A ‘Very Cruel’ Medicare Rule is Costing Seniors Dearly

It’s bad enough to be hospitalized. But thousand of seniors across the country are finding their medical problems compounded with financial frustration and large bills because of a Medicare technicality that can cost them dearly. The problem starts when their doctors want them to go to a skilled nursing facility as an interim, rehabilitative step between the hospital and home. But if the hospital has not classified the patient properly for Medicare billing purposes, then Medicare, the government health insurer for seniors, refuses to pay the skilled-nursing bill.
The problem was that when the hospital sent the bill to the Centers for Medicare and Medicaid Services, or CMS, for payment, it said that Gilbert was in the hospital for “observation” rather than admitted in the “inpatient” category. That difference, which is many cases is a technicality, means the difference of thousands of dollars for every patient affected.
The problem is a result of Medicare rules that only authorize follow-up, skilled nursing care after a patient has had inpatient hospital care for at least three consecutive days. Even splitting that classification – say, as one day for observation and two for inpatient care – will not satisfy the three-day inpatient requirement, regardless of the fact that the patient stayed and was treated in a hospital the whole time.
The inspector general for the U.S. Department of Health and Human Services said last year that in 2012, Medicare beneficiaries had more than 600,000 hospital stays that lasted three or more nights but did not qualify for skilled-nursing facility payment. In a small share of those cases, 4 percent, Medicare mistakenly paid for skilled nursing care anyway, costing $225 million.
· The distinction – observation versus inpatient — has financial consequences for hospitals as well.
Hospitals have their own financial reasons for classifying some multi-day stays as observational. One is that hospitals with billing mistakes can be subjected to intense CMS audits with deep financial consequences. Since 2010, CMS has used outside contractors to aggressively review admission records and seek repayment for improper admissions, according the office of U.S. Sen. Sherrod Brown, an Ohio Democrat For healthcare providers, it may be safer for many to simply classify a hospitalization as observational. That usually means they’ll get less money in reimbursement than if they coded the bill with inpatient fees, and the patients may get stuck with more out-of-pocket costs for care and prescription drugs. But for hospitals, it is better than getting hit with an audit and facing claw-back demands from CMS, health professionals say.
Hospitals may also do this to avoid Medicare penalties they can face if they have an excessive number of in-patient readmissions within 30 days of discharge. Part of the Affordable Care Act, the Readmissions Reduction Program started in October 2012 and was supposed to result in better care the first time a patient is admitted. Excessive readmissions now can cost a hospital money, and many hospitals are reporting that their readmission rates are, in fact falling.
But one way to get around the risk of readmission penalties may be to avoid as much as possible the inpatient classification. CMS has said it was concerned that too many patients were being admitted to hospitals improperly, getting inpatient services and costing CMS more money when they should have been observed for longer first. that the legislation could wind up in a different legislative vehicle tied to the rates that Congress authorizes CMS to pay hospitals. That kind of linkage could give the complaining lawmakers more leverage.
Section 3025 of the Affordable Care Act added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. The regulations that implement this provision are in subpart I of 42 CFR part 412 (§412.150 through §412.154).
Readmission Measures
In the FY 2012 IPPS final rule, CMS finalized the following policies with regard to the readmission measures under the Hospital Readmissions Reduction Program:
· Defined readmission as an admission to a subsection(d) hospital within 30 days of a discharge from the same or another subsection(d) hospital;
· Adopted readmission measures for the applicable conditions of Acute Myocardial Infarction (AMI), Heart Failure (HF) and Pneumonia (PN);
· Established a methodology to calculate the excess readmission ratio for each applicable condition, which is used, in part, to calculate the readmission payment adjustment. . A hospital’s excess readmission ratio for AMI, HF and PN is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition.
· Established a policy of using the risk adjustment methodology endorsed by the National Quality Forum (NQF) for the readmissions measures for AMI, HF and PN. Established an applicable period of three years of discharge data and the use of a minimum of 25 cases to calculate a hospital’s excess readmission ratio of each applicable condition.
o For FY 2013, the excess readmission ratios are based on discharges occurring during the 3 year period of July 1, 2008 to June 30, 2011.
For FY 2014, the proposed excess readmission ratios will be based on discharges occurring during the 3-year period of July 1, 2009 to June 30, 2012.
CMS is finalizing the expansion of the applicable conditions for FY 2015 to include: (1) patients admitted for an acute exacerbation of chronic obstructive pulmonary disease (COPD); and (2) patients admitted for elective total hip arthroplasty (THA) and total knee arthroplasty (TKA). Payment Adjustment
In the FY 2013 IPPS final rule, CMS finalized the following policies with regard to the payment adjustment under the Hospital Readmissions Reduction Program:
· Which hospitals are subject to the Hospital Readmissions Reduction Program;
· The methodology to calculate the hospital readmission payment adjustment factor;
· What portion of the IPPS payment is used to calculate the readmission payment adjustment amount; and
· A process for hospitals to review their readmission information and submit corrections to the information before the readmission rates are to be made public.

Sources—amac, the plain dealer, Stephen koff, cms.gov


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