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From Health Law Daily, August 6, 2013

Hospitals improperly billed Medicare Part A for cancelled elective surgeries

By Sarah E. Baumann, JD

In 80 of 100 cases surveyed, the HHS Office of Inspector General (OIG) determined that hospitals improperly billed Medicare for short-stay hospital inpatient claims that involved cancelled elective surgeries (OIG Report, No. A-01-12-00509, August 6, 2013). The claims were neither reasonable nor necessary because a clinical condition did not exist upon admission and a new clinical condition did not emerge after admission that required inpatient care. CMS generally agreed with the OIG’s recommendations that it recover overpayments and strengthen guidance discussing appropriate billing procedures for cancelled elective surgeries.

Cancelled elective surgeries. Medicare requires that certain elective surgeries be performed in inpatient hospital settings. However, surgeries may be cancelled based upon a patient’s condition or decision, or based upon a hospital’s inability to perform a surgery on a particular date. The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) allows hospitals to use “V-codes” that explain why a surgery was cancelled. Hospitals may also change a patient’s status to “outpatient” prior to discharge or release when both the physician and the hospital’s utilization review committee concur with the decision and bill for outpatient services under Medicare Part B.

OIG study. The OIG reviewed inpatient (Medicare Part A) claims that utilized V-codes, involved stays of two days or less, and had charges that were not assigned to revenue centers representing emergency rooms, operating rooms, or cardiac catheterization laboratories. Eighty of 100 claims were not medically reasonable or necessary because they did not involve conditions severe enough for inpatient stay. Of these, 71 were cancelled because patients were not ready. One beneficiary, for example, could not undergo hip replacement surgery due to a urinary tract infection. Nine surgeries were cancelled because hospitals were not ready, as in the case of a hospital experiencing equipment failure. Medicare made payments of $345,717 related to these admissions. Twenty cases were appropriately billed as inpatient admissions. For example, one patient was unable to have a carcinoma removed after developing cardiac issues under anesthesia.

Causes. The OIG determined that the improper billing resulted from unclear Medicare requirements, restrictive Medicare requirements, and inadequate hospital utilization controls. Medicare manuals do not specifically address the issue of cancelled elective surgeries, making billing requirements unclear. Additionally, physicians may not unilaterally change a patient’s status to outpatient. Instead, the hospital utilization control board must agree, and it is often difficult to coordinate a review by both parties prior to discharge or release. Finally, some hospitals did not have utilization controls in place to address the issue of cancelled elective surgeries. Many based their decisions not to implement such controls based on the short timeframe available prior to discharge or release.

Recommendations and response. As a result of this review, the OIG recommended that CMS adjust all overpaid claims that it is lawfully permitted to, strengthen guidance regarding Part A billing with respect to cancelled elective surgeries, address remaining claims not reviewed by the OIG, and instruct Medicare administrative contractors (MACs) to encourage hospitals to implement strong utilization controls. Although CMS did not agree with all specific recommendations, it generally agreed with the OIG’s concerns and is taking steps to address them. For example, it has issued an inpatient prospective payment system Proposed rule for fiscal year 2014 proposing that a practitioner should only order an inpatient stay where the stay is projected to exceed two Medicare utilization days, or where the beneficiary requires an inpatient-only procedure. CMS suggested that it can specifically address the cancelled elective surgery issue in the Final rule.

MainStory: TopStory OIGReports PartANews IPPSNews AuditNews BillingNews PaymentNews PartBNews

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