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AHA comments on CMS' two-midnights proposal

June 19, 2013

The AHA today urged the Centers for Medicare & Medicaid Services to issue new instructions to its recovery audit and other contractors explaining how to review the medical necessity of Medicare Part A inpatient hospital stays, instead of finalizing its proposed “time-based presumption” policy. Proposed in the fiscal year 2014 inpatient prospective payment system rule issued in May, the policy would instruct Medicare medical review contractors to presume an inpatient hospital admission is reasonable and medically necessary if a beneficiary requires more than one Medicare utilization day, which the agency defines as an encounter crossing two midnights. “We appreciate CMS’ effort to clarify what is required for payment of inpatient hospital services under Medicare Part A, particularly in light of the focus by Medicare [RACs] on the medical necessity of short inpatient stays,” wrote AHA Executive Vice President Rick Pollack. “Unfortunately, CMS’ proposed time-based presumption of medical necessity is not reflective of the way hospitals function today: while it might address some problems, it likely would generate others.” AHA suggested that, rather than adopt a time-based presumption, the agency instead make three changes to the RAC program. First, AHA urged CMS to limit RAC review to only the information in the medical record that was known to the physician at the time of the decision to admit. Second, AHA urged CMS to instruct the RACs to focus their audits on those other factors that the agency has said are relevant to the admission decision, instead of only factors like the patient’s length of stay and outcome. Finally, AHA called on CMS to penalize RACs for “incorrectly denying an inpatient stay – not just to recoup their contingency fee – to provide some check on the strong financial incentive RACs have to conclude that beneficiaries should not have been admitted.” AHA will submit separate comments on CMS’ hospital inpatient and long-term care hospital PPS proposals.