In a qui tam action that the American Hospital Association (AHA) characterized as an attempt to retrospectively review the medical judgments that doctors make every day, the association urged the court and the Department of Justice to approach short-stay hospital stays with “sensitivity” to the challenges that providers face in the “information void” left by CMS. While the AHA said in its amicus curiae brief that it took no position on the proper outcome of the case and sought only to provide background, it made clear its position that CMS’s standards for observation admissions are ambiguous.
In 2011 Karin Berntsen, an employee of Prime Healthcare Services, Inc., filed a qui tam action against the hospital system, its founder, and 14 of its hospitals alleging that emergency departments improperly admitted patients who could have been placed in observation, treated as outpatients, or discharged. She alleged that as a result of these unnecessary admissions, the hospitals submitted false claims to the federal health care programs. The federal government intervened in May 2016.
In its brief, the AHA explained that observation is a distinct type of hospital care, not to be confused with inpatient, emergency, clinic, or recovery services, that involves ongoing monitoring, testing, and assessment solely for the purpose of determining the need to admit a patient. There are, however, no clear standards for these admission decisions, said the AHA.
For example, argued the AHA, in the hospital inpatient prospective payment system (IPPS) proposed rule for calendar year 2014, CMS asked doctors to use a 24-hour period and the expectation of a patient’s need for an overnight stay as inpatient admission benchmarks (Proposed rule, 78 FR 27486, 27646, May 10, 2013), then in August 2013 promulgated the two-midnights rule (Final rule, 78 FR 50495, 50944, August 19, 2013). Indeed, the Medicare Payment Advisory Commission (MedPAC) noted that the difference between the inpatient criteria and the criteria for outpatient observation status are often unclear to providers.
In light of these ambiguous standards, which the AHA said CMS has struggled unsuccessfully to refine and clarify, the association asked courts to require the government in False Claims Act litigation to allege with specificity why inpatient claims are improper.