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Inpatient Admissions Decision Fuels RAC Uncertainty

James Carroll, for HealthLeaders Media, July 26, 2010

Recent approval of a Region C Recovery Audit Contractor (RAC) issue for inpatient hospital claims review has initiated uncertainty among providers, putting an emphasized onus on them to lean on Centers for Medicare & Medicaid Services (CMS) guidance and policy manuals.

The issue, "inpatient admissions without a physician's inpatient admit order," may be referenced in the Medicare Claims Processing Manual, Section 50.3 which states that "patients are admitted to the hospital as inpatients only on the recommendation of a physician or licensed practitioner permitted by the State to admit patients to a hospital." While the posting of this issue may have come as a bit of surprise, it has long been one of the basic premises of accurate billing, according to Deborah Hale, CCS, CCDS, president and CEO of Administrative Consulting Service, LLC in Shawnee, OK.

"There's so much written in the Medicare Benefit Policy Manual stating that the decision to admit as inpatient is a complex medical judgment that can only be made after a physician has taken into consideration a number of clinical and safety factors," she said. "It [the manual] stresses the importance of the physician making a conscious decision to admit as inpatient, and that is the foundation for everything in this process."

One factor that may confound facilities is that many have dubbed it the first official medical necessity issue approved by CMS. While technically it may not be, and though some may argue the point, this new Connolly RAC issue is, in fact, consistent with establishing medical necessity for services provided, according to Hale.

"While this is technically not a medical necessity issue as most hospitals define medical necessity (i.e., the case may meet necessity for inpatient admission), if they don't have an order, they don't have a billable inpatient admission," she said.

In addition to the medical necessity argument, a number of MACs have been providing information that is contrary and inconsistent to CMS guidance, according to Hale. One example of this is telling providers that the admit order can be rolled back if the patient was in observation first.

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