On-demand webinar
Navigating the Two-Midnight Rule in the Medicare Advantage World
Hear top insights and an analysis of the latest trends impacting the utilization management function since the changes became effective Jan. 1, 2024.
Speaker 1 (00:02):
Hello everyone and thank you for joining today's webinar, navigating the two Midnight Rule in the Medicare Advantage World. My name is Brittany Turman with Optum and I will be your host today. Before we begin, please note the following housekeeping items at the bottom of your audience console are multiple application widgets that you can use to customize your viewing experience. If you have any questions during the webcast, you can click on the q and a widget at the bottom of your screen to submit a question. We do capture all questions and we'll be providing follow-up to questions as appropriate. If you experience any technical difficulty, please click on the help widget. It covers common technical issues. You can expand your slide area by clicking on the maximize icon on the top right of the slide window or by dragging the bottom right corner of the slide window.
Speaker 1 (00:46):
There is a survey widget, which you can use at the end of the webcast to provide us with feedback on today's presentation. Additionally, this presentation does use streaming audio. You may listen to the audio through your computer speakers or headphones to ensure the best possible system performance, please be sure to shut down any VPN connections and connect directly to the internet. Presenting today will be Dr. Kurt Hopkins Berger, vice President Medical Solutions with Optum, and Dr. Robert Snick, physician clinical relationship manager with Optum. Now I'm going to go ahead and turn things over to Dr. Hoffberger.
Speaker 2 (01:21):
Well, thank you Brittany, and good morning or good afternoon, wherever you may be. I think we've got an interesting WebEx for you today. For those of you who are not familiar with our presenting team, I'll go first and turn it over to Dr. Snick. Kurt Hoffberger. I'm a physician and an attorney. I am a neurologist by background practice neurology for about 15 years and practiced law full-time for about three years before joining Optum where I've been involved in utilization review, clinical documentation improvement and managing physician advisor programs. And I'm very happy to be here. And with that Dr. Snick, I'll turn it over to you.
Speaker 3 (02:06):
Alright, absolutely. Well staying good morning, good afternoon to all. My name is Dr. Snick, I'm an internal medicine physician by training. I live in Anne and I have experience as a hospitalist, but I've been here with Optum for the last 13 years in various capacities, but mainly in a clinical relationship manager role. So I'm really excited to be here. We have a lot to get to today and we want to make sure that we leave enough time for questions and answers at the end. So let me just jump in here and start with our agenda. So this is what we're going to try to go over over the next 20 or 25 minutes, the two midnight rule and its impact on utilization review. We're going to touch on some criteria for medical. Of course, as you know, proprietary guidelines such as InterQual or Milliman are not authoritative with respect to making an inpatient admission decision.
Speaker 3 (03:10):
Really, it's both medical necessity and time that are crucial to consider when determining the appropriate status for a beneficiary held to the two midnight rule. We're going to spend some time talking OPPS modification to the two midnight rule, specifically with the major change that short inpatient hospital stays rather than being rare and unusual, we're again going to be payable on a case by case basis. I could certainly share some of our experience with short stay audits with respect to that modification and how it was somewhat inconsistently applied. And finally, some key takeaways for how to approach the two midnight rule with a focus on both medical necessity with the regulatory overlay of time.
Speaker 3 (04:04):
So we felt that the time was right for a review of the two midnight rule. It's been the law of the land now for the last decade for the fee for service population, but before January 1st, there was a huge variability for how Medicare Advantage plans handled patient's status with regard to time. So the 42 0 1 was proposed well over a year ago actually and finalized to become effective at the beginning of 2024. It's a big rule. There's a lot of parts, but relevant to our discussion here, it's stated that Medicare advantage plans must follow the two midnight rule that they must pay for an inpatient admission when based on consideration of complex medical factors documented in the record, the admitting physician expects the patient to require hospital care that crosses to midnights. And so Kurt, I wanted to ask you a question here. Given that the 42 0 1 was designed to bring Medicare Advantage plans more closely in alignment with traditional Medicare, why does it appear that aggregated remittance data still shows a persistent somewhat higher observation rate for the Medicare advantage population as compared to traditional Medicare?
