When does an inpatient admission begin?
The Centers for Medicare and Medicaid Services (CMS) regulations state that a patient is not considered an inpatient without an inpatient admission order. 42 CFR 412.3 states, "an individual is considered an inpatient of a hospital, including a critical access hospital, if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner." At first glance, it would appear that the admission therefore begins when the admission order is written, and in fact most, if not all, hospitals use the time of the admission order as the beginning of the inpatient admission, but is that what CMS thinks? Putting aside the elective scheduled admission where the admission does not begin until the patient arrives at the hospital and begins receiving services, in most cases the admission order is written while the patient is in the Emergency Department (ED). At that point in time the patient is still under the care of an ED nurse and in many institutions it may be several hours before the patient arrives on an "inpatient" unit with care transferred to an "inpatient" nurse.
During an Open Door Forum in 2013, Dr. Dan Duvall of CMS stated, "The physician may write the order and let's say the physician writes the order at 10:00, the patient is formally admitted at 11:00 so the patient becomes an inpatient on 11:00 and then the following morning, the physician authenticates the order, that's fine. It's the formal admission following the documentation of the order." He did not state what events happened at 11:00 to "formally admit" this patient and he did not define inpatient services nor differentiate them from outpatient services, leaving us all wondering, when does CMS believe an inpatient admission begins?
This may sound like an esoteric question with no practical value but if CMS defines the start of inpatient admission as a point in time different than the time of the order, when does an admission begin for counting inpatient days to determine eligibility for the part A skilled nursing benefit for a patient whose admission order is written at 11 pm but does not arrive on the hospital unit or is not "formally admitted" until after midnight? What about the busy safety net hospital with constant capacity problems where patients can spend prolonged periods, up to several days, in the ED receiving care while waiting for a bed, or the patient that is admitted as inpatient and subsequently dies in the ED?
When is a patient formally discharged?
CMS has stated in the Medicare Claims Processing Manual, Chapter 4, section 290.2.2 that "Observation time ends when all medically necessary services related to observation care are completed... Alternatively, the end time of observation services may coincide with the time the patient is actually discharged from the hospital or admitted as an inpatient. Observation time may include medically necessary services and follow-up care provided after the time that the physician writes the discharge order, but before the patient is discharged." While this seems to define discharge, what do they consider "actual discharge"?
The point at which CMS considers a patient formally discharged has significant implications in two areas. We generally think of observation services in relation to the medical patient who is expected to require less than two midnights in the hospital. But observation services can also be ordered for patients having outpatient surgery if they require care beyond the normal recovery period but not past the second midnight. Medical observation is paid under Ambulatory Payment Classification 8009, with a single payment for 8 or more hours, but the hours are reported as a separate line item and go into the calculation of total costs of the hospital stay. Depending on the quantity and cost of services provided to that patient during that observation stay, the number of observation hours may result in an outlier payment. Likewise, observation hours after a status indicator "T" procedure has no additional payment unless the total claim reaches the outlier threshold, in which case the hours would result in an increase in the payment. In fact, in a recent audit by the Office of the Inspector General (OIG), Northwestern Memorial Hospital was found to have overbilled for observation hours after surgeries which led to improper outlier payments as part of their $6.4 million overpayment.
The condition code 44 process to change an inpatient to an outpatient can only be completed if the patient has not yet been formally discharged. In many cases, the need to use condition code 44 occurs in the morning, after the attending has rounded and written a discharge order on a patient who was admitted incorrectly as an inpatient with no expectation if a two midnight stay. Some hospitals have taken a very conservative approach, using the time of the physician order as the point of formal discharge and not performed condition code 44 changes after that point, while others go to the other extreme and use the time that the patient physically leaves the building as the point of formal discharge and will perform a condition code 44 process up until the point the patient is wheeled into the elevator. In reality, formal discharge most likely occurs somewhere between those two extremes, approximately at the point when the patient's medically necessary care ends and the nurse has given the patient their discharge papers.
So despite the importance of defining "formal discharge", both for counting observation hours and performing a condition code 44, CMS has only made a cursory attempt at defining it in the claims processing manual and by stating that formal discharge occurs if the patient reaches a milestone indicated by the physician, such as "discharge after supper." But in most cases, physicians do not write such orders, nor does "after supper" even indicate a medically pertinent point in time, calling into question that example.
It should be noted that critical access hospitals (CAHs) do not face this dilemma; their conditions of participation state, "Observation services BEGIN and END with an order by a physician or other qualified licensed practitioner of the CAH." While defining a clear point for the cessation of billing, this contradicts federal regulation and potentially deprives CAHs of reimbursement for medically necessary observation provided to a patient after the order is written but before formal discharge. Having CMS clearly define formal discharge would be welcome by hospitals that want to bill hours compliantly and want to do condition code 44 changes compliantly.
What is an admission order?
By tradition, physicians and other practitioners place orders for patient care in the "orders" section of the medical record, be it a paper chart or electronic health record. But is that a regulatory requirement? With the 2014 Inpatient Prospective Payment Rule (IPPS) came the requirement for an inpatient admission order by a qualified practitioner as a condition of payment for an inpatient admission. Furthermore, if that admission order is transcribed by a nurse or practitioner without admitting privileges, the order must be authenticated prior to discharge as a condition of payment. Yet despite extraordinary efforts by hospital personnel, that authentication is occasionally missed.
