What?! This patient should be in observation?!?

What?! This patient should be in observation?!?

August 2013
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Published in the August 2013 issue of Today’s Hospitalist

IT’S ONE OF THE MOST FRUSTRATING interruptions hospitalists have to field. A utilization reviewer calls, sometimes from case management, but often from an outside firm working for the hospital. The reviewer is wondering: Shouldn’t your newly-admitted patient be in observation status instead?

“They hound us,” says Mujtaba Ali-Khan, DO, one of 18 hospitalists at Conroe Regional Medical Center in Conroe, Texas. The group works in four separate hospitals in the region. “I feel bad saying that sometimes I ignore the calls because the hospital pays a pretty penny for this service. But when you are in the middle of patient care, this is just one more distraction.”

Observation status is the subject of growing attention, and not just from frustrated physicians. The Centers for Medicare and Medicaid Services has proposed new rules that may make it easier to transition patients to inpatients, while a group of Medicare beneficiaries has filed a class-action suit challenging the use of observation status.

But for hospitalists, observation status increasingly means incessant, inconsistent second-guessing of their decisions. Part of the problem is that queries seem based on ever-changing sets of unofficial criteria. Then there’s the fact that observation is being deemed the right setting for a growing list of clinical scenarios.

Take this example, offered up by hospitalist Frank Romero Jr., MD, who works at Cox Health Systems in Springfield, Mo.: A Medicare fee-for-service recovery audit contractor (RAC) flagged the chart of a hypotensive patient with new onset atrial fibrillation who had been treated with multiple antiarrhythmics. The contractors’ position? The short hospitalization should have been deemed observation status, not inpatient.

“I had never gotten reviews that involved a fib,” says Dr. Romero. “Now we have to think that this kind of patient may be an observation patient? Our normal standard of practice would be to admit this patient.”

Previous RAC reviews, Dr. Romero points out, targeted transient ischemic attacks (TIAs), syncope and chest pain. “For those,” he says, “we changed our behavior. But now, there seems to be a creep into what most people would have thought met inpatient guidelines.”

Determining whether a hospitalized patient is sick enough to be admitted or requires only observation “has always been supposed to be based on physicians’ best judgment,” Dr. Romero points out.

“But if that rule was actually followed, we would never have a problem,” he adds. “So, that’s really not the rule. It’s what somebody else interprets, either RAC or insurance reviewers, of what should or shouldn’t be considered inpatient.”

Preemptive self-denials?
Those interpretations can vary widely. Some private payers set strict rules, assigning every admission under 48 hours to observation. Others say that all cases are individually determined, guided by criteria set by firms like InterQual and Milliman or by hospitals’ own in-house reviewers.

“It’s not necessarily that the criteria keep changing. It’s that no one knows what the criteria are, and it depends on the reviewer,” says Bradley Flansbaum, DO, a long-time member of the public policy committee of the Society of Hospital Medicine and a hospitalist at New York’s Lenox Hill Hospital. “Because payers are saying patients should have been in observation, people are afraid to admit patients” in case they are later audited and penalized. Meanwhile, a study published last month by JAMA Internal Medicine found that in one academic center, the hospital lost nearly $1,400 for every adult general medicine patient in observation.

While everyone claims that it’s the admitting physician’s job to make the call, insurers who disagree won’t pay.

Hospitals, obviously, don’t want denied claims “or in the case of Medicare, reimbursements reclaimed (with added penalties) several years later. The result is what some call a culture of preemptive self-denial. Hospitals have restructured their utilization review and case management departments, hired physician advisors and medical directors, and contracted with outside firms that specialize in medical necessity claims to assist with proper billing.

While hospitals say they are trying to help admitting physicians follow the rules, some hospitalists view it as interference in their clinical decision-making. Others consider it overkill when reviewers demand that doctors beef up their documentation. And physicians feel hamstrung by payers who they see as intent on denying needed care.

“The most frustrating thing from physicians’ point of view,” Dr. Romero says, “is that they are using retrospective judgment where we have to use judgment at the point of care.”

