‘Fatigued’ providers must concentrate on complying with two-midnight rule

Some providers may be experience two-midnight rule “compliance fatigue” due to the changing rules and current lack of traditional enforcement activity, said presenters at the Health Care Compliance Association webinar, “Two Midnight Rule: Where Are We Now?” The two-midnight rule has been a “moving target” and its evolution has been challenging for providers, with CMS having issued more than 40 items of sub-regulatory guidance over the past 3.5 years. Presenters Lauren Gennett and Isabella Wood of King & Spaulding LLP said, however, that it is important for compliance personnel to emphasize the importance of continued compliance.

Two-midnight rule. The two-midnight rule is codified at 42 C.F.R. Sec. 412.3(d), which provides that an inpatient admission is considered reasonable and necessary under Part A if the admitting physician ordered the inpatient admission based on the expectation that the patient would require at least two midnights of medically necessary hospital services.

If an unforeseen circumstance, such as a beneficiary’s death or transfer, results in a shorter stay than the physician’s expectation of at least two midnights, the patient may be considered to be appropriately treated on an inpatient basis. An inpatient admission for a surgical procedure specified by Medicare as “inpatient only” under 42 C.F.R. Sec. 419.22(n) is also generally appropriate for payment under Medicare Part A, regardless of the expected duration of care.

Rare and unusual circumstances exception. There may be “rare and unusual circumstances” in which an inpatient admission for a service not on the inpatient only list may be reasonable and necessary in the absence of an expectation of a two midnight stay. CMS expanded this exception effective January 1, 2016 (see OPPS payment update a net cut for many, Health Law Daily, November 13, 2015). The exception is determined on a case-by-case basis by the physician responsible for the care of the beneficiary, subject to CMS medical review. Relevant factors include: (1) the severity of the signs and symptoms exhibited by the patient; (2) the medical predictability of something adverse happening to the patient; and (3) the need for diagnostic studies that appropriately are outpatient services.

Wood said that CMS has not provided examples of services that might qualify for the “rare and unusual circumstances” exception. She noted that the exception is challenging for providers, who do not know how rare and unusual the circumstances must be to qualify for the exception. There is, she said, “a lot of wiggle room and uncertainty” for providers.

Inpatient admission orders. Before the two-midnight rule, there was not an express requirement for an inpatient admission order, but now 42 C.F.R. Sec. 412.3(a) requires that the inpatient admission order be in the medical record for the hospital to be paid for inpatient services under Part A. The physician is required to authenticate the order before discharge, which can be difficult for short stays. Gennett said that this requirement is “low hanging fruit for contractor denials.” There is, however, an exception for missing or defective orders that CMS originally included in January 2014 guidance and recently updated in the Medicare Benefit Policy Manual, Pub. 100-02, Ch. 1 (see Change Request 9979, March 10, 2017).

Enforcement. From October 2013 through September 2015 Medicare administrative contractors (MACs) conducted limited “probe & educate” reviews, and quality improvement organizations (QIOs) began conducting reviews in October 2015. QIO review has had its challenges, however, and in 2016 CMS temporarily “paused” QIO patient status reviews (see QIOs back to reviewing Two-Midnight rule claims, Health Law Daily, September 13, 2016). In April 2017 the QIO record selection process changed; QIOs now sample the top 175 providers with a high or increasing number of short stay claims per area with a request for 25 cases, and all other providers previously identified as having “major concerns” in the prior round of review will have a request for 10 cases.

Recovery audit contractors (RACs) may conduct provider-specific patient status reviews for providers that have been referred by the QIO as exhibiting persistent noncompliancewith Medicare payment policies, including consistently failing to adhere to the two midnight rule. The presenters noted that providers should be “extra cautious” in light of the potential for RAC referrals.

The two-midnight rule is also on the HHS Office of Inspector General’s (OIG) radar. In December 2016, the OIG issued a report based on a claims review for fiscal years 2013 and 2014 concluding that hospitals are billing for many inpatient stays that were potentially inappropriate (see Two-midnight Medicare policy succeeding but still lacks full cooperation, Health Law Daily, December 19, 2016). The OIG also stated in its FY 2017 work plan that it intends to review hospitals’ use of inpatient and outpatient stays under the two midnight rule.

Personal health care spending from 1996 to 2013 analyzed

Despite the increase in health care spending in the United States, not enough is known about how private and public spending varies according to condition, age and sex group, and type of care. An investigative study of government budgets, insurance claims, U.S. government records, and facility and household surveys, published by JAMA, concluded that from 1996 to 2013 there was $30.1 trillion in personal health care spending for 155 separate conditions, with spending on diabetes, ischemic heart disease, and low back and neck pain accounting for the highest amounts of spending.

Conditions and type of care. The 155 conditions examined included cancer, which was broken down into 29 separate conditions. For the top three spending conditions, the study made the following findings for 2013:

  • Diabetes had the highest health care spending in 2013, with an estimated $101.4 billion in spending, including 57.6 percent spent on pharmaceuticals and 23.5 percent spent on ambulatory care.
  • Ischemic heart disease had the second-highest amount of health care spending in 2013, with estimated spending of $88.1 billion.
  • Low back and neck pain had the third-highest amount of health care spending in 2013, with estimated health care spending of $87.6 billion.

The study’s analysis of spending from 1996 through 2013 found that personal health care spending increased for 143 of the 155 conditions. Additional study findings regarding spending increases from 1996 through 2013 include:

  • Low back and neck pain spending increased by an estimated $57.2.
  • Diabetes spending increased by an estimated $64.4 billion.
  • Emergency care spending increased 6.4 percent.
  • Retail pharmaceutical spending increased 5.6 percent.
  • Inpatient care spending increased 2.8 percent.
  • Nursing facility spending increased 2.5 percent.

Age and spending. The study found that spending among working-age adults, totaling an estimated $1 trillion in 2013, was attributed to many conditions and types of care. Among persons 65 years or older, an estimated $796.5 billion was spent in 2013, with 21.7 percent occurring in nursing facilities. The smallest amount of health care spending was found to be for persons under age 20 years, with an estimated at $233.5 billion spent, or only 11.1 percent of total personal health care spending in 2013.

Age, sex and spending. The study found that the greatest spending was for individuals between 50 and 74 years, with spending highest for women 85 years and older. Because life expectancy for men is lower, the study found less spending by men in the 85 years and older age group.

Estimated spending differed the most between the sexes from age 10 to 14 years, according to the study, when males have health care spending associated with attention-deficit/hyperactivity disorder, and at age 20 to 44 years, when women have spending associated with pregnancy and postpartum care, family planning, and maternal conditions. Together the study estimated that these conditions constituted 25.6 percent of all health care spending for women from age 20 through 44 years in 2013. Without this spending, the study concluded that females spent 24.6 percent more overall than males in 2013.

Conclusion. The study concludes that this information is important because it may have implications for efforts to control U.S. health care spending.