Health Information Management

Observation services under review in IPPS

APCs Insider, May 3, 2013

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In last year’s OPPS proposed and final rules, CMS solicited comments about redefining inpatient admission criteria. The idea was to provide hospitals additional guidelines for determining whether a patient should be admitted as an inpatient or placed in observation. In the Fiscal Year 2014 IPPS proposed rule, CMS rolled out a new time-based standard for inpatient admission.

CMS is reexamining inpatient criteria because it has seen a significant increase in the number of patients spending more than 24 hours in observation. Providers are worried that a Recovery Auditor will deny a short inpatient stay for lack of medical necessity and recoup payment years later. So instead some facilities place patients in observation for longer time periods.
Under CMS’ proposal , Medicare’s external review contractors would assume that an inpatient stay is reasonable and necessary for any patient who is admitted over two midnights and receives medically necessary services as an inpatient.
CMS also admits that in some cases, a patient may not need to stay past two midnights. In order for these stays to be paid, the ordering physician will need to provide explicit documentation of medically necessity for an inpatient stay.
CMS believes this will increase the number of inpatient admissions. Others think it will cause facilities to be even more careful about admissions and place more patients in observation.
Consider this: A patient comes into the ED at 1 a.m. Monday. The treating physician determines the patient should be admitted and writes an inpatient order. The patient is treated Monday and Tuesday. The physician determines the patient is well enough to go home and discharges the patient at 11 p.m. Tuesday.
The patient received inpatient services for 46 hours, but because the stay did not cross two midnights, it does not qualify automatically as an inpatient stay. The ordering physician would need to justify that stay explicated in the record.
That’s one extreme. The other involves a patient admitted at 11:55 p.m. Monday, is treated and released at 12:05 a.m. Wednesday. The patient was only in an inpatient for 24 hours and 10 minutes, but the admission crossed two midnights, so it meets the new criteria.
I don’t know how likely either of those scenarios is and I doubt that auditors will look only at time when determining whether an admission is justified.
Take a look at the proposal, think about the pros and cons, then submit comments to CMS. You have until June 25 to submit comments.

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