Patient Status: Where Two Worlds Collide...Where Two Worlds Collide Joe Zebrowitz, MD ... Largest reason the last two years for overpayment has been “lack of medical necessity. Nationally,

Patient Status: Patient Status:

Where Two Worlds Where Two Worlds

CollideCollide

Joe Zebrowitz, MDExecutive Vice President, Senior

Medical DirectorExecutive Health Resources®

877-EHR-Docswww.ehrdocs.com

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AgendaAgenda

� Overview – The Perfect Storm

� Medicare Admission Review Compliance – Achieving Short Stays and Observation Certification, Compliance & Revenue Integrity

� Recovery Audit Contractors - What they are, who they are, and how to deal with them?

� How Admission Review Compliance Impacts: Qualified Stays & Transfer DRGs

� PQRI

� Questions & Answers

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� CMS is mandated to vigorously collect overpayments and aggressively seek out provider fraud – $10.8 billion in 2006.

� Largest reason the last two years for overpayment has been “lack of medical necessity.

� Nationally, QIO’s initiate one day stay and focused 1, 2, and 3 day stay review programs as Part of 8th scope of Work requiring HPMP be mandatory part of QIO mission – this pushes hospitals towards more liberal use of observation and strict criteria to avoid scrutiny.

The Perfect StormThe Perfect Storm

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� Tax Relief & Healthcare Act signed into law 12/20/06 -Expands Recovery Audit Contractors nationally by 2010 and can look back 4 years.

� Medlearn Matters on Condition Code 44 demonstrates CMS is committed to “prior to discharge” requirement.

� Transfer DRG’s penalize hospitals for efficient care and shorter lengths of stay.

The Perfect Storm (continued)The Perfect Storm (continued)

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� Medicaid Integrity Plan (MIP) (July, 2006) uses same tactics and approach but for Medicaid instead of Medicare.

� “Observational Medicine” is also leveraged by Private and Managed Payors to pay “observation” reimbursement for care delivered in the acute setting. This confuses everyone by having different regulatory & contractual rules for every payor and every type of patient (Medicare, Managed Medicare, Medicaid, Managed Medicaid and Managed Care).

The Perfect Storm (continued)The Perfect Storm (continued)

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2008 Proposed OPPS Changes2008 Proposed OPPS Changes

� Continued pressure on hospitals to admit patients to observation

� Stress appropriateness of observation for multiple conditions

� Eliminate some extra payments for observation

� Clearly telling us that scrutiny is going to be greater

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Why do I say that??Why do I say that??

� CMS used to pay additional APC for Observation if Dx was CP, CHF, Asthma but:

� “there is currently no compelling rationale for a different OPPS payment approach for observation care for only three specific clinical conditions”

� So, payment eliminated, but increase in reimbursement for Level 5 ED visit by…$23 dollars

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And there is moreAnd there is more

� CMS included a note of caution regarding failure to report observation care on claim forms: “We expect to carefully monitor any changes in billing practices on a service-specific and hospital-specific basis to determine whether there is reason to request that QIOs review the quality of care furnished or to request that Program Safeguard Contractors review the claims against the medical record.”

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Is Observation on the Rise??Is Observation on the Rise??

� “observation care may play an important role in the treatment of many Medicare beneficiaries in the hospital outpatient department, decreasing the need for short inpatient admissions and ensuring safe discharges of patients to their homes.”

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How about Stats?How about Stats?

� CY 2004: 77,000 Observation Claims

� CY 2005: 123,400 Observation Claims

� CY 2006: 271,200 Observation Claims

� Oh, and Medicare thinks this might be because Hospitals are interested in getting more of those three APC’s that are being eliminated!

� But it seems they just want more obs

� Imperative for Hospitals to watch medical necessity of admissions and document document document.

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Recovery Audit Contractors Recovery Audit Contractors

(RACs)(RACs)

� Used successfully in other government programs

� Pilot program started in April of 2005

� Paid a percentage of the overpayments they uncover and collect

� Money is deducted from future Medicare Payments– you have to appeal to get it back

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RAC DemonstrationRAC Demonstration--

First Year ResultsFirst Year Results

� Pilot Program in NY, CA, FL

� FY 2006 $289M in overpayments

� $260M of that was hospital overpayments

� FY 2006 $10m in underpayments

� 97% of improper payments identified were overpayments

� Well, what is next??

