CMS has limited initial patient-status reviews of acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to a six-month look-back period from the date of admission.


July 28—As the end of a 90-day “pause” in short-stay claims adjudication by quality improvement organizations (QIOs) nears, Medicare officials are hedging as to the when the reviews will resume.

The Centers for Medicare & Medicaid Services (CMS) confirmed in emailed responses to questions that several actions the agency required QIOs to take during the pause were “nearly complete.” CMS had said the pause was needed to improve standardization around the QIO review process, retrain QIOs on the two-midnight policy, re-review claims denied by the QIOs, and conduct provider outreach and education.

The pause, which was supposed to last no more than 90 days, began May 4 and should end next week under the original CMS timeline. However, when asked about the likelihood of resumption next week, a  CMS official said there was no “hard date” for the restart of QIO audits of payment claims under the two-midnight inpatient admissions policy.

Some doubts have arisen among providers and consultants that the end of the pause is imminent, with several industry sources reporting that QIOs have yet to contact hospitals to initiate the outreach and education that was supposed to occur.

Industry advisors said the audit stemmed from complaints by many hospitals that QIOs were not following regulatory requirements to count patient time in observation toward the total calculation of a stay lasting at least two midnights, which would qualify the hospital to receive inpatient payment rates for the care provided.

On Oct. 1, 2015, QIOs took over from Medicare administrative contractors (MACs) the initial patient status reviews of providers to determine the appropriateness of Part A payment for short-stay inpatient hospital claims. However, provider advisors said QIOs had the same difficulty as MACs in accounting for patient time in observation when they began enforcing the two-midnight rule.

CMS specifically cited “inconsistencies” in QIOs’ application of the two-midnight policy.

“CMS became aware of inconsistencies in the BFCC-QIOs’ application of the two-midnight policy for short hospital stay reviews, and on May 4, 2016, we temporarily paused short stay patient status reviews to give us time to improve standardization in the BFCC-QIOs’ review process,” the agency wrote in a new online posting, referring to Beneficiary and Family-Centered Care QIOs (BFCC-QIOs).

American Hospital Association staff said they informed CMS about hospitals’ concerns regarding the QIO review process, including the lack of sufficient time to implement education and improvement activities between a first-round audit and second audit request, and delayed receipt of review results and education. Such delays could prevent the hospital from rebilling denied claims under Part B due to the one-year filing limit.

Latest Steps

On June 6, CMS directed BFCC-QIOs to re-review all short-stay patient status claims that had been denied under the QIO medical review process since Oct. 1, 2015, when the BFCC-QIOs began conducting these reviews.

The claim reviews will resume “after the BFCC-QIOs have completed retraining on the inpatient admission policy, completed the re-review of previously formally denied claims, performed any needed provider outreach and education, and CMS validates the accuracy of the BFCC-QIOs’ performance of these activities,” according to a new CMS posting. “Many of these improvement steps have begun and are nearly complete. CMS will advise stakeholders when the suspension is lifted.”

The agency said it has “clarified” instructions to QIOs, directing them to limit initial patient status reviews of acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to a six-month look-back period from the date of admission

Importantly, CMS removed from the provider sample for re-review Medicare fee-for-service (FFS) claims that were outside the six-month look-back period and were either formally or informally denied. Those will be paid under Part A.

“I am sure all hospitals are delighted that CMS has realized the effect the BFCC-QIO audit suspension had on the hospital's ability to appeal or rebill denied short-stay inpatient admission claims,” Ronald Hirsch, MD, a vice president of AccretivePAS, said in emailed comments. “Although the actual number of cases was small (10-25 per hospital), the results of those audits were to be used to determine whether a hospital was referred to the RAC [recovery audit contractor] for further auditing, so the stakes could not have been higher.”

CMS also confirmed that QIOs are re-reviewing FFS claims that were formally denied and that fall within the six-month look-back period “to determine whether the initial review decision was consistent with the two-midnight policy in effect at the time of the hospital admission.”

A claim is considered “formally denied” if three criteria have been met: The provider was sent an initial results letter by the BFCC-QIO; the BFCC-QIO conducted and completed provider-specific education regarding the claims in question; and the BFCC-QIO sent the provider a final results letter, with the denial subsequently sent to the MAC for effectuation.

CMS issued the clarification limiting the QIO re-review to a six-month look-back period due to the rules allowing Medicare Part A claims denied by QIOs to be rebilled under Medicare Part B within one calendar year of the date of service.

“The imposition of a six-month look-back period for claims impacted by the temporary suspension of the BFCC reviews is being implemented to help ensure that providers receiving denials for Part A claims have sufficient time to rebill under Medicare Part B,” this week’s CMS notice stated.

After the Restart

The CMS official, who spoke on background, identified some of the steps that will occur after QIO reviews restart.

“After the temporary suspension, CMS will continue its oversight efforts by routinely re-reviewing a subset of BFCC-QIO completed claim reviews, monitoring provider education calls, and responding to individual provider inquiries and concerns,” the CMS official noted.

The latest CMS posting also noted that after the pause ends, QIOs will review claims within the six-month look-back period that were not formally denied. This issue was previously addressed in sub-regulatory guidance.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, July 28, 2016