DEVELOPING: Appeal Process for Certain Changes in Status for Medicare Now Live

Despite some uncertainly in light of the Trump administration’s hold placed on all pending federal regulations, it has been confirmed with the Centers for Medicare & Medicaid Services (CMS) that the appeal process for certain status changes of Medicare patients, as finalized in CMS-4204-F, is effective today, February 14^th.

As a reminder, this appeal process and delivery of the required notice, the Medicare Change of Status Notice (MCSN), applies to a very small patient population of patients receiving care in hospitals.

First, this only applies to patients with traditional Medicare as the primary payer. It does not apply to Medicare Advantage patients, patients where Medicare may be the secondary payer, patients whose care is covered by the Veterans Administration, or any other payer. Although patients with Medicare primary and Medicaid secondary would not incur any financial liability for almost all care, the MCSN must be delivered if other criteria are met.

Then, of those Medicare patients, the next criterium is an admission status change from inpatient to outpatient. For traditional Medicare, that requires following the utilization review process as outlined in 42 CFR 482.30, commonly called the “Condition Code 44 (CC44) process.”  If the patient is hospitalized as outpatient with or without observation services, they are not afforded appeal rights. If a patient is hospitalized as inpatient, they do not have the right to appeal that status designation.

The next criterium is the physician must not only have ordered observation services, but the patient must also receive observation services, of any duration. As a reminder, a CC44 change is a change from inpatient to outpatient and if, and only if, the patient still requires continued hospital care should observation services be ordered. If the physician orders observation services but the care the patient receives is custodial care, convenience care, or routine surgical recovery care, that should be documented, that service should not be billed as observation services, and the appeal process is not available to the patient.

As a reminder, if a patient’s necessary hospital care is completed and the patient is waiting for a ride home, that is not observation care and should not be billed as such.

The next criterium is that the patient either has Medicare Part A and not Part B, representing about 7 percent of Medicare beneficiaries, or the patient has Medicare A and stays 3 or more days after the date of the inpatient admission order that was initially written and led to the formal admission and need for CC44.   

For example, the patient with A and not B is admitted as inpatient with syncope on February 16^th. On February 17, the UR team sees the case, determines that inpatient admission was not appropriate based on the Two Midnight Rule and initiates the CC44 process. The patient’s status is changed to outpatient and because the patient continues to warrant telemetry while competing the necessary 24 hours, an order for observation is provided and that service is delivered.

This patient should now receive the MCSN. On the other hand, if the CC44 process was completed at the end of the 24 hours and the doctor indicated that the patient was stable for discharge, an MCSN is not necessary since no observation services will be received.

An illustration of the other patient type would be the patient with Medicare A and B who presents Feb. 16 with weakness. The patient is admitted as inpatient with a diagnosis of urinary tract infection and dehydration. The next morning, on Feb. 17, a CC44 change is done, and observation services are ordered and provided while the patient receives some iv fluids and antibiotics. Later that day, the patient is stable to be discharged but the family is nowhere to be found.  

The patient remains hospitalized receiving custodial care. (Although the second midnight will pass, inpatient admission is not warranted as the care is not necessary hospital care.)

If this patient remained in the hospital on the Feb. 19, the delivery of the MCSN is required. This is the delivery date because if the patient appeals and the initial inpatient admission order on the 16^th is reinstated, the patient will now have 3 inpatient days necessary to qualify for part A coverage of a skilled nursing facility (SNF) stay, assuming other criteria for Part A SNF coverage is met.

As with our syncope patient, if, at the time of the status change on Feb. 17, there was no indication for observation services and they were not provided, the MCSN would not be delivered.

The MCSN must be properly completed, including checking the box applicable to the patient’s situation, and the patient should receive a verbal explanation. This can be scripted as simply as “because we changed your status from inpatient to outpatient and you met the other criteria designated by Medicare, you now have the option to appeal your status change from inpatient. This form explains what that appeal means to you and how to appeal if you so choose. Please sign and date this and I will bring you a copy.”

If the patient chooses to appeal, they will contact the QIO specified on the form (it is the same QIO and contact number as on your Important Message from Medicare) and the QIO will contact you to obtain the medical records. Then you wait for a determination.

There is one significant difference with this appeal; the patient does not have financial liability protection. If they choose to remain hospitalized, an Advance Beneficiary Notice of Non-Coverage may be delivered, if one has not already been delivered, as may have occurred in the case of the custodial care patient. Patients are not required to remain hospitalized during the appeal process nor is there any benefit to doing so.

The QIO will contact you with their determination and if the patient “wins” you will restore the initial inpatient order as the proper order for claim processing, shifting the stay to inpatient and the cost of hospital care to Part A, relieving the patient without Part B of financial liability and restoring the potential part A SNF benefit access for the patient who stay 3 or more days after the inpatient admission order.

As I have described on Monitor Monday and in my RACmonitor articles, the key to this new somewhat confusing appeal right is to avoid it altogether by having a robust utilization review process and get every patient in the right status from the start.

Enhance your first and second level review process with trained staff and adequate access to physician advisors for secondary review. If you get the status right from the beginning, you will never face another CC 44 change and hence never have to deliver the MCSN.

Programming note: Listen live to Dr. Ronald Hirsch Mondays on Monitor Mondays, 10 Eastern with Chuck Buck and sponsored by R1 RCM.