Revenue Cycle

How inpatient-only procedures apply to CAHs

Medicare Update for CAHs, June 29, 2011

Inpatient-only procedures are those that CMS determined may only be safely performed on an inpatient basis for three reasons: because of the invasive nature of the procedure, the need for at least 24 hours of care due to the nature of the procedure, or the underlying physical condition of the patient requiring surgery.

These procedures have an outpatient prospective payment system (OPPS) status indicator of C and a complete list of the procedures is published every year in the OPPS final rule in Addendum E. Unless an exception is made, no payment will be made by the Medicare administrative contractor (MAC) for the inpatient-only procedure or any other services furnished on the same date as the procedure if an inpatient-only procedure is billed as an outpatient procedure.

So how do inpatient-only procedures apply to critical access hospitals (CAHs)? All outpatient claims are processed through the integrated outpatient code editor (I/OCE); however, the edits for inpatient-only procedures are not turned on for CAHs. Although these edits do not specifically apply, CAHs should still seek clarification from their MAC regarding the application of the definition of an inpatient-only procedure, according to Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.

“In the past, CMS has iterated that just because an OCE edit does not exist or is not turned on for any provider—regardless of how the facility is paid—that it does not mean that the regulations and guidance can be disregarded,” she says.

HCPro, Inc. has inquired with the Medicare Contractor Medical Director for MAC jurisdiction 3 regarding CMS policy and the non-application of the edits in CAHs. According to the Medical Director, if a Medicare contractor or review agency has reason to believe that a procedure may be safely performed only as an inpatient, and the CAH delivers that service as an outpatient, the claim could be denied for medical necessity based on the wrong setting.

The medical director went on to say that CAHs should be aware that the congressionally-mandated inpatient-only listed is developed by physicians, open to comment from all specialty societies and interested parties, and reviewed on a yearly basis on appropriateness criteria. In addition, the director stated that it may be difficult for CAHs to defend the decision to ignore the inpatient-only list based solely on how a facility is reimbursed (i.e. OPPS vs. cost-based).

What it boils down to is that just because the I/OCE edits aren’t in place for CAHs, it’s erroneous to assume that it doesn’t apply, according to Mackaman.

“The inpatient-only procedures are selected based on safety and quality of care issues for the majority of Medicare beneficiaries,” says Mackaman. “Just because a hospital is paid on cost rather than a prospective payment system, does not mean that the CAH can ignore the rule.



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