By Ronald Hirsch, MD, FACP, ACPA-C, CHRI, CHCQM
- The new rule, CMS-4204-F, will affect two distinct categories of fee-for-service Medicare patients and specifically excludes Medicare Advantage patients. The first, the retrospective group, are those who during a past hospital stay since 2009 had their admission status changed from part A to part B and either did not have part B coverage or stayed three or more days, were transferred to a skilled nursing facility and had to pay out of pocket for that SNF stay. CMS is expected to announce the date that appeals will be accepted soon. The second, deemed the prospective group, are current patients, starting February 14, 2025, who have their status changed from inpatient to outpatient via the condition code 44 process, have observation services ordered, receive observation services, then either do not have part B or stay 3 or more days in the hospital starting with the day of the initial inpatient order.
- The retrospective process will require, upon notification from the CMS eligibility contractor or MAC, hospital and nursing facility HIM departments to search for medical records pertaining to the applicable stay and submit them within 120 days. CMS notes there is a federal 7 year record retention requirement and providers will not be penalized if records cannot be located past that timeframe.
- If no records are available, CMS will accept “testimonial evidence” from the beneficiary or provider but “such statements by themselves may be insufficient to establish eligibility and/or determine if Part A coverage requirements were met.” The patient must also provide proof that they paid out-of-pocket for care rather than were simply billed for such care but never paid.
- If the patient’s appeal is decided in their favor, the hospital/SNF will be required to refund any money paid by the patient and has the option of refiling a claim with Medicare for the services. CMS does not specify how providers should prepare such claims, being that the coding standards and rules in place at the time of the service may vary greatly from current standards, such as use of ICD-9 codes rather than ICD-10, use of RUG rather than PDPM for SNF admissions, etc. It is also not specified what processing methods, such as bundling rules, DRG assignments, etc. the MACs will use to pay such rebilled claims. It is unclear if the MACs have the ability to “recreate” the processing of a claim from up to 14 years ago to determine the proper payment rate.
- The prospective process will require hospitals to provide a new notice, the Medicare Change of Status Notice (MCSN), to any Medicare fee-for-service patient who meets the inclusion criteria outlined above. This form will require the hospital staff to check the appropriate box, obtain the patient signature, ensure the patient or their representative comprehends the content, and provide the patient a copy.
- The MCSN must be delivered to the patient as soon as the patient’s status is changed from inpatient to outpatient and receive observation services for patients who do not have Part B, or when the patient whose status is changed to outpatient and receives observation services reaches the third day after the date of the initial inpatient admission order.
- The patient may appeal their status change by contacting the Quality Improvement Organization for their state, as specified on the MCSN. The QIO will request records from the hospital, solicit the views of the patient, and within 24 hours determine if, based on 42 CFR 412.3, the Two Midnight Rule, the hospital’s decision to change the patient’s status from inpatient to outpatient was appropriate.
- If the appeal is decided in the patient’s favor, the hospital will be instructed to “reactivate” the inpatient admission order and prepare a claim with that date of inpatient admission. If any money, such as deductibles, has been collected from the patient, that must be refunded.
- If the patient is medically stable for discharge but chooses to stay in the hospital awaiting their appeal adjudication, they do not have financial protections. A hospital may present the patient an Advance Beneficiary Notice for custodial care and charge the patient to remain hospitalized. If the appeal is decided in the patient’s favor, the patient cannot be charged for any time they remained in the hospital awaiting the decision, regardless of the medical necessity for such care.
- CMS estimates that nationally 15,655 MCSNs will need to be delivered per year and that 8,000 patients will file appeals, an average of 3 per hospital per year. Despite this low number, hospitals must prepare applicable policies and procedures to ensure they honor patient’s rights. In addition, HIM departments should be informed to expect medical record requests for distant hospital and SNF stays.
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Bio: Dr. Ronald Hirsch is a Vice President of the Regulations and Education Group at R1 RCM Inc. Dr. Hirsch was a general internist and HIV specialist and practiced at Signature Medical Associates, a multispecialty practice located in Elgin, IL. He was Medical Director of Case Management at Sherman Hospital in Elgin, IL from 2006 to 2012, where he was Chairman of the Medical Records Committee from 1995 to 2012, and also served on the Medical Executive Committee. Dr. Hirsch is certified in Health Care Quality and Management by the American Board of Quality Assurance and Utilization Review Physicians, certified in Revenue Integrity by the National Association of Healthcare Revenue Integrity, and on the Advisory Board of the American College of Physician Advisors. He is on the editorial board of RACmonitor.com. He is the co-author of The Hospital Guide to Contemporary Utilization Review, with the third edition published in 2021.