March 2022
THE LIVANTA
CLAIMS REVIEW
ADVISOR
A monthly publication to raise
awareness, share findings, and
provide guidance about Livanta’s
Claim Review Services 
Volume 1, Issue 2
Exploring Short-Stay Claim Review Guidelines
In this issue of The Livanta Claims Review Advisor:
  • History and Background of Short-Stay Claim Reviews
  • Short Stay Medical Review
  • Step-by-step Guideline for Short-Stay Determinations
  • Example Scenarios for Short-Stay Part A Denials
  • Documentation Features 
Brief History of Short-Stay Claim Reviews
The Centers for Medicare & Medicaid Services (CMS) implemented the Two-Midnight Rule in Fiscal Year (FY) 2014 to assist in determining when an inpatient admission would be appropriate for payment under Medicare Part A (inpatient hospital services). Under the Two-Midnight Rule, hospital stays with a reasonable expectation of at least two midnights are considered appropriate for Part A payment. In the FY2016 Outpatient Prospective Payment System (OPPS) Final Rule, CMS amended the Two-Midnight Rule and clarified that, in certain circumstances, Medicare would also pay for inpatient stays that lasted less than two midnights (i.e., “short stays”) on a case-by-case basis if the documentation in the medical record supported the determination that the patient required inpatient hospital care. The Two-Midnight Rule does not apply to procedures on the Inpatient-Only List.

Under CMS direction, Livanta is the Beneficiary and Family Centered Care -Quality Improvement Organization (BFCC-QIO) conducting fee-for-service claim reviews of acute care inpatient hospitals, long-term acute care hospitals, and inpatient psychiatric facilities to determine the appropriateness of Part A payment for short stay inpatient hospital claims. These claims are reviewed in accordance with the Two-Midnight Rule published in FY 2014 Hospital Inpatient Prospective Payment System (IPPS) Final Rule CMS-1599-F, as revised by CMS-1633-F. This Rule outlines two medical review policies: (1) a two-midnight presumption; and (2) a two-midnight benchmark. CMS also issued a BFCC-QIO Two-Midnight Claim Review Guideline that graphically depicts the tenets of the Two-Midnight Rule.

Read more: QIOs to Assume New Role in Education and Enforcement of the Two-Midnight Rule
Short-Stay Medical Review
Two-Midnight Presumption
Inpatient hospital claims with lengths of stay two midnights or greater after formal inpatient admission are presumed to be appropriate for Medicare Part A payment and are not the focus of medical review efforts, unless there is evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the two-midnight presumption. Therefore, these inpatient claims are not subject to sampling under the Short Stay Review (SSR) program. This presumption is explained in Livanta’s Step-by-Step Guideline for Short-Stay Review Determinations.

Two-Midnight Benchmark
The two-midnight benchmark represents guidance to Medicare review contractors to identify when an inpatient admission is generally appropriate for Medicare Part A payment under CMS-1599-F, as revised by CMS-1633-F. This guidance is consolidated in the graphic Two-Midnight Claim Review Guideline issued by CMS, noted below. Livanta follows these steps when making SSR determinations for sampled inpatient claims of less than two midnights.
Applying the Claim Review Guideline
The Two-Midnight Rule does not set a standard of care or dictate what kind of care physicians should be providing for patients. The rule is designed to determine how claims will be paid. Except for rare and unusual circumstances, physicians should generally treat patients expected to require medically necessary hospital care for less than two midnights under outpatient or observation. The term "outpatient" as used by CMS in the Two-Midnight Rule does not mean the patient should not be in the hospital—rather, it is used to designate an observation admission and Medicare Part B payment of the claim.

Support for an expected two-midnight stay
CMS acknowledges that there are circumstances where the patient’s length of stay may be less than that initially estimated at the time of admission; however, this is a relatively infrequent event. Estimates of length of stay are made based on data, clinical judgment, and plans of care. Documentation of these factors is reviewed specific to the admission and to support of the two-midnight expectation. Generic statements accompanying inpatient orders in many electronic medical records often do not provide sufficient clarity to support such decisions.
 
The physician's initial expectation of the beneficiary's length of stay may be uncertain. If the physician is uncertain whether the beneficiary will be able to be discharged after one midnight in the hospital or whether the beneficiary will require a second midnight of care, it may be prudent to spend the initial day in observation. When it is clearly expected that a second midnight will be required, the physician may order inpatient admission.
Support for admission without a two-midnight expectation
At the time of admission, if a physician believes that the situation is one of the rare and unusual situations where inpatient care is required—despite the fact that such care is not expected to span at least two midnights—then he or she should explicitly document the reason the specific case requires inpatient care as opposed to hospital services in an observation status. Upon review, CMS and its contractors retain the discretion to determine whether the documentation is sufficient to support the medical necessity of the inpatient admission.

