CMS Updates: What CY 2016 OPPS Means To Your Hospital Marc Tucker, DO, FACOS, MBA Vice President of Compliance and Education

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Agenda

• IPPS/OPPS Updates • BFCC-QIOs – Short Stay Reviews • Recovery Auditor Updates • Legal/Legislative Updates

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Governmental Audit and Fraud Fighting Entities Who What

OIG Office of the Inspector General

DOJ Department of Justice

MCR RA Medicare Recovery Auditors

SMRC Supplemental Medical Review Contractor

MAC Medicare Administrative Contractors

HEAT Health Care Fraud Prevention and Enforcement Action Team

CERT Comprehensive Error Rate Testing

MIP Medicaid Integrity Plan

MIG Medicaid Integrity Group

MICs Medicaid Integrity Contractors

MIG Medicaid Inspector General

MCD RAC Medicaid Recovery Audit Contractors

PERM Payment Error Rate Measurement

ZPICs/UPICs Zone Program Integrity Contractors / Unified Program Integrity Contractors

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IPPS/OPPS Updates

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2016 OPPS Final Rule • 2016 Outpatient Prospective Payment System final rule was

published on October 30, 2015, effective on January 1, 2016.

• The rule finalized two key provisions: 1.  Short inpatient hospital stays (stays when the physician

expects the beneficiary to require less than two midnights of hospital care) are again payable on a case-by-case basis; and,

2.  A shift in medical review strategy to have Quality Improvement Organizations (QIOs), and not the Medicare Administrative Contractors (MACs), conduct these reviews of short inpatient stays.

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Two-Midnight Rule Modification In finalizing the 2016 OPPS final rule, CMS revised its rare and unusual exceptions policy: “…to allow for Medicare Part A payment on a case-by-case basis for inpatient admissions that do not satisfy the 2-midnight benchmark, if the documentation in the medical record supports the admitting physician’s determination that the patient requires inpatient hospital care despite an expected length of stay that is less than 2 midnights.”

– 80 FR 70545

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CY 2016 OPPS Final Rule Summary Staying the same:

•  “We did not propose any changes for hospital stays that are expected to be greater than 2 midnights; that is, if the physician expects the patient to require hospital care that spans at least 2 midnights and admits the patient based on that expectation, the services are generally appropriate for Medicare Part A payment.” (80 FR 70541)

•  “We also did not propose to change the 2-midnight presumption.” (80 FR 70541)

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2-MN Rule Review: Benchmark and Presumption

The 2-Midnight Benchmark: •  “Surgical procedures, diagnostic tests, and other treatments

would be generally considered appropriate for inpatient hospital admission and payment under Medicare Part A when the physician expects the patient to require a stay that crosses at least 2 midnights and admits the patient to the hospital based upon that expectation.”

•  “For purposes of determining whether the 2-midnight benchmark is met and, therefore, whether an inpatient admission is appropriate for Medicare Part A payment, we consider the physician’s expectation including the total time spent receiving hospital care—not only the expected duration of care after inpatient admission, but also any time the beneficiary has spent (before inpatient admission) receiving outpatient services, such as observation services, treatments in the emergency department, and procedures provided in the operating room or other treatment area.”

80 FR 70539

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The Benchmark & Medical Necessity • Hospitalstays(asopposedtoinpa/enthospitalstays)spanningorapproachinga2midnightstayshouldnotbeautoma/callychangedtoaninpa/entadmission.

• WhilegenerallyPartApaymentisavailableforcasesmee/ngthe2midnightbenchmark,theappropriatenessofPartApaymentforthesecasesisgovernedbythefollowing:

For Medicare payment purposes, both the decision to keep the patient at the hospital and the expectation of needed duration of the stay must be supported by documentation in the medical record based on factors such as beneficiary medical history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event during hospitalization. (2016 CY2016 OPPS, 80 Federal Register 70539)

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2-MN Rule Review: Benchmark and Presumption

The 2-Midnight Presumption: “Under the 2-midnight presumption, inpatient hospital claims with lengths of stay greater than 2 midnights after the formal admission following the order are presumed to be appropriate for Medicare Part A payment and are not the focus of medical review efforts, absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-midnight presumption.”

80 FR 70539

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Medical Necessity (MBPM, Ch. 1, Sec. 10) “(T)he 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; •  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.”

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2+ Midnight Inpatient Audit Targets

• 2-MN cases are not automatically IP. • Cases with custodial care, care for convenience, or delays in

care (CDC) are the highest risk for audit and denial. • There are no national standards defining what is custodial, delay,

or convenience: – How does your facility define custodial care, care for

convenience, and delays in care? – How are you reviewing for these?

• A case that “only” meets OBS criteria for 2 nights could represent a CDC.

