A and Medical Review Criteria
Effective Oct. 1, 2013
CMS-1599-F “clarified” its definition and changed the criteria for an inpatient admission
CMS’s previous guidance for inpatient stays: 24-hour benchmark
CMS’s new policies:
2-midnights presumption
2-midnights benchmark
The final rule revises and clarifies the definition of an appropriate hospital inpatient admission, which must be met by providers to receive Part A payment

9. 2-Midnight Presumption
Hospitals will be entitled to a presumption that an inpatient hospital admission is generally appropriate for Part A payment if it crosses 2 midnights after the formal admission order.
Admissions will not be the focus of medical review efforts absent evidence of systematic gaming, abuse or delays in the provision of care in an attempt to qualify for the 2-midnight presumption.
Review contractors will still assess claims where the beneficiary plan of care after admission crosses 2 midnights:
To ensure the services provided were medically necessary;
To ensure that the stay at the hospital was medically necessary;
To validate provider coding and documentation as reflective of the medical evidence;
When the CERT Contractor is directed to do so under the Improper Payments Elimination and Recovery Improvement Act of 2012; or
If directed by CMS or another authoritative governmental entity (including but not limited to the HHS Office of Inspector General and Government Accountability Office).

10. 2-Midnight Benchmark
Physicians are to use a 2-midnight benchmark and order admission for patients expected to require hospital care crossing at least two midnights.
Under previous guidance, admitting physicians were instructed to use a 24-hour period as a benchmark and order admission for beneficiaries expected to need hospital care for 24 hours or more.
The 2-midnight benchmark specifies that the relevant 24 hours are those encompassed by 2 midnights.
Claims will not a receive presumption that services were provided appropriately during an inpatient stay if the total inpatient time did not exceed 2 midnights.
In their review of the medical record, Medicare review contractors will consider complex medical factors that support a reasonable expectation of the needed duration of the stay relative to the 2-midnight benchmark.
Upon medical review, time spent as an outpatient will be counted towards meeting the 2-midnight benchmark
Physician is expected to apply this in order to determine the appropriateness of the decision to admit.
The procedures on the OPPS Inpatient-Only list at § (n) are an exception to the 2- midnight benchmark.

11. 2-Midnight Benchmark
Our previous guidance also provided for a 24-hour benchmark, instructing physicians that, in general, beneficiaries who need to stay at the hospital less than 24 hours should be treated as outpatients, while those requiring care greater than 24 hours may usually be treated as inpatients. Our proposed 2-midnight benchmark, which we now finalize, simply modifies our previous guidance to specify that the relevant 24 hours are those encompassed by 2 midnights. While the complex medical decision is based upon an assessment of the need for continuing treatment at the hospital, the 2-midnight benchmark clarifies when the beneficiaries determined to need such continuing treatment are generally appropriate for inpatient admission or outpatient care in the hospital. 78 Fed. Reg ,
It has been longstanding Medicare policy to require physicians to admit a beneficiary as a hospital inpatient based on their expected length of stay. Id.
For those hospital stays in which the physician cannot reliably predict the beneficiary to require a hospital stay greater than 2 midnights, the physician should continue to treat the beneficiary as an outpatient and then admit as an inpatient if and when additional information suggests a longer stay or the passing of the second midnight is anticipated. Id.
…the rule, as finalized, provides for sufficient flexibility because of its basis in the physician’s expectation of a 2-midnight stay. Such would include situations in which the beneficiary improves more rapidly than the physician’s reasonable, documented expectation. Such unexpected improvement may be provided and billed as inpatient care, as the regulation is framed upon a reasonable and supportable expectation, not the actual length of care, in defining when hospital care is appropriate for inpatient payment. Id. at

12. Conditions of Payment: Certification
Content
Authentication of the practitioner order
Reason for inpatient services
Estimated time the beneficiary requires or required in the hospital
The plans for post-hospital care, if appropriate
Timing
Certification begins with the order for inpatient admission
Certification must be completed, signed, dated and documented in the medical records prior to discharge

13. Conditions of Payment: Certification
The certification or recertification may be signed only by one of the following:
M.D. or D.O
Dentist in the circumstances specified in 42 CFR (d)
Doctor of podiatric medicine if his or her certification is consistent with the function he or she is authorized to perform under State law
Certifications and recertification must be signed by the physician responsible for the case, or by another physician who has knowledge of the case and who is authorized to do so by the responsible physician or by the hospital’s medical staff.
Admitting physician of record;
Physician on call for the admitting physician of record;
Surgeon responsible for a major surgical procedure on the patient (or surgeon on call for him or her);
Dentist functioning as the admitting physician of record or as the surgeon responsible for a major dental procedure; or
When admitted by a non-physician practitioner who is licensed by the State and has been granted privileges by the facility, a physician member of the hospital staff who has reviewed the case and who also enters into the record a complete certification statement

