Beware of UPICs Applying the Wrong Admission Criteria

If the physician expects that a patient will be in the hospital for two days, the patient is an inpatient. Period.

One of my clients recently received the results of a Unified Program Integrity Contractor (UPIC) audit of one-day stays. The UPIC denied the overwhelming majority of the one-day stays it reviewed. For many of the denials, the UPIC included the following purported justification: 

“The provider’s documentation did not support that an inpatient level of care was required to observe the beneficiary’s symptoms. The provider’s documentation did not include any other abnormalities that would require an inpatient level of care, as opposed to monitoring an observation at the outpatient level. The documentation submitted does not support severity of illness or intensity of service for an inpatient admission. Therefore, the claim is denied.”

The buzzwords “severity of illness” or “intensity of service” are likely familiar to most of you. They’re commonly used in the industry. There is, however, one key place where those phrases do not appear at all: that’s in the two-midnight rule. What does the two-midnight rule say? Let’s look at 42 C.F.R. 412.3:

“Except (as specified below), an inpatient admission is generally appropriate for payments under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses two midnights. The expectation of the physician should be based on such complex factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event. The factors that led to a particular clinical expectation must be documented in the medical record in order to be granted consideration.”

Neither the phrase “severity of illness” nor “intensity of service” appear here. While there is a reference to the severity of signs and symptoms, it is in the context of how that affects the physician’s expectation of the length of stay. When it comes to determining whether the patient should be an inpatient, there is only one question: “when the physician admitted the patient, did the physician reasonably expect that they would need two days of hospitalization?” 

If the physician expects that a patient will be in the hospital for two days, the patient is an inpatient. Period. Many people will ask “but wait, does the patient need hospital care?” That is a fair and reasonable question. But I want to be very clear about a frequently misunderstood point: observation is hospital care. If it’s anticipated that the patient needs two days of observation, they need two days of hospital care. If they could have been at home, or in a hotel, then it is likely they didn’t need hospital care. But if they needed IVs and nursing and observation, they were using hospital care. Whether it occurs in the ED, an observation floor, a psychiatric unit, or a medical ward, it is hospital care. Observation is not a lower level of care.

The question is not whether the patient actually stayed for two days. It’s all about expectation. As the regulation says, if an unforeseen circumstance results in a shorter beneficiary stay, the patient may be considered to be appropriately treated on an inpatient basis. It’s completely unfair to take all of the one-day stays and conclude that they are inappropriate. If the patient received two days of observation care, that is darn compelling evidence that the expectation they would be in the hospital for two midnights was reasonable. If that wasn’t the case when the patient presented, it was certainly clear at 11:59 p.m. before the second midnight. Even if it wasn’t clear earlier, that patient could and should have been an inpatient at that moment. 

That said, the actual course of the hospitalization is not dispositive. A reviewer has to stand in the shoes of the physician at the time they made the admission decision. Was it reasonable to expect a two-day stay? If so, the Medicare admission was proper, and the audit should be fought. And if it subsequently became clear that the patient should be admitted, it is important to remember that under the DRG system, the payment will be the same unless the changed admission time somehow impacts the patient’s outlier status. (The length of stay can affect things like the patient’s eligibility for skilled nursing facility, or SNF care, so I am not suggesting that the moment of admission is irrelevant. I am merely making the point that if the patient was admitted Monday at noon, and remained until anytime on Wednesday, regardless of the time that a reasonable physician would know the patient would require admission, that patient should, without a doubt, be an inpatient.) 

When a UPIC, or anyone else, starts talking about the intensity of service or severity of illness, level of care, or anything in MCG or Interqual, when reviewing hospital admission of a Medicare patient, it is important to recognize that they are mistaken. 

Programming Note: Listen to healthcare attorney David Glaser and his “Risky Business” segment every Monday on Monitor Mondays at 10 Eastern.