• Commercial payers have targeted this for years. – EHR is defining these terms for EHR clinical groups to be

added to our EHR Logic™.

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Custodial, Convenience, and Delay

•  “Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services where such expenses are for custodial care.”

– Social Security Act, §1862(a)(9)

•  “CMS' longstanding instruction has been and continues to be that hospital care that is custodial, rendered for social purposes or reasons of convenience, and is not required for the diagnosis or treatment of illness or injury, should be excluded from Part A payment.”

– CMS Q&A relating to Patient Status Reviews (3/12/14)

•  “Any evidence of systematic gaming, abuse or delays in the provision of care in an attempt to receive the 2-midnight presumption could warrant medical review.”

– CMS Q&A relating to Patient Status Reviews (3/12/14)

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2-MN Exceptions •  IP Only procedures •  Newly initiated mechanical ventilation*

*Excludes anticipated intubations related to minor surgical procedures or other treatment.

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<2MN stay with >2 MN Expectation* •  AMA •  Election of hospice •  Unexpected death •  Unexpected transfers •  Unexpected improvement *MUST DOCUMENT ─ Why patient left before 2 MNs. ─ Why 2-MN expectation was reasonable.

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2016 OPPS: Short Inpatient Hospital Stays

“When a beneficiary enters a hospital for a surgical procedure not specified as inpatient only under § 419.22(n), a diagnostic test, or any other treatment, and the physician expects to keep the beneficiary in the hospital for only a limited period of time that does not cross 2 midnights, the services would be generally inappropriate for payment under Medicare Part A.”

– 80 FR 39349

Previous Guidance

“For stays for which the physician expects the patient to need less than 2 midnights of hospital care and the procedure is not on the inpatient only list or on the national exception list, an inpatient admission would be payable on a case-by-case basis under Medicare Part A in those circumstances under which the physician determines that an inpatient stay is warranted and the documentation in the medical record supports that an inpatient admission is necessary.”

– 80 FR 70541

Current Guidance

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Are short IP hospital stays “rare and unusual?”

•  No! – “We would like to clarify that our proposed modification to the current

exceptions process does not define inpatient hospital admissions with expected lengths of stay less than 2 midnights as rare and unusual.”

– 80 FR 70545 (emphasis added) – “We will allow Medicare Part A payment on a case-by-case basis for

inpatient admissions that do not satisfy the 2-midnight benchmark, if the documentation in the medical record supports the admitting physician’s determination that the patient requires inpatient hospital care, despite an expected length of stay that is less than 2 midnights.”

– 80 FR 70545 •  HOWEVER, 1-midnight IP cases will be audited; therefore:

– Require a high level of acuity; and, – Require a high documentation standard.

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Inpatient Expectation <2 Midnights For payment purposes, the following factors, among others, would be relevant to determining whether an inpatient admission where the patient stay is expected to be less than 2 midnights is nonetheless appropriate for Part A payment:

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

•  The medical predictability of something adverse happening to the patient; and,

•  The need for diagnostic studies that appropriately are outpatient services (that is, their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more).

80 FR 70541

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Defining Observation Services 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”).

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2017 IPPS – Proposed Rule •  The two key areas applicable to Utilization Management

departments are: o  Adjustment to IPPS Rates Resulting from 2-MN policy. o  The Notice of Observation Treatment and Implication for Care

Eligibility Act of 2015 (The NOTICE Act), enacted August 6, 2015 (effective August 6, 2016).

• Best Practice Recommendation: All hospital stays where the patient

has been receiving observation services for almost 24 hours should have a Physician Advisor review to determine whether the patient is appropriate for admission, continued outpatient services, or discharge prior to issuing the required Medicare Outpatient Observation Notice (MOON).

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QIO Review of Short Inpatient Hospital Stays

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A Shift in Medical Review Strategy • Effective October 1, 2015 • QIOs, not MACs, responsible for reviews of short inpatient stays

• 2 BFCC-QIOs: Livanta and KePRO • Current audit activity includes:

– Patient status reviews for claims with dates of admission within 6 months of October 1, 2015

– Biannual patient status reviews • Provider education • Referral to Recovery Auditors

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QIO Review of Short IP Hospital Stays “We are changing our medical review strategy for short hospital stays and will have QIO [Quality Improvement Organization] contractors conduct reviews of short inpatient stays.” (80 FR 70546)

•  The MACs will no longer be responsible for conducting these types of reviews (as they had been under Probe & Educate).

•  This change in medical review strategy was effective as of October 1, 2015.

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QIO Review of Short IP Hospital Stays

•  1. Are outside the six-month look-back period and were formally denied (as defined below) are being removed from the provider sample for re-review and will be paid under Part A.

•  2. Are outside the six-month look-back period and were not formally denied are being removed from the provider sample for re-review and will be paid under Part A.