14. Conditions of Payment: Certification
No specific procedures or forms are required for certification statements.
In the absence of specific certification forms or statements, CMS will look for certain medical record elements to determine whether the certification requirements have been met.
Medical record elements to establish certification – default methods
Authentication requirement for practitioner order
The signature or co-signature of the inpatient admission by the certifying physician
Requirement to certify the reasons for medical necessity of hospital inpatient services
Diagnosis and plan documented in the inpatient admission assessment; or
Inpatient admitting diagnosis and order
Estimated time requirement
Inpatient admission order written in accordance with the 2-midnight benchmark, supplemented by physician notes and discharge planning instructions
Post hospital care plan
Physician notes; or
Discharge planning instructions
CAH 96 hour expectation requirement
Actual discharge within 96 hours

15. Conditions of Payment: Order
Inpatient admission order must be present in the medical record prior to billing
SPECIFY, SPECIFY, SPECIFY
The order must specify the admitting practitioner’s recommendation to admit as an inpatient
Include the word “inpatient”
Admit “to inpatient”
Admit “as an inpatient”
Admit “for inpatient services”
If “inpatient” is not included, orders may still be considered to specify inpatient admission if consistent with the remaining medical record
If order language appears ambiguous, obtain and document clarification from the physician prior to billing (ideally, prior to discharge)

16. Conditions of Payment: Order
Timing
Must be furnished at or before the time of inpatient admission
Can be written in advance, but admission does not occur until formal admission by the hospital
Medicare does not permit retroactive orders or the inference of orders
Qualification of the ordering/admitting practitioner
Licensed by the State to admit inpatients to hospitals
Granted privileges by the hospital to admit
Knowledgeable about the patient’s hospital course, medical plan of care, and current conditions at the time of admission
Physician assistants, residents or registered nurses may document the admitting orders
Must be documented in accordance with State law including scope-of-practice laws, hospital policies, and medical staff bylaws, rules and regulations
Must identify the qualified ordering practitioner
Must be authenticated by the ordering practitioner prior to discharge
A transcribed and authenticated order also satisfies the order part of the physician certification as long as the ordering practitioner also meets the requirements for a certifying physician.
Example: “Admit to inpatient per Dr. Smith” would be considered an acceptable method of identifying the ordering practitioner and would meet the order requirement if they are appropriately authenticated by Dr. Smith.
Method also acceptable for residents and students who are not licensed or do not have admitting privileges
Method may be used by all residents and fellow working within their GME program

17. Conditions of Payment: Order
Verbal orders
A verbal or telephone inpatient admission order must be authenticated by the ordering practitioner in the medical record prior to discharge (unless hospital or the State requires an earlier timeframe)
An authenticated verbal order also satisfies the order part of the physician certification provided that the ordering practitioner also meets the requirements for a certifying physician

18. CMS Issues Temporary Instructions to Auditors – “Probe and Educate” reviews
In a document issued November 1, 2013, CMS revealed how auditors will address inpatient stays with admission dates of October 1, 2013 – March 1, 2014
RACs and MACs will not review any inpatient stay of 2 midnights or more
RACs will not review any inpatient stay of less than 2 midnights
However, MACs are directed to do “patient status” probe reviews of stays of less than 2 midnights, with a “limit of 10 to 25” reviews per hospital for dates of service October 1 – December 31, 2013
Reviews conducted on a prepayment basis
MACs will assess the hospital’s compliance with:
The admission order requirements
The certification requirements
The 2-midnight benchmark
No reviews of CAH inpatient admissions during this period

19. “Probe and Educate” Reviews
Based on the results the reviews, CMS will instruct MACs to:
Deny each non-compliant claim
Send a letter to the hospital outlining reasons for the denials
Offer individualized phone calls to those providers with “moderate/significant” or “major” concerns
For providers identified as having “moderate/significant” or “major” concerns:
MACs will conduct additional probe reviews for dates of service January 1 – March 31, 2014
10-25 claims
If continuing concerns are identified, MACs may review an additional claims

20. Continuing Guidance
CMS will continue to host open-door forums and issue guidance
November 12, 2013 Special Open Door Forum
September 26, 2013 Special Open Door Forum – transcript available at: Education/Outreach/OpenDoorForums/Downloads/TranscriptSODF092613FinalRuleCMS- 1599Final.pdf
September 5, 2013 “Hospital Inpatient Admission Order and Certification” available at: Service-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order pdf
August 15, 2013 Special Open Door Forum – transcript available at: Education/Outreach/OpenDoorForums/Downloads/081513InpHosAdm2MidnightProvSODFAnnou ncementAudioTranscript.pdf

