Novitas Solutions, in concert with CMS (Centers for Medicare & Medicaid Services), is continuing to focus on lowering the CERT (Comprehensive Error Rate Testing) claims paid error rate. Currently, one area of concern identified in the CERT data is one-day inpatient admissions and outpatient observation services. Specifically, recent CERT errors have identified a significant issue related to the submission of claims for one day inpatient admissions. These errors indicate observation services would have sufficed.
The following are examples of one-day inpatient admissions in which the documentation did not support the inpatient admission and observation care would have been the more appropriate billing. All examples are from CERT error reports and denied as inpatient one-day stays by the CERT contractor.
The following definitions and guidelines are provided to assist you in making future determinations regarding whether a claim is properly submitted as an inpatient admission or outpatient observation care.
“An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight.” – CMS, IOMs, Publication 100-02, Chapter 1, Section 10
Physicians are recommended to use a 24-hour period as a benchmark when making a determination on an inpatient admission. However, admissions are not deemed covered, or non-covered, solely on the basis of the length of time the patient actually spends in the hospital. Additionally, when a patient presents for a minor surgical procedure, or other treatment that is expected to keep them in the hospital for only a few hours (less than 24), they are considered outpatients, regardless of the hour the patient presented to the hospital and if that patient remained in the facility over the midnight census.
The 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. In general, the decision to admit a patient should be primarily based on the severity of illness and intensity of services rendered.
Inpatient care, rather than outpatient care, is required only if the beneficiary's medical condition, safety, or health would be significantly and directly threatened if care was provided in a less intensive setting. Without accompanying medical conditions, factors that would only cause the beneficiary, or beneficiary’s family, inconvenience in terms of time and money do not justify a continued hospital stay. This includes, but is not limited to, continued hospitalization when the patient’s condition warranted a discharge to home or when the patient could have been discharged for nursing home placement. Failure to discharge the patient when appropriate will result in a delayed discharge and will be subject to medical necessity denials.
When it is determined that a patient was admitted erroneously, the condition code 44 policy may be invoked. All the requirements set forth in the condition code 44 policy must be met in order to change the status from inpatient to outpatient. These requirements are included below:
The hospital may not bill observation charges retroactively to cover the time the patient was admitted as an inpatient in the hospital. Medicare does not permit retroactive orders or inference of physician orders. If observation is ordered upon the determination that the patient should no longer receive inpatient treatment, Medicare coverage begins when observation services are initiated in accordance with the physician’s order. In condition code 44 situations, as for all other hospital outpatient encounters, hospitals may include charges on the outpatient claim for the costs of all hospital resources utilized in the care of the patient during the entire encounter.
The use of a bed for physician periodic monitoring and active monitoring by the hospital's nursing or other ancillary staff, for the patient care which are reasonable and necessary to evaluate an outpatient's condition or determine the need for an inpatient admission.
Observation services must be patient specific and not part of the facility’s standard operating procedures. For example, post-procedural recovery and monitoring would not be billable as observation. In certain instances, specific clinical situations may arise and additional outpatient services, or an inpatient admission, may be medically necessary. However, this would have to be outside the standard recovery and monitoring periods for the procedure rendered.
Observation services are not considered medically necessary when the patient’s current medical condition does not warrant observation, or when there is not an expectation of significant deterioration in the patient’s medical condition in the near future.
Observation services generally are not expected to exceed 48 hours in duration. Observation services greater than 48 hours in duration are seen as rare and exceptional cases. If medically necessary, Medicare will cover up to 72 hours of observation services. Observation services rendered beyond 72 hours is considered medically unlikely and will be denied as such. The appeals process must be followed to have observation services exceeding 72 hours to be considered for payment. A patient in observation status is either:
A physician’s order is required when placing a patient in observation. Lack of documentation can lead to claim errors and payment retractions. A lack of documentation for an inpatient admission does not warrant retroactive observation billing. An order to admit the patient as an inpatient is also required when billing for an inpatient stay. Again, lack of documentation that clearly indicates the order for admission is grounds for a claim error and payment retraction. For example, and order simply documented as “admit” will be treated as an inpatient admission. A clearly worded order such as “inpatient admission” or “place patient in outpatient observation” will ensure appropriate patient care and prevent hospital billing errors. It is imperative that there is a continued focus on lowering the CERT rate and facility involvement is a key component to this goal.
In conclusion, providers are reminded that observation services are provided on an outpatient basis and should be billed according to observation billing guidelines; which state that all hours of observation should be submitted on a single line with the date of service being the date the order for observation was written. Orders for observation services are not considered to be valid inpatient admission levels of care orders. When billing observation services, Novitas Solutions expects the charges associated with those services to be billed as outpatient level of care services. Providers are encouraged to participate in educational opportunities offered by POE (Provider Outreach and Education). Training and educational materials are focused on addressing topics that assist providers in understanding Medicare policies.