“Only as an Inpatient” – What Does That Mean?

If a patient is insured by UHC Medicare Advantage, it appears that almost anything goes when it comes to determining the correct admission status.

In a recent segment of Monitor Mondays, a weekly Internet broadcast produced by RACmonitor for MedLearn Media (“Clinical Validation Audits,” available at https://racmonitor.com/monitor-mondays-past-episodes/), David Glaser, a healthcare attorney, reported on an audit of one of his clients by the Unified Program Integrity Contractor (UPIC). The UPIC is a Centers for Medicare & Medicaid Services (CMS) contractor whose primary goal is to investigate instances of suspected fraud, waste, and abuse in Medicare or Medicaid claims.

According to Mr. Glaser, the audit targeted short inpatient admissions for Medicare beneficiaries. He reported that the UPIC denied a majority of these admissions, stating that “an inpatient level of care was not required” and that “the documentation does not support the severity of illness or intensity of service for inpatient admission.”

As Mr. Glaser pointed out, this rationale does not make sense, in the context of the Two-Midnight Rule. The Two-Midnight Rule, adopted on Oct. 1, 2013, bases the admission decision on the expectation of a medical need for a two-midnight hospital stay. The rule has some exceptions, and was modified by CMS in 2016, but the basics remain the same, in that if a patient is expected to need hospital care that will exceed two midnights, they should be admitted as an inpatient.

Many interpret this as a strictly time-based rule, but it is important to note that beyond two midnights, there is a second standard: the medical necessity for hospital care. As CMS said in the Two-Midnight Rule, “the crux of the medical decision is the choice to keep the beneficiary at the hospital in order to receive services or reduce risk, or discharge the beneficiary home because they may be safely treated through intermittent outpatient visits or some other care.” In essence, that means a physician needs to ask two questions: 1) does the patient require care that can only be safely provided in the hospital, and 2) how long will that care require?

While that determination sounds simple, the question of “how long” can be complicated by non-medical factors. The patient with chest pain who presents on Saturday but cannot get a stress test until Monday will require two midnights in the hospital. However, that second midnight is required simply because the hospital chooses not to offer stress tests on Sundays, so that midnight cannot be counted. Likewise with the patient who cannot get a ride home until the morning, or the physician just wants to keep them “one more day” without any medical justification.

The elderly patient who requires placement because the family can no longer provide care for them in the home may require several days in the hospital to arrange a caregiver or to find a long-term care solution, but that patient does not medically need to be in the hospital for that process. If there was a payment source to pay for an in-home caregiver or a long-term care facility, that patient could be sent there from the emergency department, and their health and safety would not be jeopardized in any way.   

But back to the issue of “inpatient level of care.” The UPIC contractor reportedly cites this in its denials, so one would presume it has some basis in Medicare regulations. In 2012, the Medicare Program Integrity Manual, Chapter 6, section 6, actually stated as such, noting that “inpatient care rather than outpatient care is required only if the patient’s medical condition, safety, or health would otherwise be significantly and directly threatened if care was provided in a less intensive setting.” But the current Manual, which was last updated in 2020, includes no such statement and instead describes the Two-Midnight Rule.

Interestingly, the Medicare QIO Manual, Chapter 4 states in Section 4110, “inpatient care rather than outpatient care is required only if the patient’s medical condition, safety, or health would be significantly and directly threatened if care was provided in a less intensive setting.” While this may provide support for the UPIC’s use of that standard, it should be noted that this section of the Manual applies to reviews by the Quality Improvement Organization (QIO) and not other audit agencies, and was last updated July 11, 2003. Therefore, while it is the latest iteration of the Manual, it should be disregarded as reflecting current regulation.

To add to the confusion, UnitedHealthcare (UHC) recently updated its Medicare Advantage policy on inpatient admissions. That policy starts with the encouraging statement that “hospital services (inpatient and outpatient) are covered when Medicare criteria are met.” But that simply affirms the Medicare requirement that requires Medicare Advantage plans to provide all services available to Medicare beneficiaries; it does not address admission status.

But then it gets more confusing. The UHC policy states that “the CMS Hospital Inpatient Patient Payment System (IPPS) Final Rule provides clarity when inpatient hospital admissions are generally appropriate for payment.” The inclusion of this statement in their policy – along with further discussion directly referencing the Two-Midnight Rule, such as “they should order admission for patients who are expected to require a hospital stay that crosses two midnights and the medical record supports that reasonable expectation” – adds hope that UHC follows the Two-Midnight Rule, as it applies to traditional Medicare patients.

But then, two paragraphs later, all hope is sent down in flames when UHC notes, “for coverage to be appropriate under Medicare for an inpatient admission, the patient must demonstrate signs and/or symptoms severe enough to warrant then need for medical care and must receive services of such intensity that they can be furnished safely and effectively only on an inpatient basis.” Out of the blue, the concept of “only as an inpatient” returns. As a reference for this “only as an inpatient” statement, UHC has a link to the QIO Manual noted above. But UHC is not a QIO, so this Manual should not serve as a reference (in addition to the fact that it is out of date). 

Clinically speaking, are there any services that cannot be furnished in a hospital as an outpatient? Theoretically, a heart transplant can be performed as outpatient if the physicians forget to write the magic words “admit as inpatient” in the medical record. That patient was no less safe than if they were formally admitted as inpatient for their surgery and hospital care. In fact, starting in 2015, CMS allows inpatient-only surgeries to be performed as outpatient as long as the order is obtained within three calendar days, and while the patient is still hospitalized.

Where does that leave us? For patients with traditional Medicare, the Two-Midnight Rule is the law of the land, as delineated in 42 CFR 412.3. No auditor should be using any other standard for determining the medical necessity for inpatient admission. CMS should update the QIO Manual to reflect the regulatory changes that have been made since 2003.

And finally, if faced with a patient insured by UHC Medicare Advantage, it appears that almost anything goes when it comes to determining the correct admission status.

Programming Note: Listen to Dr. Ronald Hirsch every Monday at 10 Eastern on Monitor Mondays when he makes his Monday Rounds, sponsored by R1RCM.