Understanding the New CMS Inpatient Prospective Payment System Rule for Physicians

1. New CMS FY 14 IPPS Ruleaffecting Inpatient Status What does the physician need to know

2. Why the new Rule? Concerns from Beneficiaries - experiencing long length of stay in observation – resulting in high out of pocket expenses Concerns from Hospitals of the high volume of RAC reviews High Payment Error Rate – Not medically necessary Inpatient stays should be receiving care as an outpatient/observation

3. Medicare “Inpatient” • New Rule Begins October 1, 2013 • Physician Order MUST state: “Admit to Inpatient” or “Admit as Inpatient” at the time/before admission • Inpatient is now based on the physician’s expectation that the patient would require hospitalcare spanning 2 midnights • Physician certification is required

4. Elements of Certification • Inpatient order is required • Reasons for hospitalization stated • Estimated time the patient requires hospital services • Plans for post-hospital care, if appropriate • Certification must be completed and signed/dated before the patient is discharged 42 CFR§424 subpart B and 42 CFR §412.3

5. Medicare Medical Necessity • Benchmark • Physician may consider the accumulative time the patient spent receiving outpatient services (observation, ED, OR time, etc.) when determining if inpatient admission is justified. – as long as patient requires greater than a total of 2 midnights in hospital

6. Medicare Medical Necessity • Presumption • Inpatient hospital stays with the length of stay greater than 2 midnights, after the formal admission order, will be presumed generally appropriate for Part A (inpatient) payment – and should not be reviewed by RAC • Requires the services provided to be medically necessary • Requires the hospitalization to be medically necessary • Requires documentation of order and certification

7. Medicare Medical Necessity • Medical Necessity is based on the following: Age, Signs and Symptoms, Comorbidities, Morbidity, Mortality, Risk if patient were to be discharged, and Hospital Treatment • Dailyphysician documentation as to why the patient needs to stay in the hospital and receive care at the hospital (Medical Necessity) - This is CRUCIAL to avoid denial and cannot be overemphasized.

8. Impact on admissions • Medical/Surgical cases with expected Length of Stay of less than 2 midnights will likely NOT qualify as inpatients • ICU patients are not exempt • Surgeries/procedures that are on “Medicare Inpatient Only” list must be inpatient, even if remain in hospital only 1 day • 3-day qualifying stay requirement for SNF placement has not changed – cannot count time prior to the inpatient order – the patient must require necessary hospital care each day

9. OBSERVATION Observation Status - medically necessary hospital services that do not require 2 midnights If a second midnight is required for care of patient, that patient should be converted to inpatient The intent of new CMS rule is to reduce observation Length of Stay

10. Example #1 • Tuesday - Patient receiving care for SBO in ED at 22:00 • Wednesday - Inpatient order is written at 2:00 pm – MD estimates patient requires 2 midnights for hospital stay • Thursday - Patient DC at 9:00 am • 1st MN crossed as outpatient in ED • 2nd MN crossed as inpatient • RESULT: 2 midnights occurred in hospital = INPATIENT (providing hospital services were necessary)

11. Example #2 • Tuesday - Pt with TIA in ED at 14:00 • Tuesday - Observation order written at 18:00 • Wednesday am - MRI performed: acute stroke • Wednesday noon - Inpatient order written - MD estimates pt requires 2 midnights • Thursday - Patient DC at 9:00am • 1st MN crossed as OBS • 2nd MN crossed as INPT • RESULT: 2 midnights occurred in hospital = INPATIENT