Analysis by Marilyn Singleton, MD, JD of Hospitals Improvements for Payment (HIP) Act of 2014.
We cringe when we see “comprehensive” reform of anything but don’t shoot the messenger. Even if physicians do not take Medicare patients under Part B, these patients are still captured by Medicare Part A.
The House Ways and Means Health Subcommittee chairman has introduced for discussion the Hospitals Improvements for Payment (HIP) Act of 2014. This is to be the first step in comprehensive Medicare reform. The Committee is requesting comments from the public. Please send all comments on this discussion draft to [email protected].
The “two-midnight rule” has been particularly vexing as both physicians and patients can suffer the consequences. Many patients who believed they were admitted to the hospital because they were “observed for two full days have been denied payment for skilled nursing post discharge.
Here is a brief background on the two-midnight rule. If a Medicare beneficiary is treated in a hospital for a minimum of two-midnights, the hospital stay is deemed “generally reasonable and necessary” as an inpatient stay. However, if a beneficiary is treated for less than two-midnights (short stays), it is not assumed that the inpatient stay is reasonable and necessary.
In CMS’ view the majority of improper hospital payments pertain to these short stays, which CMS believes “are due to inappropriate patient status—that is, the services furnished were reasonable and necessary, but should have been furnished on a hospital outpatient, rather than hospital inpatient, basis.” The Recovery Audit Contractors (RACs) have focused their auditing on short stays. Most hospitals contested the denial of payment. Beginning on October 1, 2013, CMS placed a moratorium on RAC audits on most hospital claims related to medical necessity in an attempt to stem the backlog of audits and appeals. With the Protecting Access to Medicare Act of 2014, Congress further codified this moratorium through March 31, 2015, in order to provide more time to find a solution to these issues.
The key issues that are addressed in the draft bill are:
- Potentially misaligned incentives between inpatient and outpatient hospital payments;
- Unintended consequences of using auditors to solve a payment issue, including an increase in provider appeals and observation stays—which has cause coverage problems for beneficiaries and as result of hospital appealing the Recovery Audit Contractor (RAC) denials, as well as other provider/supplier appeals, over the course of five years, there are nearly 800,000 claims back-logged waiting to be addressed;
- Obama Administration’s “two-midnights” policy; and
- Obama Administration’s decision to deny providers their appeal due process rights.
Title I of the HIP discussion draft addresses and offers solutions for nine specific issues, including:
- A new hospital prospective payment system;
- A new per diem rate for short lengths of stay;
- Repeal of the two-midnights payment reduction; and
- Improvements to the RAC program
Title II includes bipartisan suggestions for inclusion in the proposed bill, including:
- Requires hospitals to notify beneficiaries, who are in observation, that they may not qualify for coverage of skilled nursing facility services.
- Repealing the ObamaCare moratorium on physicians-owned hospitals,
- Repealing the statutory condition of payment requiring Critical Access Hospitals (CAHs) to provide an average length of stay that is at least 96 hours in duration
- Providing parity by allowing nurse practitioners, physician assistants, clinical nurse specialists and midwives to meet the documentation requirements for ordering a hospital stay.
- Establishing a comprehensive, voluntary bundled payment program.
Full text of proposed bill at: http://waysandmeans.house.gov/uploadedfiles/hip_sec-by-sec_.pdf