•  3. Are within the six-month look-back period and were not formally denied will be reviewed when we resume QIO reviews as per our sub-regulatory guidance at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews.html.

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QIO Review of Short IP Hospital Stays

•  4. Are within the six-month look-back period and were formally denied are being re-reviewed by the BFCC-QIO to determine whether the initial review decision was consistent with the two-midnight policy in effect at the time of the hospital admission.

“formally denied” is defined as meeting the following three criteria:

a. The provider was sent an initial results letter by the BFCC-QIO; and

b. The BFCC-QIO conducted and completed provider-specific education on claims in question; and

c. The BFCC-QIO sent the provider a final results letter and the denial was sent to the MAC for effectuation.

https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews.html,

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QIO Review of Short IP Hospital Stays • Short stay reviews will be performed by the two Beneficiary and

Family Centered Care QIOs (BFCC-QIOs): Livanta and KePRO.

•  “BFCC-QIOs have begun to conduct post-payment reviews of claims and refer findings to the MACs for payment adjustments.” (80 FR 70546)

•  “BFCC-QIOs will educate hospitals about claims denied under the 2-midnight policy and collaborate with these hospitals in their development of a quality improvement framework to improve organizational processes and/or systems” (80 FR 70546)

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QIO Denial Category Ratings • Minor Concern – Provider with a denial rate of <10% of the reviewed

claims for the provider specific sample.

• Moderate Concern – Provider with an error rate of >10% of the reviewed claims for the provider specific sample.

• Major Concern – Provider with an error rate of >20% of the reviewed claims for the provider specific sample.

• Many Hospitals will now be in the Major Concern Category!

– During the MAC Probe & Educate program a Major Concern was identified by a greater than 70% denial rate

– Under the current QIO review program a Major Concern is identified by a greater than 20% denial rate

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QIO Referral to Recovery Auditors Under the QIO short-stay inpatient review process, hospitals that are found to exhibit the following pattern of practices will be referred to the Recovery Auditor:

•  Having high denial rates; •  Consistently failing to adhere to the 2-midnight rule; •  Having frequent inpatient hospital admissions for stays

that do not span one midnight; or •  Failing to improve their performance after QIO

educational intervention Source: 80 FR 70546

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Pause in QIO Short Stay Reviews

•  On June 6, 2016, CMS required the BFCC-QIOs to re-review all short stay patient status claims that were denied under the QIO medical review process since the BFCC-QIOs began conducting these reviews on October 1, 2015.

•  Q: What is CMS announcing today?

•  A: Today, CMS is announcing it has clarified the instructions for medical review of claims affected by the temporary suspension of the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews of acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to determine the appropriateness of Part A payment for short stay inpatient hospital claims. Specifically, CMS is announcing that these reviews will be limited to a six-month look-back period from the date of admission and announcing that Medicare Fee-For-Service (FFS) claims that:

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One more thing about BFCC-QIOs •  In the final rule, CMS said, “BFCC-QIOs will educate

hospitals about claims denied under the 2-midnight policy and collaborate with these hospitals in their development of a quality improvement framework to improve organizational processes and/or systems.”

•  Based on the post-payment review results, your hospital’s processes may come under scrutiny.

•  Don’t wait for the QIO to ask! Now is the time to ask: –  What is our process to make appropriate inpatient

admission decisions? –  Is this process consistent with recommended best

practices? –  Does it comply with all applicable Conditions of

Participation?

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Recommended UR Workflow*

* For all admissions after 1/1/16. Medical necessity reviews include an evaluation of physician documentation.

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Recovery Auditor Updates

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Recovery Auditor Enhancements Enhancements currently in place:

•  RAs must maintain an overturn rate of less than 10% at the first level of appeal.

•  RAs must maintain an accuracy rate of at least 95%. •  Limited the RA look-back period to 6 months from the date of service for

patient status reviews, in cases where the hospital submits the claim within 3 mos. of the date of service.

•  RAs to incrementally apply the ADR limits to new providers under review. •  RAs must provide consistent and more detailed review information

concerning new issues to their websites. •  CMS has the ADR limits for facility claims across all claim types of a

facility.

•  CMS is establishing ADR limits based on a provider’s compliance with Medicare rules.

Source: Recovery Audit Program Enhancements (as of Nov. 6, 2015)

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Recovery Auditor Enhancements

•  Enhancements that require modifications to the current contracts: –  RAs will have 30 days, instead of the current 60, to complete complex

reviews and notify providers of their findings.

–  RAs must wait 30 days to allow for a discussion request before sending the claim to the MAC for adjustment.

–  RAs must confirm receipt of a provider’s discussion request within 3 business days.

–  CMS will require the RAs to broaden their review topics to include all claim/provider types.