Speaker 2 (05:31):
That's a great question, Rob, and I think there are really two facets to the answer or the non-answer of that question. The first one being, should we assume that Medicare Advantage plan should have similar observation rates as traditional Medicare in a particular facility and so on and so forth? Certainly seems to indicate the 42 0 1 that because an inpatient stay is considered in a sense, a basic benefit that all plans have to provide, that there could be concerns when observation rates are significantly different for Medicare Advantage plans as well. But the second facet to that answer is we still have questions about traditional Medicare in the two midnight rule, as you pointed out a decade later. And quite frankly, I think the MA plans around the country being completely new to this, having experienced it for less than a year, they also have a lot of questions, probably somewhat similar to the enormous number of questions that we experienced for traditional Medicare 10 years ago. So I think there's still a learning curve. I think there's still a lot of room for dialogue, and I would expect, and I would think, I'm just guessing here, CMS would expect that observation rates between Medicare Advantage plans and traditional Medicare would slowly start converging in some way.
Speaker 3 (07:05):
Alright, well fair enough. Thank you. And why don't we start, we have a survey question here that is, oh sorry, did I go too far since the two midnight rule became effective? And I would read this actually as since the 42 0 1, since January 1st with the aligning of the Medicare Advantage plans to the traditional two midnight rule. What has been your experience in terms of review of these cases and denials? And it'll just give us an idea of what you are seeing out there. Feel free to enter as many as may apply to you will tally up these results over the next 30 seconds and then kind of compare and contrast to what our experience here at Optum has been since January 1st. So we'll just take a beat here. Has there been more inpatient billing in this population, more denials as a result? What has been the impact on the peer-to-peer volume, et cetera, et cetera? Okay,
Speaker 2 (08:26):
I see the answers are still coming in there. Absolutely.
Speaker 3 (08:40):
Okay. Alright. So here is what you said here, increase in denials from the seems to be not surprisingly, one-to-one for an increase in the peer-to-peer volume. That makes complete sense. Of course, an increase in need to review Medicare Advantage, Medicare Advantage cases is closely followed behind and I think that that would be in concert with what we've seen more or less. So what we did here is we took our Q4 2023 Medicare advantage volumes and compared it to data from Q1 of 2024. And just like your number two answer there, there's been a significant increase in the volume of concurrent second level review cases that we're seeing come in on Medicare Advantage plans. And we've also increased significantly our inpatient recommendation rate for those cases that have been sent into us. And it's not surprising necessarily, if you take the idea that the original two midnight rule a decade ago was to greatly reduce long stay observation in favor of increasing inpatients.
Speaker 3 (10:04):
Well, I think you could expect that now that Medicare Advantage plans are being held to the two midnight rule, that there would be an increase in the inpatient recommendation rate of those cases, perhaps even less of a surprise. I mean it's a truism to a point, but the more we recommend inpatient and the more our clients are billing inpatient, you're going to see more denial. So we have seen an uptick in the need to perform peer to peers. And Kurt, I know you're somewhat close to this, what are some of the common arguments we've heard from payers on both cases that have not crossed to midnights and even cases that have crossed to midnights?
Speaker 2 (11:00):
I'm speaking in very broad generalities here, but some of the arguments we've heard, well there are a lot of them. We've actually covered them in a publication recently as well. Initially back in December and January, about a year ago, we were actually hearing some payers saying they simply didn't believe the two midnight rule applied to MA plans despite the fairly plain language in the 42 oh run rule itself that it did. I think a lot of the arguments and a lot of the controversy comes around cases that are about to or have just crossed to midnights. I think a lot of the payers have an idea, and I'm not taking a position by saying this, but I think a lot of the payers have the idea that there must be something beyond medically necessary hospital services. Obviously I'm putting words in payer's mouths when I say that, but the idea that medically necessary hospital services spanning to midnight is not enough.
