CMS Clarifies Medical Necessity of Inpatient Services

February 8th, 2011 / By Barbara Aubry, RN

Admit or not admit still seems to be the tough question for many hospitals.

In an effort to provide industry guidance, CMS recently released a new Med Learn Matters update, number SE1037. The target audience includes all providers, MACs, and FIs because they are once again responsible for medical necessity oversight via audits.

The gold standard has not changed, CMS reminds staff involved in clinical decision making and patient status assignment must “stay abreast of all CMS national inpatient hospital policy and National and Local Coverage Determinations.” In addition, they warn you must be sure your medical documentation demonstrates evidence of the clinical need for admission. This is not new, but is still overlooked. Plus, they warn all subsequent inpatient care provided must be carefully documented with regard to necessity.

CMS admits their RAC, MAC and CERT reviewers use medical necessity or utilization criteria tools including Millman, InterQual and proprietary systems during audits. They refer readers to Chapter 6, Section 6.5.1 of the Program Integrity Manual that spells out how their auditors function.  In addition to criteria, they also expect their reviewers to use their clinical judgment.

CMS is clear “inpatient care, rather than outpatient is required only if the beneficiary’s medical condition, safety or health would be significantly and directly threatened if care was provided in a less intensive setting.”  They also mention that admission for the beneficiary’s peace of mind, family convenience or for financial factors due to non clinical needs is not medically necessary. They note; screening criteria is only one tool auditors use when making determinations.

An important reminder is found in Chapter 6, Section 6.5.2 of the Program Integrity Manual which states “review of the medical record must indicate inpatient care was medically necessary, reasonable and appropriate for the diagnosis and condition of the beneficiary at any time during the stay.”

Reference is then made to the Benefit Policy Manual Guidelines in Chapter 1, Section 10 that discusses the expectation that  admission should be considered  when at least a 24 hours (or longer) is stay is required. They expect the physician to consider severity of signs and symptoms, medical predictability of adverse outcome, ready access to diagnostic testing and whether those studies can be completed on an outpatient basis.

When you are faced with documenting medical necessity, think like an auditor.  Be sure you tell the entire story that supports your decision making process.  And, if you find that inpatient status is no longer warranted, consider invoking your facility’s Condition Code 44 process.

Barbara Aubry is a Regulatory Analyst with 3M Health Information Systems.

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