If the admission order is not authenticated prior to discharge, but the admitting practitioner's history and physical or a progress note state the words "admit as inpatient" and that practitioner authenticated that document prior to discharge, does this meet the conditions of payment as a valid, authenticated inpatient admission order? It certainly shows the practitioner's intent, and CMS has stated that reviewers have the discretion to pay an inpatient admission if the practitioner's intent is clear, but they also stated that the use of intent as an argument for payment should be relatively infrequent. If that notation in the practitioner's documentation can be considered a valid admission order, hospitals would not have to worry about proving intent or hoping that the reviewer will be inclined to use their discretion.
What is medical necessity for hospital care?
The 2014 IPPS rule summarizes the first part of the two-midnight rule very nicely in one sentence, stating that "the crux of the medical decision is the choice to keep the beneficiary at the hospital in order to receive services or reduce risk, or discharge the beneficiary home because they may be safely treated through intermittent outpatient visits or some other care." While CMS publishes National Coverage Determinations and Local Coverage Determinations to help determine the medical necessity of care provided to patients, there are no such federal guidelines for the medical necessity of hospitalization. CMS has clearly stated that they do not recognize the published guidelines, such as InterQual® and MCG Care Guidelines®, as binding, yet these guidelines do help hospitals answer the question of who requires care in the hospital and who can be safely treated in a lesser setting.
So if CMS does not recognize InterQual® or MCG®, what standards are hospitals, and more importantly the auditors, supposed to use to determine the medical necessity for hospital care? Regulation states that it is a complex decision made by a physician, yet there are 800,000+ denials awaiting administrative law judge review where the physician made that complex decision and the auditors denied the claim. CMS needs to define the medical necessity for hospital care clearly so that hospitals and auditors can play by the same set of rules.
If a patient appeals an admission denial or continuing stay denial, do the days count towards their part A SNF benefit?
The requirement for three consecutive medically necessary inpatient days to qualify for part A Skilled Nursing Facility (SNF) coverage continues to confound providers and patients alike. Patients who are inpatients for two days and patients who are placed outpatient with observation for one day then get admitted as inpatient for two days do not qualify for their part A SNF benefit. But the "word is out on the street" that if the patient appeals their discharge to the Quality Improvement Organization (QIO), that process will take at least two days and regardless of the outcome, those extra days will allow them to qualify for the part A SNF benefit. As a result, many patients seeking to access their part A SNF benefit will appeal their hospital discharge.
But do those days count? 42 CFR 409.30 states, "The beneficiary must have been hospitalized in a participating or qualified hospital or participating CAH, for medically necessary inpatient hospital or inpatient CAH care, for at least 3 consecutive calendar days, not counting the date of discharge." This requirement is inherently ambiguous since it is unclear if only the inpatient admission must have been medically necessary or if all three days of the inpatient admission must be medically necessary. Take the case of a patient who is appropriately admitted as an inpatient and requires two medically necessary inpatient days. The physician determines the patient is stable for discharge to a lower level of care and writes a discharge order. If the patient then appeals their discharge to the QIO and the QIO agrees with the discharge at the time of the discharge order, that demonstrates that those days awaiting the appeal were not medically necessary. Since the admission was medically necessary and the total length of stay exceeded three days, does the patient now have access to their part A SNF benefit or do all three days need to be medically necessary? To further complicate the issue, the 2014 IPPS Final Rule and the Medicare Benefit Payment Manual, Chapter 8 also states that when reviewing eligibility for the SNF benefit, reviewers should apply the "broad definition" of medical necessity, stating that denials should occur only if there is "substantial departure from normal practice."
Prior to the QIO redesign that occurred in 2014, the responses from the QIOs to this situation showed no consistency with some QIOs allowing the days to count and others stating they did not and that situation has not improved in the months since Livanta and KePRO took over all appeal duties. The answer to this question is crucially important as if the part A SNF payment is denied due to the lack of a qualifying stay, the SNF will go back to the hospital and demand reimbursement for their costs, stating that "the hospital told us the patient had a qualifying stay." It should be relatively simple for CMS to review their regulations and state if the days spent in an unsuccessful appeal of a discharge can be counted to the part A SNF benefit.
What is the status of a patient with an unsigned admission order?
In the January 14, 2014 guidance related to admission orders and certification, CMS stated that if a verbal inpatient admission order is not authenticated prior to discharge, then the admission "never occurred" and the stay should be billed as outpatient part B. While this seems reasonable (to a small extent) for a verbal order given at 3 am by a half-asleep doctor for a patient who clearly only needs one midnight of hospital care, what about the patient who is admitted and hospitalized for 7 days after a stroke and needs to go to a SNF for rehabilitation but the doctor neglected to sign the admission order prior to discharge? Is CMS stating that this patient was never an inpatient with no qualifying inpatient stay and now must pay out-of-pocket for the SNF stay? Wasn't the elimination of long outpatient hospital stays the main driver in the development of the two-midnight rule?
Furthermore, when patients are admitted as inpatient, hospitals are required to present the patient the Important Message from Medicare outlining their rights as an inpatient. 42 CFR 482.30 requires participation by the Utilization Review Committee whenever an inpatient admission is determined to be not medically necessary, with strict rules for notification, yet the ability to "ignore" an unsigned admission order appears to contradict that edict. Did CMS really intend to allow a physician to unilaterally take away the rights of an inpatient by not authenticating the admission order without any oversight and no patient notification requirements? CMS needs to revisit this guidance and realize the can of worms they opened.
Dr. Ronald Hirsch is a Vice President of the Regulations and Education Group at AccretivePAS Clinical Solutions. He graduated from UCLA with a degree in psychobiology. He received his medical degree from the Chicago Medical School in North Chicago, IL, and completed his internal medicine residency at Kaiser Permanente Medical Center in Hollywood, CA.
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