Speaker 2 (12:05):
There has to be some enhanced level of risk or acuity or some enhanced level of services provided beyond medically necessary services as a whole. I think if I had to summarize what we've been seeing, that would be it. That's where most of the controversy is. MA plans always paid a certain percentage of short stays because sometimes it's just so obvious a patient is an inpatient despite a short stay. But I think the idea of an expectation is somewhat new to payers and they're getting used to this. And again, the idea of medically necessary hospital services, what does that actually mean in the context of the midnight rule? So that's what we're seeing mostly in our discussions with payers on peer-to-peers, et cetera.
Speaker 3 (12:56):
Alright, that sounds good. And I remember on the survey slide, the top answers need to review Medicare advantage cases, increase in denials, increase in peer in peer-to-peers needing to be done, et cetera. I think the one thing becomes clear when I look at the aggregate Q1 2024 data for our Medicare advantage population net net there are more inpatients where inpatient is being billed more, there is an increase in denial. We're able to maintain overturn rates. And I think that's also what we're seeing in aggregate remittance data that the observation rate for Medicare advantage did take a significant step down from Q4 2023 to Q1 2024. Move on here and while we're on medical necessity, it's our very next slide here. So what about medical necessity? As I said at the outset, appropriate status rather is a combination of medical necessity with a regulatory overlay of time.
Speaker 3 (14:11):
So here this slide is going to touch on medical necessity and then the following slide is going to have some pointers about appropriately applying time considerations. And as you know, of course, the MS states that the decision to admit a patient is a complex medical judgment, which can only be made after the physician has considered a number of factors, including as it says here, patients medical history, current medical needs, the types of facilities available to inpatients and to outpatients, as well as the perceived potential risk to the patient if not treated in the appropriate setting. And some factors to considered include the severity of the signs and symptoms exhibited by the patient as well as the medical predictability of something adverse happening to the patient. And sometimes I distill those bottom two on patient considerations. You could really distill it down to how sick is the patient and how risky is the patient. And to me at least from a documentation perspective, those are the vital tenets to capture when documenting in the chart.
Speaker 3 (15:23):
And if we move on to time here, a Cliff's notes version obviously of the two midnight rule would state that if your estimated length of stay from start of service is greater than two midnights, generally these patients would be appropriate for inpatient billing. And if under two midnights you should be considering observation, but it's not always so clear cut. And there's exceptions to consider really in either direction if your estimated or actual length of stay is greater than two midnights, but there's evidence of convenience care, custodial or unexplained delays in care, you may have a patient who satisfied the benchmark or even the presumption yet is not appropriate for inpatient billing. Think of a patient who presents on say a Saturday morning with chest pain, yet your hospital doesn't do stress tests over the weekend. So the patient's held till Monday. Yes, two midnights would've been crossed and anticipated at presentation.
Speaker 3 (16:25):
However, if there was no other active medical issues being treated and the scheduling of the test was the sole reason that the patient crossed to midnights, then this would really be considered a delay in the provision of care. And inpatient billing might not be appropriate in the other direction. You might have a patient with an estimated length of stay of greater than two midnights, however the patient ultimately doesn't cross two midnights, right? Unexpected patient expiration, unforeseen transfer a, a hospice election prior to the second midnight. And of course probably the most commonly invoked of them all unexpected recovery are all regulatory exceptions. And it's important to not self-audit cases for which some of these exceptions apply but rather be confident in their defensibility. Sometimes when we review, I know Kurt does as well, the pepper data for a hospital, I'll see a hospital with a low short stay inpatient rate.
Speaker 3 (17:29):
There can be various reasons for that, but one of the things I want to make sure of when I see a very, very unusually low short stay inpatient rate is to make sure that the client isn't inappropriately changing the patients to outpatient observation. When there was a possibility of invoking one of these exceptions to the two midnight rule at the top there, you could see new onset mechanical ventilation. This does exclude brief ventilation for a surgical procedure and still does require we believe, an expectation of an overnight of hospital care. But generally speaking, new onset mechanical ventilation can be thought of as equivalent to an inpatient only procedure. And I'm sure as most of you're aware, inpatient only list procedures can only be reimbursed as an inpatient. But I do want to highlight that is true for Medicare advantage just as it is for traditional Medicare. And at the bottom here, the 2016 modification that we'll get into on the following slide, patient's acuity and risk sufficient to require inpatient care. Okay. I guess when does time start? When do we start the clock here towards these midnights?
