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Registered nurse Laura Frey enters data into a computer in a trauma room at Parkview.

Waiting for midnights

Hospitals critical of Medicare’s new rules for reimbursement

Photos by Michelle Davies | The Journal Gazette
Registered nurses Heather Burniston, left, Jennifer Bell and Jeff Minard work on patients’ charts in the Emergency Department at Parkview Regional Medical Center.

It’s called the two-midnight rule, and some hospitals want to avoid it like a measles epidemic.

Federal officials want to make sure that hospitals are admitting only those patients who really need extended expert medical care, which is expensive. So they drafted a plan to audit Medicare claims for inpatients whose hospital stays are shorter than two midnights.

The theory is that any patient who stays in the hospital longer than that legitimately needs to be there.

There are potential benefits to the rule. Cutting hospital reimbursements for one-night stays would reduce federal health care spending. Also, federal officials say the new rule establishes criteria for when a hospital must admit a patient rather than letting the person linger in observation status.

But hospitals fear this is just the government’s way of weaseling out of paying for expensive medical care that health care professionals have already provided. They say inpatient status has always applied to patients who stay in a hospital room one night, and the government hasn’t made a compelling argument why that should change.

Consumers are caught in the middle. Taxpayers surely endorse lower federal spending on health care. But patients and their families want to ensure that, above all, appropriate medical decisions are being made in their case.

Hospitals could conceivably respond by keeping patients longer to make sure they exceed the two-midnight threshold that could trigger an audit.

Or they could release patients who would benefit from one overnight in the hospital.

Local hospital officials say that’s a trap they won’t fall into – even if they risk having more claims audited.

Federal officials adopted the two-midnight rule last year, setting an effective date of Oct. 1, 2013. But they have pushed back enforcement three times to allow federal officials more time to write clear guidance on how to comply. The most recent delay extends implementation until after March 31, 2015.

In the meantime, the American Hospital Association and a coalition of hospitals have filed a challenge to the changes, and Congress is considering bipartisan bills that specifically address the issue.

Dollars and docs

The difference between how much it costs to be treated in the emergency room and how much it costs to spend one day as a hospital patient is considerable.

Actually, it’s less than half.

The U.S. average cost for one day as an inpatient was $1,960, according to the Kaiser Family Foundation, which used 2011 data. The charge for an emergency department visit that didn’t result in admission was $969, according to the U.S. Department of Health and Human Services, which used 2010 data.

In Indiana and Ohio, the average cost of each inpatient day was even higher: $2,025 in Indiana and $2,170 in Ohio.

When doctors are able to treat ’em and street ’em, as the saying goes, it saves a lot of money for everyone – especially taxpayers. Combined, Medicare and Medicaid paid almost 47 percent of hospital care expenses in 2010, according to data from the Centers for Medicare and Medicaid Services. Medicare recipients are U.S. residents age 65 and older and younger people with disabilities. Medicaid recipients are low-income individuals and families.

For comparison: Patients paid only 3 percent of total hospital care revenue in 2010, according to the same study. That’s less than one-fifteenth as much as the federal government pays, on average.

The challenge: How can hospitals reduce the number of people admitted to the hospital without risking making mistakes by sending home someone who really should be tucked into a hospital bed?

The middle way

There’s a third status besides inpatient and outpatient, said Joni Hissong, director of care coordination, case management and social work for Parkview Health.

An outpatient with observation services can stay in the hospital overnight. The person isn’t officially considered an inpatient but receives the same level of care as an inpatient, she said.

Hissong, a registered nurse, said Parkview medical staff evaluate patients before a doctor decides the next steps. A clinical assessment includes blood pressure, temperature, pulse, blood-oxygen levels and other vital signs, along with asking numerous questions.

Whether to admit the patient to the hospital can depend on the person’s current status and overall health, taking into account chronic conditions such as diabetes, congestive heart failure and chronic obstructive pulmonary disease, or COPD, she said.

Doctors base their judgment on training and experience. Clinical criteria for when to admit a patient are available, but Hissong described them as guidance only, not rules.

“The decision to admit a patient is always a complex medical decision that the physician makes,” she said. “We always make the clinically right decision for the patient. We do the right thing for the patient every time.”

The process is similar at hospitals owned and operated by Lutheran Health Network, spokesman Geoff Thomas said. He provided a statement.

“The new two-midnight rule from the Centers for Medicare and Medicaid Services instructs physicians to utilize their medical judgment to certify and document the criteria necessary for a hospital admission,” he wrote.

“If a physician expects a Medicare beneficiary’s treatment to require a hospital stay lasting at least two midnights, and admits the patient based on that expectation, the service will be covered under Medicare Part A,” Thomas said. “Episodes of care shorter than this will generally be classified as observation status, an outpatient service covered by Medicare Part B.”

Paying up

Ah, that’s the issue: reimbursement.

Medicare and most private insurance companies pay lower rates for outpatient than for inpatient care. Patients with private insurance, including through an employer, could feel the difference in their wallets if their policies call for different co-pays based on whether they are admitted to the hospital or remain on an outpatient status, said Spencer Grover, vice president of the Indiana Hospital Association.

The issue has caused great concern among hospital administrators.

“It’s confusing to physicians and patients,” Grover said, adding that he and the organization he represents don’t support the two-midnight rule.

Thomas said Lutheran will make it a priority to educate staff on the new pending rule. But a national hospital association wonders if that’s even possible.

In a 30-page complaint filed April 14 in U.S. District Court, the American Hospital Association alleges that the new standards are “arbitrary and capricious.”

By classifying inpatient status as only those patients who are in the hospital two midnights or longer, the Centers for Medicare and Medicaid Services will save “millions of dollars because it will convert tens of thousands of inpatient cases, reimbursed under Part A, into outpatient cases, reimbursed under Part B,” the hospital association alleges.

Parkview is ready to fight for higher federal reimbursement when necessary.

When Medicare or an insurance company denies a claim after service is provided, Parkview files a petition, citing details of the case, Hissong said. Typically, both the hospital and the auditor are represented by doctors during the appeals process, she said.

“We have a very, very low denial rate,” Hissong said. “And we have a very high success rate with our appeals.”

Parkview, like all other hospitals, has not yet been audited under the two-midnight rule.

sslater@jg.net

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