CMS-4201-F – The Medicare Advantage Rule - Questions and AnswersDr. Khiet Trinh Can you talk a little bit about how the rule came to be? Medicare Advantage (MA) programs have exploded in market share over the past decade or so. These programs implemented coverage criteria that were often different, more stringent, than traditional fee-for-service Medicare. A noticeable effect was the rise in the percentage of patients in a hospital that were hospitalized as observation. As this trend continued, operating margins of health systems started to dwindle. As background, in 2013, Medicare attempted to simplify for clinicians whether to hospitalize a patient as inpatient or outpatient (with observation services). This resulted from legal actions from beneficiaries who were concerned they were being kept observation when they should have been inpatient. This is important because as an inpatient you have certain rights, such as appeal rights and Skilled Nursing Facility (SNF) coverage rights. There were also greater financial liabilities as an outpatient versus being inpatient. Therefore, CMS implemented the Two-Midnight Rule. For the first time, a patient's status was no longer just about intensity of service or severity of illness – it is actually based on time, and more specifically the number of midnights a patient was expected to spend in the hospital for hospital care. Ostensibly, this was a welcome change because it made it much easier for physicians. They could look at their watch and say “Okay, you stayed two midnights for hospital services, or I expect you to stay two midnights so I can make you inpatient.” But MA never went that road. They said “Nope. Our contract with CMS allows us to create our own criteria for inpatient versus observation (OBS).” So we have been urging CMS – writing commentaries, speaking to leaders about the unfairness of some of the criteria used by MA – and finally this year on April 5th, after a comment period, CMS has come out and said that they want to clarify that MA plans must follow the Two-Midnight Rule. We’re excited because it makes our lives easier, and could improve the patient experience as well, in the sense there may be less status changes as the rules are simpler. Can you talk a bit more about the administrative burdens that the old way caused? It's an enormous administrative burden on hospitals to have different standards between fee-for-service Medicare and MA plans. Hospitals are left to navigate the different criteria that may exist between different MA plans. And then of course, all the peer to peers and appeals to argue medical necessity when they deny are very resource intensive. Add to this the different notices, submissions, and other nuances required just to get paid for care provided for their member, and the burden becomes overwhelming and expensive. Of course any slip-up, will result in the dreadful “technical denial”. To be clear, even with this new rule (known as CMS-4201-F), most of these processes will remain, but a standard inpatient criteria is most welcome for those of us in Physician Advisory. What is the impact of this rule on hospitals, patients, etc.? I do foresee an increase in inpatient status at discharge. The average length of stay for a hospitalization in America is about 4.5 days. This naturally crosses two midnights. Before CMS-4201-F, OBS patients could be languishing many days in OBS because they didn't “meet” MCG or they didn't “meet” InterQual. Now, if you're receiving medically necessary hospital services after two midnights, you should be upgraded to inpatient. I think that's really important. While the Two-Midnight Rule is the headline, there are other important parts of CMS-4201-F. For example, in 2016 a big rule came along that said you actually don't have to stay two midnights – it's called the “case-by-case exception” through which if a doctor thinks you need to be inpatient because you're at such a high risk, but doesn’t expect you to stay two midnights, it's still okay to admit that patient as an inpatient. That also now applies to MA plans. Another big one is that the Inpatient Only List (IPOL) also now applies to MA plans. This was one example where CMS actually made things easier and said that if the procedure you have is on this IPOL, then you will get inpatient payment regardless of how long the patient stays, provided there is an inpatient order. Again, previously MA plans had their own criteria for surgical statusing and none of them really followed the IPOL. But now, CMS is clarifying that MA plans also have to follow IPOL. The other big thing is SNF coverage. If a patient would qualify for SNF coverage under fee-for-service Medicare, now MA plans would also have to qualify. These are seismic changes, in my world at least. Overall, it is great to have this clarity. Whether you look at it from a hospital standpoint, a patient standpoint or as a physician, it's not only clarifying, but it's simplifying criteria, at least on the surface. What is the financial impact of all of this? I believe that from a financial standpoint there may be an opportunity to classify more patients as inpatients than before. To hospitals this is a positive as inpatient generally pays more than observation. There is also financial impact to patients. For example, if you are hospitalized as observation, you have to pay coinsurance each time. Additionally, certain medications that you take in the hospital may not be not covered. Essentially if a patient comes in for observation/outpatient, they are at more financial risk because their coinsurance applies each time they go to the hospital, and because their medications given during the stay may not be covered. Whereas if they are considered inpatient, Medicare will pay for the stay, including medications, for the first 60 days after the deductible has been met. Importantly, if an inpatient disagrees with discharge, they’re able to appeal to the Quality Improvement Organization (QIO). Those are rights that are only afforded to inpatients. So by ostensibly making inpatient easier, these rights are now restored to patients who previously would have been OBS. Do you feel like this better aligns with your decision making as a clinician – that you’re able to go with what you know is right for these patients versus fighting with the insurance companies that don't have clear criteria set for why or why not they be reimbursing in a certain way? Absolutely. CMS has always deferred – and they remind us in this latest regulation – that the decision to admit is a complex medical judgment to be made by the physician. This is really important because before the Two-Midnight Rule it was based on commercial criteria. Criteria may say if a patient gets a certain rate of IVF, a certain number of packed Red Blood Cells, a certain liter of oxygen, etc, they can now be inpatient. That's silly to a doctor at the bedside, right? They should be able to look at the entirety of the patient, including the presenting symptoms, labs, x-rays, physical exam, risk of adverse event and say, “In my judgment this should be inpatient.” Not only that, but when you see somebody spend days and days in OBS just because they didn't “meet criteria”, it can be very frustrating. Now a doctor can say, “I expect, in my clinical judgment, this patient to stay two midnights or two midnights have passed for hospital level services. I now can confidently make this patient inpatient.” So for the physician at the bedside, it does bring simplicity. I can guarantee you 90% of bedside physicians have no idea how to work commercial criteria tools. The Two-Midnight Rule should make more sense to these same physicians. How common are MA plan denials happening? How prevalent is the problem? The OIG looked at denials from 2014 to 2016. What they found was only 11% of these denials were ever appealed. However, the MA plan themselves overturned 75% of these appeals. It's infuriating. To me, that would indicate there are too many inappropriately denied services to begin with. Once you push back, the vast majority got overturned. But I don't think it was ever intended that MA plans would wield this kind of latitude to deny, and in fact the language being used is that MA plans cannot be more restrictive in covering traditional Medicare benefits than Medicare FFS. So I think that the language was always there and CMS-4201-F clarifies, enforces, and codifies this key point. What is the next fight or the next big change where we need to focus our efforts? After myself, and many others, wrote letters during the comment period to CMS supporting the Two-Midnight Rule, many of us then wrote a second letter about the need to reform the prior authorization process. Remember, different payers have different prior auth processes and algorithms. This causes tremendous administrative burdens for all involved. Even more alarming, there may be direct patient harm due to delays in starting treatment plans as we wait for approval. Simplifying prior authorizations should be our next goal. Dr. Trinh is the Chief Clinical Officer and Chief Physician Advisor for Ensemble Health Partners |