Skip to main content

3 Patient Status Rules You Must Understand to Get Paid Correctly

Analysis  |  By Kimberly A. Hoy JD CPC  
   January 24, 2019

Misunderstandings created by years of variable-quality audits have caused hospitals to be so cautious they are misapplying CMS guidance and forgoing revenue.  

This article appears in the November/December 2018 edition of HealthLeaders magazine.

For too long, discussions of patient status have focused only on denials. Misunderstandings created by years of variable-quality audits have caused hospitals to be so cautious they are misapplying CMS guidance, forgoing otherwise appropriate revenue, and negatively affecting Medicare beneficiaries.

In my 15 years of experience writing, teaching, and speaking on Medicare, there is no area more misunderstood than the Medicare rules for inpatient admission and related billing and payment mechanisms. I frequently find that even if one hospital department understands the guidance, they may face challenges from other departments that do not.

To ensure accurate payment, here are three patient status rules your staff members should understand and implement correctly.

1. Observation care as the basis for inpatient Part A payment 

The most significant misunderstanding I encounter is the idea that the patient must always meet inpatient requirements under InterQual or MCG to be covered.

This is directly contrary to written CMS guidance and FAQs published by KEPRO, who has been tasked by CMS with patient status audits. All medically necessary outpatient care should be counted toward CMS’ metric for admission: two midnights.

If the documentation demonstrates the patient is in medically necessary observation (e.g., the patient meets InterQual or MCG requirements for hospital-level observation) for two midnights, the case would be considered appropriate for Part A inpatient payment under CMS’ current Program Integrity Manual guidance. Providers should never have cases of medically necessary observation lasting more than 48 hours.

2. Self-denials and inpatient Part B payment 

CMS adopted a self-denial process allowing full inpatient Part B (APC) payment for cases that don’t meet inpatient requirements.

Post-discharge self-denials are far more efficient than the labor-intensive and time-sensitive condition code 44 (CC44) process providers have been using for years, and if billed correctly, self-denials provide exactly the same payment, in most cases.

The time UR staff and physician advisors save on the CC44 process can be used to focus on third-party insurance authorizations, peer-to-peer appeals, and denials, which have the potential to have a much greater impact on overall revenue.

However, providers must be careful they are following CMS billing instructions to ensure they are getting the full payment they are entitled to for these cases.

3. Inpatient-only procedures 

The recent removal of total knee arthroplasty (TKA) from the inpatient-only list highlighted the significant misunderstandings about this rule.

Procedures not on the inpatient-only list, such as TKA, may still be provided on an inpatient basis if the patient’s condition warrants. Procedures also get added to the list every year, such as stenting with myocardial infarction in 2018.

These procedures require an inpatient order to receive any payment; if the inpatient order is missing, there is no way to recoup payment. Training and concurrent review are vital to ensure that inpatient orders are not missed and that patients who qualify for admission get admitted.

Kimberly A. Hoy, JD, CPC, is the director of Medicare and compliance for HCPro, a division of Simplify Compliance. 

Get the latest on healthcare leadership in your inbox.