From The LGH Physician Advisor Team

Out with the old, and in with the new! The LGH Physician Advisors have implemented a new process to review all Medicare inpatient cases that have been discharged after only one midnight.  This review is in response to concern that government audits are focusing on cases that fall into this category, which are being scrutinized for lack of medical necessity and an unclear expectation of two midnights by the admitting physician. 

Nationally, we have heard feedback that cases are being denied for payment if the plan on admission does not outline a two-midnight expectation. CMS has made it clear that simply giving a discharge date or saying you expect the patient to stay for two midnights is not enough.  CMS wants to see a plan outlined that spans two midnights.  We request that all admitting providers remain diligent about outlining the medical necessity for hospitalization and why you expect at least two full days of hospital care. If you are able to briefly outline a two-day treatment plan for what you order as an inpatient stay, that would be fairly audit-proof!

It probably goes without saying, but if you expect a Medicare patient to go home the next day, that patient should be Observation status.

Now, here is the process of LGH self-denial for Part A payment. (If this happens, we will contact you.)

If the reviewed <1MN (inpt) case fails to show a two-midnight expectation, based on the lack of documentation or medical necessity, we will follow the CMS process of self-denying the inpatient bill and requesting outpatient (Part B) billing.

The process is:  

  • The attending physician will be notified though Epic when this occurs.

  • If the attending agrees, we move forward with the self-denial. If the attending disagrees, a second Physician Advisor (PA) will review, then either concur or disagree.

  • If there is agreement that the case is not appropriate for inpatient and best classified as Observation, a letter is sent out to the patient. The letter notifies the patient of the change in the status of his/her stay and how it affects the Explanation of Benefits and/or co-pay.

  • LGH self-denies the billing to Medicare for inpatient for cases where the Two Midnight Rule is not met, instead billing for Part B (in this case, Observation services). This process helps LGH to avoid financial losses to the auditors, as well as fraud concerns. 

This all calls for a focus on what documentation is needed to support an inpatient stay for Medicare patients, regardless if the stay is 1 or 2 MN.  To assist you in strong documentation, we plan to modify the embedded phrase at the bottom of each History and Physical, making it simpler to state what diagnostics and treatments are expected to take at least two midnights. Please remember that in cases that do get better faster than expected, choose that option in the discharge summary when explaining the one-midnight stay.  We have seen several cases where a two-midnight expectation is well-documented in the H&P, but the discharging physician chooses the option explaining the patient was in Observation (despite having an inpatient order).  If Observation is documented in the DC summary, we have no choice but to self-deny the inpatient bill and cut losses that are not necessary!

These errors absolutely have a significant financial impact, as Observation services were never ordered, so the $2,275 Observation bundle cannot be billed. Likewise the patient will receive co-pays for the various Part B services.  It would have been better in these weak cases to have started out in Observation.

If you have questions about the self-denial process or the Two Midnight Rule, our phone lines are always open, at 544-4675 or 544-6253.  You can also page or email any of the Physician Advisors:  Phil Billoni M.D., Jen DeLutis M.D., Lisa Kernic D.O. or Tara Tawil M.D.

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