The Final Rule has Taken Effect: Does Your Hospital Comply with CMS’ Requirements?

Kevin R. Miserez, Esq.
Jessica C. Forster, Esq.

By now, most hospitals are in the process of revising their inpatient admission documentation protocols to comply with the recent changes to the Hospital Prospective Payment System Final Rule for FY 2014 (“Final Rule”). In early November, the Centers for Medicare and Medicaid Services (“CMS”) announced that it will provide hospitals an additional three months of RAC-free reviews of inpatient admissions. However, during this time period, CMS has instructed Medicare Administrative Contractors (“MAC”) to conduct “Probe and Educate Reviews” in order to monitor and assist hospitals’ compliance with and implementation of the new requirements contained in the Final Rule. Originally, CMS announced that MACs would be conducting probe reviews of short-stay inpatient admissions with dates of admission between October 1 and December 31, 2013. CMS has since extended these probe reviews to dates of admission on or before March 31, 2014. The MACs will conduct inpatient status reviews of 10-25 claims per hospital, which will be conducted on prepayment basis. CMS has instructed the MACs to deny payment for any reviewed claim identified by the MACs to be out of compliance with the Final Rule. During the probe reviews, the MACs will provide education and outreach to those hospitals in which the MAC has identified moderate/significant or major errors in the claims selected for prepayment review. When conducting the probe patient status reviews, CMS has instructed the MACs to assess the hospital’s compliance with the (1) admission order requirements, (2) certification requirements and (3) 2-midnight benchmark. Although there has been extensive guidance and discussion surrounding the 2-midnight benchmark, guidance on the inpatient certification and order requirements has been minimal in comparison. On September 5, 2013, CMS released additional guidance that was intended to provide clarity specifically for the physician inpatient order and certification requirements, which took effect on October 1, 2013.

Under section 1814(a) of the Social Security Act, physician certification of medical necessity is required as a condition of payment for hospital inpatient services under Medicare Part A. In its September 5 guidance, CMS explained that the physician certification must include the reasons for inpatient services, the estimated time the beneficiary requires or required to be in the hospital, and any plans for post-hospital care. Also, the physician certification must include authentication of the inpatient order certifying, among other things, that the inpatient services were reasonable and necessary.

In regards to the authentication requirement, CMS explained that the certification may be signed only by a doctor of medicine or osteopathy, a dentist in the circumstances specified in 42 C.F.R. 424.13(d), or a doctor of podiatric medicine if his or her certification is consistent with the functions he or she is authorized to perform under state law. Furthermore, the physician who signed the certification must be the physician responsible for the case, or by another physician who has been authorized by the responsible physician or the hospital’s medical staff. In addition, the physician, podiatrist or dentist who signs the certification must also have “knowledge of the case.” According to the September 5 guidance, only specific physicians, podiatrists or dentists are considered to have the requisite knowledge of the case to qualify as the certifying physician. Examples of those specific physicians include the admitting physician of record, a physician on call for the admitting physician, or a surgeon responsible for a major surgical procedure or a surgeon on call for him or her.

As discussed in the September 5 guidance, CMS does not require specific forms or statements to be used for certification and recertification. In the absence of such forms or statements, CMS will look at a variety of elements contained in the medical record to determine whether the requirements for certification have been met. These include, but are not limited to, the reasons for inpatient services may be met by the inpatient admitting diagnosis and orders, the estimated time requirement may be met by the inpatient admission order written in accordance with the 2-midnight benchmark, and the post-hospital care requirement may be met by the physician notes or the discharge planning instructions.

As for the timing of the certification, CMS explained that certification begins with the order for inpatient admission, and in most circumstances must be completed, signed, dated and documented in the medical record prior to discharge. The inpatient admission order is an essential element of the physician certification and is required for payment. An inpatient order must be furnished by a qualified ordering practitioner at or before the time of the inpatient admission. A qualified ordering practitioner includes a physician or other practitioner who is licensed by the State to admit patients, granted privileges by the hospital to admit patients to that specific facility, and knowledgeable about the patient’s hospital course, medical plan of care and current condition at the time of admission. Additionally, CMS’ September 5 guidance provides that a non-qualified practitioner (e.g., physician assistant, resident or registered nursed) may document the order upon discussion with and at the direction of the ordering practitioner. Under these circumstances, the inpatient order must identify and be authenticated by the qualified ordering practitioner prior to discharge. An inpatient order authenticated by a qualified ordering practitioner will also satisfy the authentication requirement of the physician certification so long as the ordering practitioner also meets the requirements of a certifying physician.

When documenting the inpatient admission order, the order must specify that the patient is being admitted for inpatient services. In the September 5 guidance, CMS instructed hospitals that the most effective way of meeting this specificity requirement is to include term “inpatient” in the admission order. In the event that the term “inpatient” is omitted from the order, the inpatient admission order may still be deemed appropriate provided that the intent to admit the patient as an inpatient can be clearly interpreted from the remaining medical record documentation. However, there is certainly an increased risk that the failure to include the term “inpatient” will result in a contractor’s determination that the requirements for the inpatient admission order were not satisfied.

With the effective date of the Final Rule having already passed, hospitals are under pressure to implement their new inpatient admission and documentation protocols to comply with the Final Rule, including the certification and order requirements. Although short-stay inpatient claims are currently exempt from RAC audits until March 31, 2013, hospitals’ are still subject to prepayment denials by the MACs. While only a small number claims will be reviewed by the MACs during the prepayment probe reviews, CMS has stated that hospitals identified by the MACs as having continuing concerns in their compliance with the Final Rule at the end of the six-month probe review period may be selected for further prepayment review for a much larger sample of claims (100-250 claims, depending on the size of the hospital). Therefore, it is imperative that hospitals obtain a firm understanding of the changes contained in the Final Rule, as well as implement and continue to evaluate their inpatient admission and documentation policies sooner rather than later.