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RAC Next Steps RAC Next Steps –– Tax Relief & Tax Relief &

Healthcare Act of 2006 (HR6408)Healthcare Act of 2006 (HR6408)

� Signed into law on 12/20/06

� Cites highly successful program (in year 2 of 3 demonstration)

� Estimates expanding RACS could save $10B over 5 years

� Allows budget neutrality for physician payment 5% increase

� Can go back 4 years – clock is ticking & risk is already present

� Requires nationwide expansion of the program by January 1, 2010, but……

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CMS timeline for RollCMS timeline for Roll--out of out of

RAC to all 50 statesRAC to all 50 states

� March 07: Explore expansion of existing RACs

� Spring 07: Begin informing provider groups about RAC expansion plans; add expansion information to CMS web site

� Spring 07: Begin procurement process for four RACs

� August 07: First new states go live – MA, SC, AZ

� March 2008: Goal is to have all states with RACs operational by this date

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RAC RegionsRAC Regions

D

C

BA

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Why is Patient Status Such Why is Patient Status Such

a Problem?a Problem?� Compliance and Regulatory

• Inpatient short stays that are deemed not appropriate create a compliance and potential False Claims issue

• Clear directive to have documentation support the patient’s status

• Patient financial responsibility different

• Self Administered Drug quandry

� Overuse of observation

• Revenue – APC vs DRG, average $4-5K/case (millions of dollars a year)

• Length of stay artificially elevated

• Transfer DRG effect

• Outpatient outlier abuse

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How Do Hospitals Manage How Do Hospitals Manage

Medicare Admission Medicare Admission

Review?Review?� Decision to admit is made in the emergency room

� Admitting (or ED) Physician checks off a box – “Admit to Inpatient’or “Admit to Observation”

� Case or Utilization Management Nurse reviews case

� UR Criteria are applied

� If case does not meet inpatient, call made to physician to ask for more information

� Final determination made based on meeting or not meeting Interqual guidelines without second level review with trained URphysician – and little documentation as to the process in the chart

� Physician Advisor rarely gets involved while patient in house

� Rare that this process itself happens 7 days a week, 365 days a year.

� What does Medicare say about criteria??

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Inpatient Definition Inpatient Definition (CMS Medicare Benefit Policy Manual, (CMS Medicare Benefit Policy Manual,

Chapter 1, Chapter 1, §§10)10)

“An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight.”

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Continued…

“However, the decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient's medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital's by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors to be considered when making the decision to admit include such things as:

· The severity of the signs and symptoms exhibited by the patient;

· The medical predictability of something adverse happening to the

patient;

Inpatient Definition Inpatient Definition (CMS Medicare Benefit Policy Manual, (CMS Medicare Benefit Policy Manual,

Chapter 1, Chapter 1, §§10)10)

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• The need for diagnostic studies that appropriately are outpatient services (i.e., their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more) to assist in assessing whether the patient should be admitted; and

• The availability of diagnostic procedures at the time when and at the location where the patient presents.

Admissions of particular patients are not covered or non covered solely on the basis of the length of time the patient actually spends in the hospital.”

Continued….

Inpatient DefinitionInpatient Definition(CMS Medicare Benefit Policy Manual, (CMS Medicare Benefit Policy Manual,

Chapter 1, Chapter 1, §§10)10)

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Outpatient Observation Services Defined

Observation services are those services furnished by a hospital on the hospital’s premises, including use of a bed and at least periodic monitoring by a hospital’s nursing or other staff which are reasonable and necessary to evaluate an outpatient’s condition or determine the need for a possible admission to the hospital as an inpatient. Such services are covered only when provided by the order of a physician or another individual authorized by state licensure law and hospital staff by-laws to admit patients to the hospital or to order outpatient tests.

Observation DefinitionObservation Definition(CMS Medicare Benefit Policy Manual, (CMS Medicare Benefit Policy Manual,

Chapter 6, section 70.4)Chapter 6, section 70.4)

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Continued…

B. Coverage of Outpatient Observation Services

When a physician orders that a patient be placed under observation, the patient’s status is that of an outpatient. The purpose of observation is to determine the need for further treatment or for inpatient admission. Thus, a patient in observation may improve and be released, or be admitted as an inpatient (See Pub. 100-02, Medicare Benefit Policy Manual, chapter 1, §10 “Covered Inpatient Hospital

Services Covered Under Part A”).” (Chapter 6, section 70.4)

Observation DefinitionObservation Definition(CMS Medicare Benefit Policy Manual, (CMS Medicare Benefit Policy Manual,

