To Admit or Not to Admit: The Level of Care Question

Making the Right Call is Crucial

The decision of whether to admit someone for inpatient treatment or keep them in observation care is perhaps one of the most significant decisions a healthcare provider has to make. It is also one of the earliest.

Once made, this decision sets the patient on a course of care that can be very difficult to alter after the fact. For better or worse, once a patient is designated as inpatient, that sets a certain expectation for care that can lead to further utilization issues down the road (for example, an unnecessarily extended hospital stay). In addition to impacts on patient care, there are high-stakes financial implications for both patients and providers that result from the decision to treat a patient in observation care instead of as a full inpatient admission. If the decision is made inappropriately—or with insufficient documentation of medical necessity—it can result in a payer denial.

According to the Centers for Medicare & Medicaid Services (CMS), roughly 10% of all claims are initially denied.[1] That is already a very large proportion for hospitals to face, and it encompasses everything from the most straightforward situations to those that are frequently “close calls” (i.e. CHF, COPD, asthma), where denial rates are likely higher. Claims can be denied for a variety of reasons, and two of the prominent causes are questionable medical necessity—which largely comes down to level of care decision—and insufficient documentation to support the claim. To avoid potential denials, it is important to get these aspects right the first time. Attempting to appeal these denials can be a time-consuming and costly process for hospitals, with varying levels of success. As the Advisory Board put it, “Only about two-thirds of denials are recoverable, but almost all (90%) of them are preventable.”[2]

Medicare’s Two Midnight Rule and Inpatient-Only List

Making the appropriate level of care call, and thereby helping to “prevent” a denial, can be as delicate as it is crucial. For Medicare in particular, the decision has added layers of nuance. The Two Midnight Rule, which first went into effect in October of 2013, attempted to clarify an inpatient stay for billing purposes. Generally, it states that if a provider reasonably expects that a patient will require a hospital stay that crosses two midnights—and that reasonable expectation is backed by the medical record—the patient can be admitted.[3] Yet it also allows for case-by-case exceptions for inpatient stays that require less than two midnights. The result is that providers must remain vigilant and carefully consider (and document) complex medical factors when making these decisions, including: patient history, comorbidities, and current medical needs; severity of signs and symptoms; and risk of adverse events.

In a further attempt to add clarity around billing, Medicare introduced the Inpatient-Only List. This annually-updated list enumerates the procedures that can only be performed in an inpatient setting, with the clear expectation of a stay that would cross two midnights.[4] Yet this measure has brought confusion of its own. Some providers were mistakenly led to believe the list was meant to be conclusive, and thus have interpreted it such that if a procedure is absent from the list (or removed from the list), it cannot be performed in an inpatient setting. This is not necessarily true; being absent from the list only means the procedure isn’t always considered inpatient. Ultimately, in order to make the appropriate call for the patient and for billing, medical providers should assume no defaults and always include documentation to support their decision-making.

Further Challenges that Can Lead to Denials

Medicare’s payment structures are not the only challenge that providers must navigate when making level of care decisions. Regardless of payer, for every patient, medical necessity must come first, and that in itself bears challenges. Even in the best of situations, this entails accessing a patient’s entire history and carefully considering what level of care is most appropriate for them based on a massive and continually-evolving body of medical evidence. If the level of care is not dictated by medical necessity, the resulting medical claim can be denied.

In addition, even when a provider is certain that medical necessity dictates an inpatient admission, the claim may still get denied if there isn’t sufficient documentation to support it. This is the second half of the challenge providers face—on top of considering the patient and applying their clinical judgment, they must also show their work. Valuable hospital staff hours must be dedicated to building claims documentation, a time-intensive process that regrettably draws resources away from patient care.

Guiding the Level of Care Decision

When deciding whether to admit a patient, providers have a variety of factors to weigh and challenges to navigate. To avoid making an inappropriate call that can negatively impact care and result in a denial, two key themes emerge: the provider must carefully establish medical necessity, and thoroughly document it.

To streamline the admission decision while adhering to evidence-based best practice, it would be ideal for providers to have a platform that is capable of automating aspects of both. Establishing medical necessity hinges on comparing the patient’s complete and accurate medical history against evidence-based, industry-accepted standards or guidelines—this can be achieved by pulling patient information directly from the electronic medical record and using software to compare it against evidence-based guidance. A clinician can then step in to review the guidance and ensure medical appropriateness based on the recommendations before submitting the claim. And if all the work is performed within the same platform, this opens up the possibility for the care guidelines and clinician notes to be automatically documented and included with the claim, mitigating concerns of denials due to insufficient documentation.

The technology needed to support this vision is now arriving. A leading provider of evidence-based care guidelines that is used by payers and providers alike, MCG Health, is releasing a platform for providers that brings those pieces together in one easy-to-use interface. It’s called Indicia for Admission Documentation with Synapse. When Indicia for Admission Documentation is launched, Synapse takes information from the electronic medical record (EMR) and then compares it with MCG’s evidence-based care guidelines, a thoroughly researched and widely accepted standard in the healthcare industry. It then presents providers with options for the most appropriate guidelines and indications for admission, specific to an individual patient’s information. The provider can then go through the options and apply their clinical judgement, with the evidence base conveniently accessed in the same platform. And as the name suggests, the platform relays this information back into the EMR, where it can be used for claims submission.

Altogether, Indicia for Admission Documentation with Synapse is the ideal platform for level of care decision-making. It helps providers streamline the admission decision while informing them of the evidence, with information drawn from and stored directly back into the EMR for accuracy. It’s the next step in a connected future that brings providers, payers, and technology together to improve utilization management and patient care.

To learn more about MCG care guidelines or Indicia for Admission Documentation with Synapse, contact MCG Health.

Image courtesy Shutterstock/sfam_photo


[1] ICD-10 Transition Moves Forward, Centers for Medicare and Medicaid Services, 2015-10-29. Retrieved from: https://www.cms.gov/newsroom/fact-sheets/icd-10-transition-moves-forward

[2] An ounce of prevention pays off: 90% of denials are preventable, Advisory Board, 2014-12-11. Retrieved from: https://www.advisory.com/research/Revenue-Cycle-Advancement-Center/at-the-margins/2014/12/denials-management

[3] CMS Medicare Claims Processing Manual (Pub. 100-04), chapter 12, section 30.6.8

[4] CMS Medicare Claims Processing Manual (Pub. 100-04), chapter 4, section 180.7

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