21. Appeals: Strategic Approach to Part A
Medicare Benefit Policy Manual (Ch. 1 §10)
Physicians should use a 24-hour period as a benchmark, i.e., they should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis. However, the decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient’s medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital’s by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors to be considered when making the decision to admit include such things as:
The severity of the signs and symptoms exhibited by the patient;
The medical predictability of something adverse happening to the patient;
The need for diagnostic studies that appropriately are outpatient services (i.e., their performance does not ordinarily require the patient to remain at the hospital for 24 hours of more) to assist in assessing whether the patient should be admitted; and
The availability of diagnostic procedures at the time when and at the location where the patient presents.

22. Appeals: Strategic Approach to Part A
Medicare Program Integrity Manual (Ch. 6, §5.2)
The beneficiary must demonstrate signs and/or symptoms severe enough to warrant the need for medical care and must receive services of such intensity that they can be furnished safely and effectively only on an inpatient basis.
Inpatient care rather than outpatient care is required only if the beneficiary's medical condition, safety, or health would be significantly and directly threatened if care was provided in a less intensive setting.

23. Appeals: Strategic Approach to Part A
Medicare Benefit Policy Manual (Ch. 1 §10) vs. Medicare Program Integrity Manual (Ch. 6, §5.2) governing guidelines for Part A inpatient claims (e.g. 24-hour vs. safely placed standard)
In the absence of statutes, regulations, or binding coverage policies that set forth specific coverage criteria for inpatient hospital admissions, the Council has long held that the MBPM, Chapter 1, Section 10 inpatient hospitalization provisions are to be applied to decide coverage of inpatient hospital admissions. In the case of King’s Daughters Medical Center (June 26, 2012) and In the case of Spokane Washington Hosp. Co. (June 19, 2012).

24. Appealing 1-Day Stays
RACs may take the position that a stay that is expected to last 24 hours (but not past 2 midnights) is per se not an appropriate inpatient
Final Rule does not disavow existing Manuals
Final Rule says that it “simply modifies our previous guidance to specify that the relevant 24 hours are those encompassed by 2 midnights”
Final Rule text does not say that 1-day stay is per se not appropriately inpatient
Any stay that is reasonably expected to cross 2 midnights but does not should always be allowed

25. Strategies for Dealing with Inpatient Part B Rule
Consider appealing all Part A denials (where it is too late to rebill under Part B) that involve services that at least arguably were appropriately furnished in the inpatient setting
Consider doing self-audits where there is still time to rebill under Part B
You can try to beat the RAC to the punch
Do not perform any self-audits where there is not time to rebill
If you determine admission was not appropriate you will have to repay but will not be able to rebill

26. Proposal to Require Conformance with State Law as Condition of Payment
CY 2014 PFS and OPPS proposed rules would require, as a condition of payment, that physician or NPP who performed service was in full compliance with State licensing and credentialing standards
Already required as a CoP
CMS says that “[o]ver the past years,” “several” situations have come to its attention where Medicare was billed for services that were performed by an individual who did not meet the State standards for those services in the State in which services were performed
Genesis for statement may be OIG Report (“Prevalence and Qualifications of Nonphysicians who Performed Medicare Physician Services,” OEI (August, 2009), which dealt only with physician office setting

27. Proposal to Require Conformance with State Law as Condition of Payment
No rationale given for why a change is needed
No indication that other alternatives were considered (e.g., denial for only serious noncompliance with State requirements)
Is this just another revenue measure?
Hospitals at risk of having to defend or settle FCA suits brought by whistleblowers on the theory that the hospital improperly billed for services because the physician or practitioner had some minor defect with his or her license or certification that the hospital knew or should have known

28. Withdrawal from Appeal Process to Rebill Under Part B
If a hospital wishes to submit claims for services under Part B, the CMS Ruling and Final Rule require that:
The Part A appeal be withdrawn (if it is pending before an adjudicator); or
An appeal to a higher level is not pursued and becomes binding or final (including if a decision or dismissal has been made and not yet appealed to the next level). 
If an appeal is pending at OMHA, a request to withdraw the Part A appeal must be submitted to the assigned Administrative Law Judge (or to the OMHA Central Operations Division if an Administrative Law Judge has not yet been assigned). 
OMHA Instructions and Withdrawal form can be found at:

29. Questions?
Andrew B. Wachler, Esq. Wachler & Associates, P.C. 210 E. Third St., Ste. 204 Royal Oak, MI