Not making the cut
For hospitalists, increased scrutiny of observation status may also be harming a growing portion of their patient
population: frail seniors too sick to be at home but not sick enough to be in the hospital “and not able to afford a skilled nursing or rehab facility without Medicare.

“They are marginal at home so they come to the hospital. But even if you include as much detail as possible in the chart to appropriately tell the story, they just don’t meet inpatient criteria,” explains Anthony Williams, MD, a hospitalist and chief quality officer at Jackson-Madison County General Hospital in Jackson, Tenn. “They either pay out of pocket to go to the SNF, or they go back home into a situation where they are going to end up sicker, back in our hospital with a worse problem. They fall through the cracks, and we see this on a daily basis.”

Before RACs and the extra scrutiny of medical necessity, these patients might have been given an inpatient bed for at least three days, allowing them to qualify for Medicare’s SNF benefit. But today, when that elderly patient stays in a hospital bed for days because it’s unsafe to discharge him, it is probably in observation, which won’t count toward Medicare’s long-standing 72-hour SNF rule. (This is the precise issue that the class action lawsuit by Medicare beneficiaries is fighting.)

Hospitalists are sometimes tempted to push the limits, but that invites yet more oversight.

Dr. Williams describes the case of a 90-year-old patient in observation who had sustained a leg injury during a fall and couldn’t function at home. Doctors kept doing test after test unconnected to the injury but related to the patient’s underlying comorbidities “to see if the patient could meet inpatient status,” Dr. Williams recalls. “I had to say, ‘OK guys, you have to stop.’ ”

“I see it from both sides,” he says. “I see hospitalists’ frustration, but we also want to be compliant as a hospital. If patients don’t need to be inpatient, we don’t need them to stay here any longer than they have to.”

Before the RAC era, explains Jason J. Ham, MD, director of the adult medical observation unit at the University of Michigan Health System in Ann Arbor, “you could get away with saying ambulatory dysfunction, dehydration, worsening dementia “inpatient “keep them for three days and then get a nearly free nursing home stay for the initial 20 days or so.” But that is no longer the case.

“And from the government and payer’s perspective,” says Dr. Ham, “taxpayer dollars should not be spent on a family who is asking to spend the government’s money so patients can get a new place to live.”

More aggressive oversight
Hospitalists aren’t wrong to think that observation care is becoming a bigger portion of their work. A June 2012 article in Health Affairs found that the ratio of observation stays to admissions jumped 24% between 2007 and 2009. In addition, the number of patients in observation for more than 72 hours at a stretch had more than doubled.

Many suspect that growth is being driven by RAC audits. “They are becoming more aggressive at auditing charts,” says Tennessee’s Dr. Williams, “so hospitals are getting more aggressive at making sure patients are in the right status.”

Experts say that the following admission diagnoses are
red flags: chest pain, COPD or asthma exacerbation, atrial fibrillation, seizures, TIA, syncope, and GI bleeds. Small hospitals without full-time physician medical directors overseeing inhouse utilization reviewers are seen as ripe for recovery efforts.

The key to minimizing the dilemma, experts say, isn’t getting to know reviewers’ criteria. Instead, doctors need to think in terms of details “and include those in their documentation. (See “Tips on documentation,” below.)

In Tennessee, Dr. Williams’ advice is to “tell the story of how sick the patient is and the story needs to be clear. You need to paint a picture, and it needs to be a Rembrandt, not a Picasso.”

Expect more scrutiny
Hospitals are also hiring inhouse physician advisors to work with case managers and utilization reviewers. Karim Godamunne, MD, MBA, a hospitalist who’s now chief medical officer at North Fulton Hospital in Roswell, Ga., works closely with the director of case management on tough calls. He reviews the charts on cases flagged by case managers and sometimes talks to the hospitalist or other admitting doctor about an admission.

“It’s not always that physicians are wrong,” Dr. Godamunne says. “It’s usually that they didn’t document sufficient evidence to meet inpatient criteria.”

Most people figure that hospitalists will get used to the added scrutiny, which will seem less onerous as doctors adjust to a new normal. But sources also caution that no one thinks this oversight will go away.