The use of telemetry, by itself, is not considered a rare and unusual circumstance that would justify an inpatient admission in the absence of a two-midnight expectation as it is commonly used by hospitals on outpatients (i.e., emergency department and observation patients) and on patients for whom a brief period of assessment or treatment may allow the patient to avoid a hospital stay.

CMS also specified in the Final Rule that the use of an intensive care unit (ICU), by itself, would not be a rare and unusual circumstance that would justify an inpatient admission in the absence of a two-midnight expectation. In some hospitals, placement in an ICU is neither rare nor unusual because an ICU label is applied to a variety of units providing a wide variety of services. Due to this wide variety of services provided in different areas of a hospital, patient assignment to a specific hospital location would not justify an inpatient admission in the absence of a two-midnight expectation.

Potential quality of care issues noted during a review for payment of a short stay are referred to the appropriate Regional BFCC-QIO for follow up. 
Step-by-Step Guideline for Short-Stay Review Determinations
The CMS Two-Midnight Claim Review Guideline is posted on the cms.gov website. Livanta includes a copy of the Guideline here, for convenience. The file was last accessed March 29, 2022. A link is also included for reference.

CMS Two-Midnight Claim Review Guideline (file may appear in a download folder)
Livanta operationalizes this Guideline issued by CMS for claim reviews to approve or deny the sampled claims, using the documentation in the medical record associated with the claim. There are three potential final outcomes of a Short Stay Review:
  • Approved: the claim is appropriate for Medicare Part A payment.
  • Excluded: the claim meets one or more of the exclusion criteria outlined in the Rule.
  • Denied: the claim is not appropriate for Medicare Part A payment.

Step 1: Did the inpatient stay from the point of a valid inpatient admission order to discharge last two midnights?
  • Yes to this step leads to the claim being Approved
  • No to this step sends the review onto Step 2

Step 1 is related to the Two-Midnight Presumption and only counts time after the inpatient admission order. Outpatient time is taken into consideration at Step 4b.
 
Step 2: Did the patient need hospital care?
  • Yes to this step leads the review onto Step 3
  • No to this step requires physician review for a potential denial

Part A payment is not appropriate for purely custodial care. Part A payment is generally not appropriate in the following circumstances: Care rendered for social purposes; care rendered for convenience only; delays in providing medically necessary care (generally, delays greater than 24 hours for consultations, testing, care plan documentation).

Step 3: Did the provider render a medically necessary service on the Inpatient-Only List?
  • Yes to this step leads to the claim being Approved as an exclusion
  • No to this step sends the review onto Step 4

In implementing the CMS Guideline, Livanta samples with the goal to avoid claims with procedure codes associated with a procedure on the applicable Inpatient-Only List. Due to crosswalk complexities, an occasional sampled claim procedure may be on the Inpatient-Only List. The medical record for such a claim is reviewed by a certified coder to ascertain whether or not the actual procedure performed is a procedure on the Inpatient-Only List. If it is determined that the procedure performed is on the Inpatient-Only List, the claim is approved for payment under Medicare Part A as an exclusion. If the patient presents for a scheduled procedure on the Inpatient-Only List and the procedure is aborted or cancelled, the claim is also approved for payment as an exclusion

Step 4: Was it reasonable for the admitting physician to expect the patient to require medically necessary hospital services, or did the patient receive medically necessary hospital services for two midnights or longer, including all outpatient/observation and inpatient care time?

Livanta breaks this step down into three components.

4a: Was it reasonable for the admitting physician to expect the patient to require medically necessary hospital services?
  • Yes to Step 4a sends the review onto Step 4b
  • No to Step 4a requires physician review for a potential denial, if Steps 4b, 4c, and 5 are also answered No

4b: Did the patient receive medically necessary hospital services for two midnights or longer, including outpatient/observation and inpatient care time?
  • Yes to Step 4b leads to the claim being Approved
  • No to Step 4b sends the review onto Step 4c

For patients who are transferred from one facility to another, the time spent in the transferring hospital also counts. The medical record submitted for review should contain documentation of the time spent in the transferring hospital.
 
