Inpatient Facility Coding & Compliance Alert

Tackling the inherent issues isn’t as easy as it seems.

Many Medicare beneficiaries will breathe a sigh of relief as the confusion regarding their inpatient/outpatient status ends this August, thanks to the CMS proposed regulations within the NOTICE (Notice of Observation Treatment and Implication for Care Eligibility) Act.

Why it matters: Most beneficiaries to date still face the dilemma whether or not spending one night in the hospital makes them an inpatient. Patients sometimes are admitted as outpatients, kept on observation status, receive the requisite care, and then are denied Medicare coverage of post-acute care with a Skilled Nursing Facility (SNF), which is available to an inpatient. Until now, even Medicare did not require that hospitals notify patients of their outpatient status, unless there is a change in the status from inpatient to outpatient. This practice is all set to change. Read on to prepare well in advance.

Give the MOON to Outpatients After 24 Hours

As per the new proposed requirements, hospitals need to notify an individual of his outpatient status, if he has been in the hospital for more than 24 hours. The hospital must use the Medical Outpatient Observation Notice (MOON) form for this purpose. The hospital must take care to include certain aspects in the dissemination of information to the patient.

Conditions and requirements: The trigger for providing the written notice, along with an oral explanation, occurs when more than 24 hours of observation services are provided.

• The oral explanation must include the reasons why the individual’s status is an outpatient and not an inpatient.
• The explanation must tell how that status implicates the services costs and subsequent coverage.
• The explanation must be in simple and appropriate language, which the patient can understand.
• After the 24 hour trigger, notification must be given within 36 hours or sooner if the beneficiary is transferred, discharged, or admitted as an inpatient.
• The beneficiary, or his representative, must sign the MOON form acknowledging receipt, understanding and that any questions have been answered.

Background: In the April 27, 2016, Federal Register, CMS has proposed regulations regarding the NOTICE Act. This change to the Social Security Act (SSA) requires that hospitals inform Medicare beneficiaries when outpatient observation services are being provided. A standardized form, the MOON (Medical Outpatient Observation Notice), has also been proposed for use by hospitals.

Note: The issuance of this notice does not constitute an appealable event; that is, this notice is just a notification, not a determination.

Timeline: 

August 5, 2015: NOTICE Act was enacted.
April 27, 2016: Proposed regulations issued in the Federal Register.
June 17, 2016: Comment period ends.
August 1, 2016: Final regulations expected.
August 5, 2016: NOTICE Act gets implemented.

“Obviously, contentious situations will arise in which the beneficiary, or beneficiary’s representative, will claim that the services constitute an inpatient admission,” according to Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, IA.

 “This will be particularly true if the beneficiary needs subsequent skilled nursing services and they do not meet the 3-day inpatient qualifying criterion,” says Abbey. “In this case relevance of the MOON form is established by the statutory requirements under the NOTICE Act.”

Does CMS Focus on the Spirit of the Law?

Issues galore: Many issues arise in connection with this notification process.

“But the real issue is probably not being addressed,” states Abbey. “CMS is taking a very minimalist approach in applying the NOTICE Act and the associated MOON form. In other words, CMS is following exactly what the legislation states. There is nothing more being done to meet the spirit of the law, that is, notifying as to their status in order to understand various payment implications,” based on patient status.

One issue that you will probably encounter as you start the process of implementation of this law includes the time factor.

How to count the 24 hours: Besides the possibility of a grace period for implementation, there is the question of how to count the 24 hours. Is the 24 hour period counted from the time that a physician orders observation services to the time that the physician discharges the patient from observation? Or should the 24 hours be the same as the way in which observation hours are counted for billing purposes? And do we have any answers to these questions as yet? “No, we don’t have any answers. All of this should come with the final regulations on or about August 1,” tells Abbey.

Case scenario: A patient may present in the afternoon through the ED with chest pains and then be placed in observation overnight using a chest pain protocol. The next morning the patient may have coronary catheterization services and then eventually be discharged from observation in the afternoon. The time from admission to observation to the time of discharge may exceed 24 hours, but for billing purposes, the observation was interrupted by the cardiac catheterization services, and thus less than 24 one-hour units will be billed.

Find the Answers to These Questions

While there are other issues, such as the application of the over 2-midnight rule, probably the biggest challenge for hospitals is operational. For example:

• Who is going to provide this notice? Or give an oral explanation, answer questions, and then obtain the signature of the Medicare beneficiary? Whoever is providing the notice will need full knowledge of copayments, deductibles, self-administrable drugs and any sort of appeals processes through utilization review or case management. This seems to be a real operational issue. If you do not have a person designated to dole out the MOON form, how do you expect this requirement will be met when the time comes?
• Processes will also be needed if the beneficiary refuses to sign the MOON form.
• While the issuance of the MOON form is a statutory requirement, would it not be best to inform the beneficiary of his status shortly after he starts receiving hospital services? A beneficiary may be in the hospital simply receiving outpatient services or he may actually have been admitted as an inpatient.
• In some cases a beneficiary may be in the hospital receiving outpatient services for more than 24 hours, but he is never referred to observation services. Apparently the MOON form need not be issued in such cases.

Issue: The timing of implementation for this process may raise concerns. While the proposed regulations came in on April 27 in the Federal Register, the comment period ends on June 17 and then a final rule will appear around August 1.

“Theoretically, this means that there will be only a few days for implementation after we know the final regulations,” says Abbey. “Hopefully, CMS will provide for some sort of grace period for actual implementation.”

Bottom line: The comment period for the implementation of the NOTICE Act ends on June 17. You must voice in your opinion if you have any concerns, particularly if you think a grace period for implementation is warranted. Operationally speaking, you must consider current policies and procedures along with new processes for implementation of the MOON form. For starters— how does your hospital handle self-administrable drugs?

“Hospitals are in an unenviable position in that they must prepare without knowing what the final regulations will stay,” feels Abbey. “One of the big issues is the identification and training of hospital personnel who will present this notice along with the explanation.”