Clarification: Two-midnight rule and related changes for BCBSM Medicare Advantage PPO

In the February 2014 Record, Blue Cross Blue Shield of Michigan announced its intent to align with the Centers for Medicare & Medicaid Services in implementing Medicare 2014 inpatient rule changes for Medicare Advantage PPO plans, including the two-midnight rule, effective April 1, 2014.

Following that announcement, Blue Cross received numerous requests from providers for additional information. The following are answers to the most frequently asked questions:

1. Why do hospitals have to complete prenotification if the case meets criteria for medical necessity and the stay is greater than two midnights?
   
   Blue Cross Medicare Advantage PPO plans contractually require participating Medicare Advantage providers to submit prenotification of all acute inpatient hospital admissions. The physician’s decision to admit a patient should be based on medical necessity and follow the CMS guidelines for an inpatient stay. Blue Cross Medicare Advantage PPO plans use the admission information supplied by the hospitals to promote the highest quality of care for members by referring appropriate cases to our wellness and care management programs when appropriate. This also helps ensure seamless transitions from the inpatient setting back home or to an alternate level of care.
   
   
2. Should hospitals wait until the second day of a stay to review cases to ensure the patient stayed two midnights and met the InterQual criteria for an inpatient stay? Would waiting affect our prenote reporting?

Hospitals should continue to review cases according to their established schedule and process while providing Blue Cross with timely prenotification of medically necessary inpatient admissions. The expectation that providers use web-DENIS to promptly notify Blue Cross of inpatient admissions has not changed.

As stated in the 2014 Inpatient Prospective Payment System final rule issued by CMS, if the order is not properly documented in the medical record, the hospital should not submit a claim for Part A payment (78 FR 50941). Meeting the two-midnight benchmark does not, in itself, render a beneficiary an inpatient or qualify that beneficiary for payment under Part A. Rather, as provided in CMS regulations, a beneficiary is considered an inpatient (and Part A payment may only be made) if that beneficiary is formally admitted pursuant to an order for inpatient admission by a physician or other appropriate practitioner. 

3. We have a patient who was admitted as an inpatient but did not meet the InterQual criteria for an inpatient stay. Our physician advisor reviewed the case and recommended observation status, but the attending physician would not change the order. What can we do?

Blue Cross does not engage in the hospital’s management of disagreements between its physicians. The CMS regulations specify that the decision to admit should generally be based on the treating physician’s reasonable expectation of a length of stay spanning two or more midnights, taking into account complex medical factors that must be documented in the medical record. Because this is based upon the physician’s expectation, as opposed to a retroactive determination based on actual length of stay, unforeseen circumstances that result in a shorter stay than the physician’s reasonable expectation may still result in a hospitalization that is appropriately considered inpatient. In accordance with the Blue Cross Medicare Advantage PPO provider manual, if a doctor is overriding InterQual inpatient criteria, then the hospital must provide the doctor’s name and phone number in the prenote documentation.

If the physician is unable to determine, when the beneficiary arrives at the hospital, whether he or she will require two or more midnights of hospital care, the physician may order observation services and reconsider providing an order for inpatient admission at a later point in time.

In considering stays lasting less than two midnights following formal inpatient admission (i.e., those stays not receiving presumption of inpatient medical necessity), the reasonableness of the physician's expectation of the need for and duration of care must be clearly documented in the medical record. These reasons should be based on complex medical factors, such as history and comorbidities, the severity of signs and symptoms, current medical needs and the risk of an adverse event.

4. Under the new CMS guidance, will all inpatient stays of less than two midnights after formal inpatient admission be automatically denied?

No. Under the CMS guidelines, there will still be services payable under Part A in a number of instances for inpatient stays less than two total midnights after formal inpatient admission. Hospitals should focus their attention on short (0-1 total days) stays (without death, transfer, discharge against advice, an inpatient-only service or a preceding outpatient stay over midnight) to ensure that the physician clearly expected a longer stay, the discharge was unexpected, or some other rare and unusual circumstance supports that the Part A claims represent appropriate, payable inpatient services. For example:

• There will be cases where the physician had a reasonable expectation of a two-midnight stay, but there was an unforeseen circumstance that resulted in a shorter stay than the physician’s reasonable expectation.
• If the beneficiary received a medically necessary service on the Inpatient-Only List and was able to be discharged before two midnights passed, those claims would be appropriately inpatient for Part A payment.
• Inpatient claims for patients who unexpectedly improved and were discharged in less than two midnights would be payable as long as the medical record clearly demonstrated that the admitting physician had reasonable expectation of a two-midnight stay and the improvement that allowed an earlier discharge was clearly unexpected.

For more information, please refer to Q4.9 on Page 14 of the CMS frequently-asked-questions document**.

5. Are hospitals allowed to change an inpatient stay to observation status after discharge?
   
   Yes. In cases where a hospital determines that an inpatient admission does not meet the hospital’s inpatient criteria, prior to submission of a claim, the hospital may change the beneficiary’s status from inpatient to outpatient and submit an outpatient claim (bill type 13x or 85x) for medically necessary Medicare Part B services that were furnished to the beneficiary, provided all the following conditions are met:
• The hospital has not submitted a claim to Medicare for the inpatient admission.
• The practitioner responsible for the care of the patient (and the Utilization Review committee, if applicable) concur with the decision.
• The concurrence of the practitioner responsible for the care of the patient (and the UR committee, if applicable) is documented in the patient’s medical record.

This change in status is typically billed with condition code “44.” Blue Cross Medicare Advantage PPO plans have waived the requirement that the change in patient status from inpatient to outpatient must be made while the beneficiary is still a patient of the hospital, prior to discharge or release.
When an inpatient claim has already been denied by Medicare and the hospital loses an appeal, or decides not to appeal, it may rebill for Part B services which are medically necessary. The hospital can also bill for the services provided as an outpatient during the three-day window. Hospitals submitting Part B inpatient claims in these situations need to include condition code “W2” on the rebilled claim.

**Blue Cross Blue Shield of Michigan does not control this website or endorse its general content.