Speaker 2 (18:54):
Well, that's a great question and there is guidance out there. It's not specified in the regulations, but there is guidance out there from CMS about when the clock starts and does it really matter when the clock starts? It does in some cases depending on the size of your hospital. If that patient presents prior to or after a midnight, that could have some consequences in terms of whether the case will be audited in terms of length of stay, whether the patient will get the three day qualifying stay, for example, for skilled nursing facility coverage. Generally the language used in the guidance is when medically necessary services as performed by medical personnel are given to the patients. So I generally interpret that as meaning simply showing up in the emergency room does not start the clock being registered, does not start the clock. Triage does not start the clock because that's not a service specific to that patient's clinical presentation.
Speaker 2 (19:58):
Everyone gets triaged, but once a medical personnel nurse, physician, et cetera starts taking a history or putting oxygen on because they're short of breath, or for example, getting an EKG immediately for a patient who's complaining of chest pain, et cetera, once something specific to that patient's reason for coming to the emergency room happens, that I believe is a reasonable interpretation of when the clock starts as well. And Rob, if you don't mind, I'm going to amplify one more point you made on this slide here, and it's the E in ELOS. And I think this again is a new world for a lot of MA payers is that a reasonable expectation is what's required not actually crossing two midnights. And that is crystal clear in all of the two midnight regulations and guidance. And I'll just put in one more little pitch here, if I may say if there are any hospital clients out there that want this information, we are able to show you where you stand in your short stay distribution compared to other hospitals of a similar nature. So if you're a smaller hospital in a rural area, for example, we can actually show you your proportion of zero and one day stays for traditional Medicare and how that ranks in a percentile with other hospitals in case you're concerned that your UR process for short stays is very much out of alignment with other hospitals. So that's something to consider as well.
Speaker 3 (21:38):
Okay, thank you. One more thing while we're on time. I guess I mentioned the benchmark and the presumption earlier. I bring it, I think it's salient to the 42 0 1 to just at least bear in mind that there is no concept of the presumption when it comes to Medicare advantage, which in a way the government isn't telling the commercial insurers what they can and cannot audit. So I think that that's important. They can and will of course deny cases that have crossed in excess of two midnights and I'm sure you're seeing that out there as well. So we can move on to the 2016 OPPS modification. I think of it this way, I guess when the original 2014 IPPS came out, even if you had a patient going to the I-C-U-A-D-K-A patient, if you didn't reasonably expect a two midnight hospitalization, then you just didn't have an inpatient and this really didn't seem fair.
Speaker 3 (22:48):
You'd have a ICU patient with significant resource utilization and lab work intensive nursing and physician intervention decision making, and all you derive would be the A PC payment. I think that this was the basis for this 2016 modification, which was going to allow for part a payment on a case by case basis provided that there was physician documentation supporting that an inpatient stay was warranted despite the short stay expectation. And this modification as well applies to the Medicare Advantage plans, just the same as traditional Medicare. And I know you sometimes give education to hospitals, et cetera, regarding appropriate status. How have you advised hospital clients to consider the 2016 modification when making an inpatient admission? When might you use this?
Speaker 2 (23:49):
Well, another good question there, Rob and I like bright lines and they're easy for me. And so what I'll often advise, and I just want to make it clear to everyone, this is simply a rule of thumb or a guideline or advice. It is not actually the language of the guidance and the regulation, but I feel that the whole point of the 2016 modification allowing one midnight inpatients is those cases that come along occasionally, rarely, perhaps, or occasionally, where you are going to as a facility expend an enormous amount of money and resources even though it's a very short stay. And that typically would be very short ICU stays. I would think that's really the reason behind the 2016 modification. As you pointed out, Rob, that if a patient is going to the ICU, but it just so happens that because of the time they came in, maybe they came in shortly after midnight and they don't actually need two more midnights going forward.
