Short-Stay Inpatient Audits and Blue Cross of Michigan

Two crucial reports from Monitor Mondays: providers, take note.

On the Oct. 11 Monitor Mondays broadcast, listeners heard many important updates, including that of the resumption of short-stay inpatient audits and the increase in Medicare Advantage enrollees and audits. But two items stood out as warranting extra attention.

First, last week, Blue Cross of Michigan released a notice that starting in 2022, they will not approve inpatient admission for a list of 22 diagnoses until at least 48 hours of observation has passed, unless the patient was receiving care in the ICU. While some of the diagnoses might make sense, like syncope and nausea and vomiting, the list also includes all patients with heart failure, COPD, and pneumonia, diabetic ketoacidosis, and surprisingly, meningitis.

They also note that InterQual criteria will not be used until after those 48 hours has passed. So, if a patient with an acute exacerbation of systolic heart failure who also has acute kidney injury, hyponatremia, and metabolic encephalopathy presents, and the doctor determines that the patient will need at least four days of treatment, and the light turns green in InterQual, unless you admit them to the ICU, Blue Cross of Michigan will not allow them to be admitted as inpatients; they must remain in observation.

It is important to note that this is an issue of payment and not medical care. If that 48-hour observation stay pays you more than if you admitted the patient as inpatient, go with it. But the problem is that I am sure most of you have no idea how the insurer actually pays your facility. That’s all in the hands of your finance staff.

It was also noted that Blue Cross implies that this policy applies to all their plans, but it is not clear that it applies to their Medicaid product. Why is that? Because it would violate a federal regulation, 42 CFR 440.2. That section describes the federal financial participation in Medicaid programs, and it clearly defines an inpatient as a patient who has been hospitalized over 24 hours, or is expected to need 24 hours – not 48 hours, not 24 to 48 hours. There is no mention of commercial criteria. And this is a regulation, not a Manual provision or an FAQ. That means that every single Medicaid plan in the country, including Managed Medicaid plans, must abide by this definition of “inpatient” if they want federal money, which constitutes the vast majority of the funding for Medicaid in every state.

With Medicare Advantage, as Blue Cross of Michigan is showing, there is no formal federal definition of “inpatient,” so the plans are free to make up their own rules. But not so with Medicaid, where the consequences for violating that federal regulation can create dire financial effects on a plan. But does the Centers for Medicare & Medicaid Services (CMS) know that many Medicaid plans are violating the law?

Maybe it is time for them to find out.