4c: Did any of the following “unforeseen circumstances” result in a shorter stay? (select from Death, Transfer, Departures against medical advice, Election of hospice, Clinical improvement)
  • Selection of any option except clinical improvement at Step 4c leads to the claim being Approved as an exclusion
  • Selection of No or clinical improvement sends the review onto Step 5

Generic statements such as "I anticipate a 2 midnight stay" are not sufficient to meet Step 4. The physician documentation of the evaluation and plan of care must indicate a reasonable expectation of a two-midnight stay. If the length of stay is uncertain, based on results of further testing, then it would be prudent to use observation until the need for a second midnight of care becomes clear. If the plan of care at the time of admission predicts a reasonable expectation of a two-midnight stay but the patient dies, recovers more quickly than expected, is transferred, elects hospice care, or leaves against medical advice (AMA), then the claim is payable under Medicare Part A.
 
Step 5: Does the claim fit within one of the rare and unusual exceptions identified by CMS (currently new mechanical ventilation)?
  • Yes to this step leads to the claim being Approved
  • No to this step sends the review onto Step 6

New mechanical ventilation provided by non-invasive ventilation such as BiPAP fits into this category; routine CPAP/BiPAP for sleep apnea does not.

Step 6: Does the medical record support the admitting physician's determination that the patient required inpatient care despite not meeting the two-midnight benchmark based on complex medical factors such as patient history and comorbidities and current medical needs, severity of signs and symptoms, or risk of an adverse event?
  • Yes to this step leads to the claim being Approved
  • No to this step leads to a potential denial of the claim

The decision on this step is always the result of physician review. The physician’s documentation must indicate the reason the patient needs inpatient admission without a two-midnight expectation. The care provided along with the reason for the admission must be of sufficient intensity and risk above the patient’s baseline risk. The "patient risk" that qualifies under this category is not the patient’s baseline risk but the risk of the treatment provided that recognizes the patient’s comorbidities. In general, the patient’s comorbidities are only relevant to this decision in so far as they influence the management of the condition that required admission. This influence should be documented in the record.
Examples of Short Stay Scenarios Denied for Part A Payment
  • Tachyarrythmias where rate control is obtained within hours without hemodynamic instability or an acute precipitating medical event such as a myocardial infarction or a pulmonary embolism
  • Chest pain with normal vital signs and negative biomarkers and electrocardiogram
  • Neurologic syndromes that resolve with minor deficits, a National Institutes of Health Stroke Scale score of less than 2, with negative imaging, admitted for work-up
  • Shortness of breath that responds to emergency department treatment without significant hypoxia or signs of underlying pneumonia
  • Altered mental status without signs of central nervous system or metabolic derangements or sepsis
  • Nausea and vomiting or abdominal pain with normal imaging, non-focal examination, and nothing to point to an acute condition that requires intervention or close monitoring
  • Weakness or dizziness without evidence of profound dehydration or an underlying process expected to reasonably require two midnights of treatment
  • Missed dialysis with fluid overload or non-critical electrolyte abnormalities, expected to improve with a single dialysis
  • Patients sent in for symptoms that resolve prior to presentation in the emergency department or shortly thereafter and have shown marked improvement at the time of admission–the status at admission is critical to the decision to admit
  • Trauma without evidence of organ derangement that would require intervention admitted for less than two midnights of observation
  • Drug overdose in patients who do not require inpatient support and can be expected to clear the drug in less than two midnights
Documentation is Key
Part A reimbursement is based on the continued need for hospital services for a second midnight.

Document case-specific features that would support the expectation of a two-midnight stay at the time of admission, such as a complex plan of care, need for frequent monitoring, impact of comorbidities, likelihood of an adverse event, or specific services that can only be provided in the hospital. Be as specific as possible and try to avoid generic statements. If the patient is being discharged prior to spending two midnights in the hospital, provide specific rationale for the decision to change from observation to inpatient status.
There are three ways that a patient can meet medical necessity for Part A payment:
  • Care that required hospital services for at least two midnights;
  • Documented reasonable expectation of two midnights of hospital care, supported by the plan of care at the time of admission; or
  • Documented need for inpatient care despite the lack of a two-midnight expectation, including an increased intensity of care needed and provided; an increased likelihood of an adverse event based on the patient’s circumstances; or a service that can only be provided on an inpatient basis.

The more explicit a physician’s documentation of his or her thought process, the more accurate the QIO determination will be.

DOCUMENTATION remains the best way to ensure appropriate reimbursement. Physicians should explain the need for a two-midnight stay or inpatient services in the absence of a two-midnight expectation. The attending physician should describe what services are uniquely inpatient services or require two midnights of hospital care. Documentation need not be exhaustive but should be specific to the case. 
Questions?
Should you have questions, please email [email protected].
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