Aetna is following Cigna's lead with a new payment policy that will initially pay inpatient claims at a lower observation rate, a move provider groups say will create an unfair and burdensome appeals process for hospitals.
Provider advocacy groups are criticizing an upcoming change to Aetna's payment policies. They say the move will lead to automatic underpayments for inpatient care and increase the administrative burden for providers.
Beginning November 15, for Medicare Advantage (MA) plans and Medicare Special Needs Plans (SNPs), Aetna will automatically approve admissions for 1+ midnight hospital stays without a medical necessity review and pay them at a severity rate comparable to rates for observation.
To receive the full contracted inpatient rate, a hospital will have to submit documentation proving the stay met criteria for severity.
Faster Payments Or An Unfair Burden?
Aetna has framed the change as a benefit to providers, designed to "help you get reimbursed faster for inpatient admissions that are initially denied.” The insurer argues that the new approach is more efficient because it avoids situations where claims are denied for failing to meet criteria, which forces the provider to either re-bill the claim as observation or file an appeal.
Provider advocacy groups strongly disagree with that assessment, arguing it violates the two-midnight rule and reduces hospital reimbursement. The Healthcare Association of New York State (HANYS) called the policy "highly problematic" and urged CMS to stop the policy in a recent letter to the agency.
"This new policy will require hospitals to fight for the appropriate payment on the back end for every Medicare Advantage patient with an inpatient-level stay," HANYS wrote.
A New Trend in Payer Policies?
Aetna isn't the only major payer updating payment policies that reduce payments and create more of an administrative burden for providers.
Cigna is set to enact a similar policy on October 1, which will allow the insurer to automatically downcode level 4 and 5 E/M claims if it deems the diagnosis does not support the complexity of the visit. Like Aetna's new rule, Cigna's policy will require providers to file a post-payment appeal with full medical records to receive the correct payment. Both policies operate on the same principle: Pay a lower rate up front and force the provider to "chase" the correct reimbursement through a burdensome appeals process.
For revenue cycle leaders, the policy appears to contradict Aetna's claims of simplification. Instead of reducing administrative work, it is likely to significantly increase the volume of appeals. Rather than focusing only on denied claims, hospital staff will now have to review every inpatient case paid at the lower observation rate to determine if an appeal for the full inpatient payment is warranted. This could create a new and significant administrative burden, further complicating the already contentious relationship between providers and payers.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
Effective November 15, Aetna will pay urgent inpatient stays at a lower, observation-level rate, requiring hospitals to appeal to receive the full contracted inpatient payment.
The policy mirrors a recent move by Cigna to unilaterally downcode E/M claims, signaling a broader payer trend of reducing payments and shifting administrative burden to providers.
Provider groups argue the policy violates CMS' two-midnight rule and will force revenue cycle teams to 'fight for the appropriate payment on the back end.'