This week’s note is about the changes to the 2-Midnight Rule in the 2016 OPPS proposed rule. In the 2016 OPPS Proposed Rule, CMS announced that October 1, 2015 they will be transitioning the medical review of inpatient admissions from Medicare Administrative Contractors (MAC) to Quality Improvement Organizations (QIO). This policy will limit the future review of inpatient admissions by the Recovery Auditors and may be related to CMS’ withdrawal of the Request for Quotes for new Recovery Auditors announced July 10.
Modifier -25 (significant, separately identifiable E/M service by the same physician on the day of a procedure) is used to distinguish visits from procedures on the same day.
It is not used to distinguish observation from a visit service on the same day.
While many providers are still digesting the IPPS Final Rule, muddling through how the OPPS Proposed Rule might impact their bottom line, and kicking rocks because the 2-midnight rule was not chucked, President Obama signed a bill into law on August 6, 2015—and it’s one providers should note. Unanimously approved by both the House and Senate earlier this year, the Notice of Observation Treatment and Implication for Care Eligibility Act, otherwise called the NOTICE Act, will not take effect until August 2016, but will certainly add one more layer to the administrative burden associated with outpatient observation services when it does.
Documentation and billing for observation stays has come under increased scrutiny from the OIG, though many hospitals have struggled with changing regulations and frequently updated guidance.
CMS is reexamining inpatient criteria because it has seen a significant increase in the number of patients spending more than 24 hours in observation. Providers are worried that a Recovery Auditor will deny a short inpatient stay for lack of medical necessity and recoup payment years later. So instead, some facilities place patients in observation for longer time periods.
The role of the utilization review (UR) committee has changed as facilities transition from reporting condition code 44 for concurrent reviews to condition code W2 for post-discharge reviews.