•  Enhancements to be incorporated into new contracts: RAs will not receive a contingency fee until after the 2nd level of appeal is exhausted.

Source: Recovery Audit Program Enhancements (as of Nov. 6, 2015)

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June 2, 2016 - Recovery Auditor Contracting Update

•  CMS is in an active procurement process for the next round of Medicare Fee-for-Service Recovery Audit Program contracts. In anticipation of this contract transition, CMS must ensure that the current Recovery Auditors complete all outstanding claim reviews by the conclusion of the active recovery auditing phase of their current contracts.

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Recovery Auditor…Important Dates

•  May 16, 2016 - the last day that a Recovery Auditor could send Additional Documentation Request (ADR) letters or semi-automated notification letters

•  July 29, 2016 - the last day that a Recovery Auditor may send notification of an improper payment to providers. This includes sending a review results letter or no findings letter, and/or providing a portal notification to each provider.

•  August 28, 2016 - Recovery Auditors will complete all discussion periods that are in process by this date. Recovery Auditors continue to be required to hold claims for 30 days, starting with the date of the improper payment notification (via letter or portal) to the provider, to allow for discussion period requests.

•  October 1, 2016 - the last day a Recovery Auditor may send claim adjustment files to the MACs.

•  https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/recovery-audit-program/recent_updates.html,

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Recent Regulatory Updates

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Regulatory Update

• Centers for Medicare & Medicaid Services (CMS) – CMS expects final PRA approval of the MOON around October 1, 2016.

Hospitals and CAHs must fully implement use of the MOON and comply with all NOTICE Act requirements no later than 90 calendar days from the date of PRA approval.

• Medicare Administrative Contractors (MACs) – Noridian, operating in JE and JF, is the first MAC to request CMS approval to

deny “related” claims pursuant to CMS Transmittal 541 – Transmittal 541, issued September 2014, provides the MAC, ZPIC, and RA with

the discretion to deny “related” claims submitted before or after the claim in question

– CMS approved “cross recovery” of professional claims related to denied institutional facet injection services, CPT codes 64493 – 64495; 64635 – 64636

– While this is only the first instance of CMS approval of a MAC request to deny related claims, other MACs may soon follow.

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Regulatory Update

• Quality Improvement Organizations (QIOs) – After a 4+ month pause in the performance of short stay reviews, CMS

announced the QIO resumption of reviews effective September 12, 2016 – CMS lifted the temporary suspension after the QIOs completed re-training on

the Two-Midnight policy and re-reviewed claims that were previously denied

• Recovery Auditors (RAs) – CMS continues to be engaged in an active procurement process for the next

round of Medicare FFS RA Program contracts – While CMS had estimated the contract and award start dates to be in the

Summer of 2016, there have been no further procurement status updates – October 1, 2016 is the last day an RA may send claim adjustment files to the

MACs.

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Legal/Legislative Updates

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AHA v. Burwell (decided February 9, 2016)

• Action: The AHA and several hospitals seek a writ of mandamus to compel the Secretary to reach timely appeal decisions.

• Summary: “At heart, this case is about an agency caught between two congressionally assigned tasks.” - AHA v. Burwell, 2016 U.S. App. LEXIS 2164 (D.C. Cir. Feb. 9, 2016)

1.  Reach administrative appeals decisions within specific timeframes; and

2.  Implement the Medicare Recovery Audit Program to detect waste, fraud, and abuse

• Holding: The US Court of Appeals for DC reversed the district court’s dismissal for lack of jurisdiction and remanded to the district court with instructions to determine whether “compelling equitable grounds” now exist to issue a writ of mandamus.

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AFIRM Act of 2015

AFIRM (Audit & Appeal Fairness, Integrity and Reforms in Medicare) Act • Highlights:

– $125M+ in additional funding for OMHA and the Departmental Appeals Board to finance reviews, hearings, and appeals.

– Medicare Magistrates w/in OMHA to adjudicate lower cost appeals. – Annual on-line publication of appeal statistics to promote transparency.

• Status: – 12/8/2015: Bill introduced in Senate by Senator Orrin Hatch (R-UT) – Placed on Senate legislative calendar under General Orders. – Many additional steps necessary before it can become law.

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The Yates Memo

• September 9, 2015 memorandum from Deputy Attorney General Sally Quillian Yates to all DOJ attorneys.

•  Title: Individual Accountability for Corporate Wrongdoing

• What does it mean for healthcare providers?

– Highlights the need to hold individuals criminally or civily responsible for corporate wrongdoing.

– The Yates Memo cites the False Claims Act as an example of the application of this new policy.

– The potential exists for the Yates Memo to have an effect on healthcare companies, their executives, and frontline employees.

Marc Tucker, DO, FACOS, Vice President, Compliance and Education Marc.tucker@optum.com

Thank you

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