“Is it helping care? Probably not. Does this in and of itself increase quality? No, it doesn’t. But it sure helps keep you out of auditors’ crosshairs,” says Ralph Wuebker, MD, chief medical officer of Executive Health Resources (EHR), the largest of the medical necessity compliance and utilization review companies being hired by hospitals. Right now, he points out, Medicare and other payers are questioning only how you’re billing a patient visit, not whether that patient should be in the hospital at all.

But next up, Dr. Wuebker believes, “Payers will be asking, ‘Are you practicing the standard of care? Are you treating patients according to current guidelines?’ I don’t feel that the scrutiny on medical-necessity documentation is going away anytime soon. If anything, it’s probably going to be dialed up.”

Deborah Gesensway is a freelance writer who covers U.S health care from Toronto.

Tips on documentation

UNFORTUNATELY, physicians have no slam-dunk template for the kind of documentation that will guarantee inpatient or observation status for borderline patients. Every payer has different criteria and is drawing the lines in different places, explains Ralph Wuebker, MD, chief medical officer at the Newtown Square, Pa.-based Executive Health Resource (EHR), a physician advisor company.

But what usually raises a red flag for reviewers is inadequate documentation, particularly in the impression or assessment part of the note. That impression or assessment section should contain “two or three sentences that say,’This is what I’m concerned about and here is why,'” Dr. Wuebker says.

For example, an inpatient admission record that says, “Chest pain. Serial troponins. Serial EKGs. Stress test in the morning” will likely invite scrutiny. “Looking at that from an auditor’s perspective with the benefit of hindsight, you see the person was in and out in 36 hours and assume observation services were appropriate without further explanation,” he notes. “When the physician writes ‘chest pain,’ you don’t know if she or he had any specific concerns.”

Instead, says Dr. Wuebker, a chart stating the person is being admitted because of “unstable angina, advanced age, her comorbidities “diabetes “and the fact that this pain was similar to a prior MI” is less likely to be questioned. “Now, if an auditor scrutinizes that case, it becomes much more clear why the physician felt this patient was high risk”.

Experts say that hospitalists should make sure that their notes address the following four points: medical necessity, severity of illness, intensity of service and mortality risk.

And although he would never recommend that hospitalists learn InterQual’s bed status criteria, Jason J. Ham, MD, director of the adult medical observation unit at the University of Michigan Health System in Ann Arbor, says there are some tricks doctors can learn to make life easier.

For instance, he says, a patient previously identified as having “confusion” or “worsening dementia,” which under most criteria would not be considered to need inpatient care, may instead be having “acute delirium” and require the amount of service that could warrant admission.

“That said,” Dr. Ham adds, “if you tag them with a delirium diagnosis, you better do a delirium workup. You can’t make them inpatients and not do anything about it.”

RAC stats

  •  Medicare and Medicaid recovery audit contractors (RACs) are private companies hired by the Centers for Medicare and Medicaid Services (CMS) to identify billing mistakes. Because RACs are paid a percentage of the improper payments they find, they have been particularly dogged in their efforts “and successful in identifying the low-hanging fruit of overpayment: wrongful site-of-care claims. In 2012, RAC-“corrected” payments totaled more than $2.4 billion, 95% of which were for overpayments.
  • Nearly half of RACs’ medical-necessity denials have to do with “wrong setting”: claiming that treatment should have happened on an outpatient basis (“observation status”) rather than as an inpatient, not that the care wasn’t medically necessary at all.
  • Medicare has not required RACs or hospitals to use any particular screening criteria, such as those developed by InterQual or Milliman. These are just some of the tools they can and do use.
  • The length of time a patient spends in the hospital also does not determine whether an inpatient claim will be denied.
  • The admitting physician is responsible for deciding whether the patient should be admitted as an inpatient; utilization reviewers or case mangers cannot change that.
  • Hospitals appeal about 41% of all Medicare claims denied by a RAC. According to the American Hospital Association, they successfully overturn a RAC denial 72% of the time.

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