Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on Medicare compliance, Stark and other big-dollar issues of concern to health care compliance officers.
By Nina Youngstrom, Managing Editor
October 3, 2011 Volume 20 Issue 35
Medicare auditors and investigators are prying into the medical necessity of Medicare services, questioning zero-day stays and other hospital admissions and challenging whether hospitals should have done certain procedures at all.
Some auditors also are expected to use extrapolation to recover large overpayments from a small universe of claims denials, although so far some hospitals have fared well in medical-necessity appeals.
With so much at stake for hospitals, the best bet for preventing overpayment determinations is to strengthen their utilization review process, improve documentation and prepare to appeal claims they believe were denied unfairly, experts say.
The signs that medical necessity are on the front burner are everywhere. Medicare administrative contractors (MACs), for example, are auditing the medical necessity of inpatient admissions for certain DRGs, such as chest pain and esophagitis/gastroenteritis, and the medical necessity of performing certain procedures. “They are under a lot of pressure to perform,” Robert Corrato, M.D., president of Executive Health Resources in Philadelphia, said Sept. 26 at the Fraud and Compliance Forum co-sponsored by the American Health Lawyers Assn. and Health Care Compliance Assn. One MAC “categorically denied” coronary artery stent cases at hospitals in its jurisdiction, he said. “Their denial rate was almost 99%.” But not all denials were sound: Of 150 cases that hospitals appealed, almost 30% were overturned at the first level, which is handled by the MAC that denied them. Many more pacemaker claims denials were overturned at the second level by the qualified independent contractor (QICs) and at the third level by an administrative law judge (ALJ).
Corrato believes the cycle of coronary artery stent denials and reversals stems partly from the MAC’s failure to routinely involve physicians in reviews. “The likelihood is at best there is an application of a screening criteria tool,” such as InterQual or Milliman. If the admission doesn’t pass muster with its software, the MAC rejects the claim without consulting a physician, Corrato adds in an interview. That means MACs may not subject claims to physician review even for complex medical-necessity cases.
Stakes Are Raised for Pacemakers
Meanwhile, the stakes have been raised for pacemaker medical necessity by an alert from the Comprehensive Error Rate Testing contractor, a Medicare program-integrity player. The CERT alert informed hospitals that eligibility for payment for dual-chamber pacemakers is a CERT target, Corrato said.
“The CERT alert identifies a suspected high level of errors,” Michael Taylor, M.D., vice president of clinical operations at Executive Health Resources, says in an interview. “RACs and MACs pick up on these alerts and base future review strategies on them.” The CERT alert presents medical necessity as a two-part issue: (1) did the patient need the pacemaker at all, and if so, (2) would the less expensive, single-chamber version be adequate? “Auditors are second guessing very detailed, educated, nuanced judgment and decisions” made by physicians, Corrato said. He and Taylor foresee increased auditor and investigator attention to Medicare coverage of pacemakers, not unlike the national enforcement initiative involving the medical necessity of implantable cardiac defibrillators (ICDs), the medical cousin of pacemakers.
Medical necessity in this area turns on whether hospitals comply with the Medicare national coverage decision for cardiac pacemakers (20.8). The NCD spells out the circumstances under which Medicare will pay for a single chamber or a dual chamber pacemaker. For example, the NCD states that patients are eligible for dual-chamber pacemakers when (1) they have single-chamber pacemakers and a definite drop in blood pressure; (2) they have “pacemaker syndrome,” which means their atrial and ventricle chambers are not beating together and it’s causing significant symptoms; (3) pacemaker syndrome can be anticipated; or (4) a small increase in cardiac efficiency will improve their quality of life.
MACs and other reviewers may deny pacemaker implants for failure to meet the NCD (or because documentation made it seem that way), Taylor says. Complicating matters is that many electrophysiologists consider the NCD outdated. “It was created at a time when more single chamber pacemakers were used, and today physicians are much more likely to put in dual-chamber pacemakers,” Taylor says. Although it might be dated, Corrato says, the NCD is binding at the ALJ level.
Also attracting medical-necessity scrutiny are zero-day stays, which means patients were discharged before midnight of the date of admission. Zone program integrity contractors (ZPICs) — CMS’s fraud and abuse (and increasing overpayment) hunters — are suspicious of what are basically the shortest of short stays. But Corrato says sometimes patients are admitted to the hospital in bad shape and dramatically improve before midnight. For example, pacemakers are often performed on an outpatient basis, but “bad things can happen to people intraprocedure” (e.g., heart, respiratory or kidney failure), Corrato says. That may prompt the physician to admit the patient because of the possibility of adverse events, especially in older Medicare beneficiaries. But the patient rallies and is released 12 hours later. That’s a zero-day stay, Corrato says, and it should be considered medically necessary if supported by documentation.
In contrast, ZPICs may find questionable zero-day stays.