Chapter 6, section 70.4)Chapter 6, section 70.4)

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Pitfalls of this ProcessPitfalls of this Process

� CMS does not rely only on objective criteria – in fact intensity of service is not actually mentioned in the definition

� Attending physicians do not know these rules nor do they know the rules applying to the other payors

� In general, following the process outlined results in a dramaticoveruse of observation

� Exception: When “pressure to admit” is applied, case management feels obligated to “force” patients to meet objective criteria

� Lack of 7 day a week coverage causes inconsistency in process

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Pitfalls of this Process Pitfalls of this Process

(continued)(continued)� “Too many cooks” cause variability in process

� Worst case scenario – observation cases make it through as inpatient and inpatient cases are kept in observation

� The biggest pitfall – overconfidence- do not forget that CMS focuses on this because they know it is so hard & hospitals are getting it wrong!!! Remember the “Emperors New Clothes”!

� How do you know what is really happening outside of your process map and on the floor?

• PEPPER report – be very very careful in using this as a guide

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What Have We Seen?What Have We Seen?� Audit Results - >20,000 cases reviewed at 100 institutions

� Informal Audits at CHS Facilities

� Observation overused 45% of the time (documentation supported inpatient)• <24 hours is 35%• >24 hours is 55%

� Inpatient overused 10-50% of the time on key diagnoses

� Coding Issues skew results and undermine revenue (DRG 182/331)

� Why does this happen??• Process Process Process• Without a backup, case managers might feel compelled to force patients to meet

criteria• Criteria sometimes misapplied – you have got to use your head

� Guidance from the QIO/ Fiscal Intermediary (FI) often not accurate – GAO (Office of Inspector General) STUDY

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SolutionSolution

Recognize that this is about daily tactics:

1. Case Management applies admission criteria to 100% of medical cases admitted through ED or directly and documents this review

2. ALL cases that do not pass criteria (regardless of admission status) must be referred to a physician advisor who is an expert in CMS rules and regulations as well as medicine.

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Solution (continued)Solution (continued)

3. Physician Advisor reviews case, speaks with admitting physician when needed, renders final decision and documents decision with specific UR form on chart or in UR documentation

4. Attending changes order when appropriate appropriate

5. Must run 7 days a week/365 days a year

6. Keep rechecking – need a compliance program for your compliance program–consistency is king in compliance

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Documentation Tip

Is the Glass Half Empty or

Half Full

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“Concerns”

“Suspected”

•Signs/symptoms “consistent with” or “concerning for”•Increased risks “due to coexisting”, “in the setting of”•Worsening “despite appropriate outpatient or ED therapy”•“Presented to ED with severe respiratory distress, dyspnea continues despite maximal medical therapy”

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Financial ImplicationsFinancial Implications

� Remember – this is not only about compliance, but also revenue integrity

� If a hospital has a strict guideline process before initiating this solution, there is always a large revenue opportunity

� Remember, one inappropriate observation case a day equals $1.8 million a year – you have to be perfect

� Also should look at impact on Medicaid as well as procedural revenue

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Compliance ImplicationsCompliance Implications

� Standard of False Claims is “reckless disregard”

� A clear, reproducible process that is well documented and QA’d is the best practice and limits your risk of an adverse audit

� Despite all these issues – CMS is not unreasonable, they want to see a good effort

� Administrative Law Judge level of appeal – standards and outcomes

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Physician Quality Reporting Physician Quality Reporting

Initiative (PQRI)Initiative (PQRI)

� 1.5% Bonus for reporting 3 of potential 74 performance measures (July-Dec 07)

� Up to 3 practice-specific measures must be present on 80% of eligible claims

� Uses CPT-II or G codes

� Next year’s rules to be available by Nov 07

� At same time projected 10% reduction in Medicare payments to physicians

� Congress may modify formulas and incentives this fall

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CMS Example: Successful ReportingCMS Example: Successful ReportingOral Antiplatelet Therapy Prescribed for Patients with CADOral Antiplatelet Therapy Prescribed for Patients with CAD

Mr. Jones presents for office visit with Dr. Thomas

Mr. Jones has diagnosis of CAD

*All of these situations represent successful 2007 PQRI reporting.Current Procedural Terminology © 2006 American Medical Association. All

Rights Reserved.

Situation 1:

Dr. Thomas documents that Mr. Jones is receiving

antiplatelet therapy.

CPT II code 4011F*

Situation 2: Dr. Thomas

documents that antiplatelet therapy is contraindicated for Mr. Jones because he has

a bleeding disorder.

