Editor’s note: This article is the first in a two-part series on patient status.

In an era of greater accountability and enforcement, hospitals and treating physicians will be increasingly responsible for complying with Medicare’s medical necessity criteria for admissions and determining patient status.

Exercise oversight methods

To improve patient care and reduce the occurrence of claims denials or underpayments, hospitals need to employ several careful oversight procedures, including:

• Retrospective guidance of its utilization review (UR) committee
• Internal audits
• Prospective guidance of case management protocol (CMP)

Medicare is aggressively reviewing cases retrospectively, says Robert Corrato, MD, president and CEO of Executive Health Resources in Newtown Square, PA. Such examinations mean “providers will see a more frequent and critical assessment of their admission status determinations,” he says.

Before the facility assesses a patient’s condition, it must determine where each patient needs to be treated: admitted as an inpatient into the hospital, treated and released as an outpatient, or held temporarily to determine whether care is needed as an observation patient.

“Hospitals must define a process and criteria against which they will assess the medical necessity and appropriateness of the setting in which services are rendered,” Corrato says.

Determine patient needs and status

Once a patient enters the hospital, caregivers must assess the patient’s condition and determine the most appropriate setting for the care of that patient and medical necessity of their ailment.

The decision to define an admission to inpatient status as medically necessary is complex and includes several factors, including:

• Current needs of the patient
• Severity of signs and symptoms
• Existence of comorbidities
• Intensity of services
• Predictability of the clinical course
• Potential for adverse complications
• Availability of diagnostic services

Following the discharge of a patient, Medicare and its contractors can determine retrospectively whether the treatment a patient received was reasonable and medically necessary.

Even when Medicare criteria are met, prevailing medical policies or evidence-based standards of clinical practice may limit coverage for the care provided.

Use decision support systems

As a first-tier medical necessity screening, many hospitals use InterQual, Milliman, or another proprietary system to determine patient status. These evidence-based clinical decision support systems apply severity of illness and intensity of services (SI/IS) criteria to the patient’s presenting condition. Hospitals use these tools for self-monitoring internal audits as well.

Although useful, many of the criteria within such screening tools are similar for observation and inpatient status determination, presenting a conundrum to the case manager trying to make a differential status determination. Inpatient admission SI/IS criteria generally require a higher level of acuity than observation status.

Be careful not to use the computer systems as the only means to determine patient status, Corrato says. “Screening criteria should never be considered dispositive or final in terms of medical necessity determinations” without the case manager consulting a physician to make a final decision, he says.

Develop an effective UR committee

In more complex care cases, determination of patient status should go to a second-tier review by the UR committee.

A typical hospital UR committee is composed of medical staff leaders, such as the chief medical officer and chiefs of service. Hospital administrators, such as health information management, case management, or other department directors, may also serve.

An effective UR team must have knowledge about:

• The clinical criteria for care and admission status
• The relationship between the criteria and a given payer and insurance requirements

The UR team must have access to pertinent patient information, particularly in cases with potentially questionable admission status.

Employ a physician champion

A physician with regulatory and clinical expertise, such as a physician adviser, should review questionable cases incorporating:

• The treating physician’s clinical impressions
• The patient’s current needs
• Medical history
• Documentation in the medical record
• Severity of the patient’s signs and symptoms (taken from the screening tool)
• Predictability of an adverse outcome relative to care
• Findings on diagnostic studies
• The role of UR team physician advisers serving on the UR team is to:
• Provide the level of expertise necessary to properly identify patient status
• Assist hospitals in appealing claim denials
• Help prepare for Medicare audits

The physician adviser can be involved in a review of admissions, which may be performed before, during, or after a status determination, but before discharge from the hospital.

Physician advisers “can serve as credible liaisons between case managers and the medical staff and between hospitals and payers, dedicated to improving the timeliness and accuracy of documentation and clinical compliance,” says Corrato.

As effective communicators and collaborators between treating physicians and case managers, physician advisers can serve in expanded roles as physician champions.

These champions lead initiatives such as increasing the number of case managers in the emergency department during critical weekend hours or implementing a CMP to properly identify patient admission status.

A physician adviser can also consult with the UR committee to target problem areas for audits.

In order to fulfill Medicare’s Conditions of Participation, a facility must establish a UR plan internally through its policies and procedures and UR committee. CMS also says facilities may use a binding entity, such as a quality improvement organization or physician adviser. Under any of these scenarios, the hospital remains responsible for its UR activities, including the medical necessity of hospital admissions.