“This is an appropriate and clever area for ZPICs to look at,” Taylor says. According to the Medicare Benefit Policy Manual (Chapter One, Sec. 10), “there has to be an expectation for the need for overnight care. When there is no physician intent to keep a patient overnight in the hospital for inpatient medical care, the patient should generally be considered an outpatient — unless the procedure is on the CMS inpatient-only list,” Taylor says. “This is an area of high risk and hospitals should apply the same rigorous utilization-review criteria they apply to other inpatient admissions. At the same time, when they see these denials, hospitals should have a physician assess every case and question whether the denials are correct.” If auditors properly denied your zero-day stay, Taylor recommends putting more muscle into concurrent reviews to prevent future errors. If the denial is inappropriate — perhaps for cardiac or urology procedures where patients are expected to require overnight stays but were able to go home early — consider an appeal, he says.
Use of Extrapolation Is Growing
He also notes that ZPICs are starting to use extrapolation in their reviews. They can calculate large recoveries based on small samples (e.g., 25 or 30 denials), Corrato says. “ZPICs can extrapolate when there is a sustained or high degree of payment error or failure of documented education,” Taylor says. Extrapolation can be a big financial blow to hospitals. He points to two strategies that may help hospitals mitigate their risk:
(1) Challenge the validity of individual claims denials underlying the extrapolation if you believe the denials were off base and have documentation to support an appeal; and
(2) Challenge the premise for the extrapolation if the ZPIC hasn’t used sound statistical sampling methodology. “We have found several cases recently where the ZPIC’s extrapolation was overturned at the first level of appeals because of inappropriate statistical methodologies,” Taylor says.
Corrato encourages hospitals to view denials critically and make sure auditors’ conclusions are appropriate. “Hospitals should not just defer to auditors,” he says. But you can’t appeal ZPICs’ decisions to extrapolate because they are allowed under their CMS contracts. The agency also has given RACs the green light to extrapolate.
It’s a Long Road to the ALJs
On a case-by-case basis, hospitals may have a long appeals road in front of them, all the way to the top of the food chain. In the medical-necessity arena, ALJs are often just what the doctor ordered. That’s what happened in one case of a stent denial Corrato described at the conference.
A Medicare patient was admitted to the hospital for percutaneous coronary intervention, a procedure to implant a stent that keeps blocked arteries open. The procedure was scheduled — in other words, it was elective and not performed in a medical crisis, Corrato said. Improved technology allows surgeons to perform these procedures on sicker patients, and that was the case here: the 83-year old beneficiary had two blockages, so two-thirds of his heart muscle was supplied by blocked arteries.
Initially, the MAC paid the MS-DRG, but later reopened the case and denied payment. According to Corrato, the reason given for the denial: “The medical record did not support an inpatient level of care.” The MAC did not elaborate. The surgeon also failed to detail the basis for his admission decision; if there were complications, they weren’t documented, Corrato says.
The hospital appealed the claim, noting marginal blood pressure and brachycardia (slow heart rate) during the procedure. The appeal was denied at the first level, called redetermination, with little explanation, Corrato said. The QIC upheld the claims denial, laconically stating that an expert panel determined the care could have been provided “in observation status.”
But the hospital’s luck turned around when it got to the ALJ. Unlike the MAC and QIC, the ALJ wasn’t dissuaded by the fact the procedure was scheduled,” Corrato said. “Heart transplants are scheduled,” he noted. The ALJ was persuaded by the surgeon’s use of atropine, a drug to treat very low heart rates, as well as the patient’s brachycardia and the distribution of blood flow, “which make us believe this [case] was a much higher level of risk.” The ALJ ruled in favor of the hospital, which received payment for the MS-DRG. The thrust of the ALJ’s opinion was that, while bad things didn’t happen to the patient, they could have — and that was good enough in this context to justify the admission, he said.
Corrato described another experience with an appeal on behalf of a hospital. Its MAC conducted a probe audit of admission necessity for chest pain (MS-DRG 313) and concluded that 90% did not make the grade. In response, the hospital implemented a utilization review process for admissions. It consists of two levels: InterQual screening of admissions, and then second-level physician advisor reviews. The MAC then audited the hospital’s chest-pain cases and denied 55% of them (11 of 20).
The MAC then demanded a corrective action plan, but the hospital pushed back, citing the merits of the cases and data from the CMS Program for Evaluating Payment Patterns Electronic Report (PEPPER). According to PEPPER, which is free electronic comparative billing data, the hospital’s volume of chest pain admissions was lower than half of all hospitals in the state, MAC jurisdiction and nation. The hospital also appealed the 11 denials — and all were overturned. “The ALJ determined that the medical evidence and documentation of the chart supported the medical necessity of the admission in question,” Corrato said.
Compliant Admissions Are Key
Taylor emphasizes the importance of having a compliant medical-necessity admission review program. That involves applying admission screening criteria (e.g., InterQual), followed by physician review and then, if necessary, input by the attending physician. “If all those pieces are in place and function properly, denials should not be upheld by a limitation of liability provision,” Corrato notes. CMS’s limitation of liability provision authorizes payment if providers did not know, or could not have been expected to know, that a service was not reasonable and necessary.
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