CPT II code 4011F-1P modifier

Situation 3:There is no

documentation that Dr. Thomas or other

eligible professional addressed antiplatelet therapy for Mr. Jones.CPT II code 4011F-

8P modifier

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ProceduresProcedures� IP only rule very confusing at times

� Who makes the IP/OP decision

� Inconsistency across payors – each payor has different methods for paying

� Three Pain Points

• Registration: Contractual vs. Regulatory, basic questions need to be asked (like expected medically necessary length of stay)

• Pre-Op Clearance: Do co-morbid conditions increase or decrease risk of complication, impact expectations of post operative course

• Post Operative Eval: Was surgery changed, were there complications

� Dollar difference for same surgery in different status is very large

� New technology a challenge

� Changing Medicare and QIO standards make it incumbent on you, the hospital to defend your decisions to get appropriate reimbursement

� Step one – run a few key reports

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Upcoming CMS InitiativesUpcoming CMS Initiatives

� CMS indicates it will likely at least pilot the “Admit to Case Management Protocol” originated in Florida and possibly roll out nationally

• Clear impact on hospital revenue

� Medicaid looking at exact same issues through Medicaid IntegrityProgram– though with state by state rules that need to be well understood

� CMS trying to get more procedures done as outpatient (recently, pacemakers, with some exceptions are now outpatients)

� HPMP audits expanding to include multi-day stays, so PEPPER is not even of any use as a warning tool

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Impact of Medicare Admission Impact of Medicare Admission

Review on Qualified Stays Review on Qualified Stays

& Transfer DRGs& Transfer DRGs

� Loss of appropriate inpatient days impacts 3 day Qualified Stay

� CMS is also concerned that patients leave prior to the GMLOS and

receive extended aftercare (home care, SNF, rehab,etc)

� 190 Transfer DRG’s, or about half of the inpatient admissions

� For most (169) DRGs formula is calculated as:

• (Actual LOS +1)/GMLOS * DRG payment

� Converts “case rate” into a capped per diem

� Observation can have an adverse effect on hospital

reimbursement under transfer DRG

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10 Techniques to Achieve 10 Techniques to Achieve

Medicare Review ComplianceMedicare Review Compliance

1. Do an audit looking critically at observation and one day stays

2. Confirm that 100% of cases are being reviewed by case management (many times we just think this is happening)

3. Have a trained Physician Advisor Team 7 days a week 365 a year for second level review

4. Have each hospital’s UR committee create policy on high risk

DRG’s like 243 and 143

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10 Techniques to Achieve 10 Techniques to Achieve

Medicare Review Compliance Medicare Review Compliance

(Continued)(Continued)5. Tell the QIO’s about your great process – invite their

cooperation as you implement

6. Support case managers in the ED to do admission reviews 7 days a week during peak hours

7. Run a report on how procedures are being classified-share this with your surgeons and work on how to separate Medicare and Medicaid classification and create an airtight process

8. Stop trying to teach physicians what observation means – and start teaching them goal oriented documentation

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10 Techniques to Achieve 10 Techniques to Achieve

Medicare Review Compliance Medicare Review Compliance

(Continued)(Continued)

9. Review your PEPPER report with Case Management, HIM, Finance and compliance – and do a reality check before taking any action

10. Educate Case Management about Medicaid policies on short stays and treat Medicaid Compliance as seriously as you do Medicare Compliance

� Bonus: Reward those who identify cracks in the system –because they are there!!!

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Useful Compliance Useful Compliance

PublicationsPublications

• GAO report on QIO accuracy

• RAC report on first year

• Legislation Expanding RAC’s

• Medlearn Matters on Condition Code 44

• Medicaid Integrity Program legislation

• Expansion of Admit to Case Management Protocol Article

• Surgical Setting Report Template

• Transfer DRG white paper

[email protected] or www.ehrdocs.com (resource page)

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ConclusionConclusion

� Medical necessity is a huge economic issue for governmental payors

� Short stays are under great scrutiny – and hard to get right

� The goal is to get it right – errors either way have serious consequences

• Revenue Integrity & Compliance

� Using the objective approach of case management and further review by the trained physician advisor – documenting each step of the way can save you a lot of compliance headaches and significantly impact your bottom line.

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Medicare ComplianceMedicare Compliance

Joe Zebrowitz, MDExecutive Vice President, Senior Medical Director

Executive Health Resources®

[email protected]