Speaker 2 (25:00):
Say your DKA example, it seems a little unfair for a hospital to take approximately 2,600 observation payment for that incredible use of resources in the ICU. So I think really when I'm asked for a bright line, I say if this is a short stay that is in your ICU, you should consider having your physicians thoroughly document that they need inpatient ICU care and consider an inpatient admission in those cases. Because the 2016 modification is, it doesn't simply obliterate the two midnight rule. The vast majority of short stay cases, less than two midnights of expected times still should appropriately be treated in observation. This is the rare or uncommon exception in the ICU for a bright line.
Speaker 3 (25:55):
Alright. All right. Well, I like bright lines too, and I mean at a bare minimum, it's probably worth keeping in mind that there's probably going to be a higher standard for documentation if ordering inpatient with an expectation of a short stay. And certainly we saw we had some experience back in 2016 or back in 20 18 20 19 with the 2016 OPPS. It was pretty much inconsistently applied the short stay inpatients. And it seemed like some of the auditors had varying degrees of familiarity with not only this rule but other rules and regulations honestly. And it probably somewhat led just unifying and having one QIO moving forward chosen to do the probe and educate audits, which was lata. So in July of 2023, the claims review advisor from Lata gave some examples of their auditing process, gave some stepwise process of how they audit cases, and they also helpfully included some hypothetical cases of when to apply the case by case exception despite a documented expectation of a short stay from start of service.
Speaker 3 (27:20):
And this was their auditing process that they laid out and much of the claims review advisor had to do with differentiating between step four A, was it reasonable to expect two bid types of care? And step six, does the medical records support inpatient care despite the shorter length of stay? And I think to paraphrase what, at least my takeaway from it, it's preferable they were saying to document an inpatient despite a short stay expectation as opposed to relying on a questionable two midnight expectation married to a dubious faster than anticipated recovery. At least that was my takeaway from it. But we can move on here to our concluding thoughts and hopefully we'll leave some time for q and a. Broad takeaways. As of the beginning of this year, Medicare Advantage plans must adhere to the two midnight rule more so than ever. If you get it right for Medicare, you'll probably get it right mostly for commercial plans, and you should be getting it right as well for Medicare Advantage.
Speaker 3 (28:29):
Now it's about both medical necessity and time and that while traditional Medicare plans are held to the benchmark and presumption, Medicare plans are specifically released from the presumption. And as I said before, they can and they do choose for denial cases that have crossed in excess of two midnights. And again, in those cases, it truly comes down to documentation of medical necessity In the absence of convenience, custodial or delays in care for patients who discharge prior to a second midnight having been crossed, make sure to document it faster than anticipated recovery if this does indeed apply. And be mindful, don't self deny cases where one of the two midnight exceptions may apply a MA death transfer, et cetera. Keep in mind the 2016 case by case exception as well. And if we take a cue from LTAs recent publication, be thoughtful about those cases appropriate for inpatient, despite a short stay expectation and not just default to expecting a two midnight hospitalization, which may not be well supported by the medical record or plan of care. And Kurt, not sure you have any concluding thoughts or if you just want to jump into a few questions here.
Speaker 2 (29:47):
Oh, Rob, I'll just amplify your thoughts on number four on this slide here. Obviously this is where most of the controversy is. Yes, we do see denials from MA plans on patients who have stayed 3, 4, 5, 6 days, but we would assume and hope that those rates of denial or even auditing or questioning the inpatient status go down significantly as the patient gets farther and farther out from the second midnight and so on. So most of the scrutiny is going to be on cases that have not yet crossed to midnights when they're discharged, and that will often be these unexpected recoveries. And if you look at some of the traditional Medicare guides, it says exactly as you pointed out, but I just want to emphasize that the traditional Medicare auditors are going to assess the reasonableness of that two midnight expectation based on complex medical factors. So that has to be in the chart. Those complex medical factors supporting that reasonable two midnight expectation have to be spelled out. And the reason for the unexpected recovery or the early discharge because of the unexpected recovery should be put in the progress note on the day of discharge as well. That's the best kind of defense you have against those highly audited cases. With that though.