Inpatient-only Procedures, SGR Bill and RAC Reviews of Short Stays


It is rare that a newsletter contains not one but several positive notices, but there does appear to be a bit of good news on the horizon:

Inpatient-only procedures performed prior to the admission order may be bundled with the inpatient stay

CMS revised billing instructions effective April 1, 2015 to allow payment for inpatient only procedures to be bundled in to an inpatient claim under the three-day (or one-day) window rules. The expansion includes coverage as follows.

  • All preadmission inpatient-only procedures performed on the date of admission; and
  • All preadmission inpatient-only procedures performed during the relevant window (one day or three days preceding the date of admission) which would otherwise be considered related to the inpatient stay.

Relative to the preadmission bundling rules, a procedure is accepted as being related to the subsequent inpatient stay if it is clinically associated with the reason for a patient’s inpatient admission and if the inpatient stay is medically necessary. The relevant preadmission window is three days for IPPS and Maryland hospitals. It is one day for non-IPPS hospitals except for critical access hospitals (CAHs). CAHs are not subject to the preadmission bundling rules.

A link to the full transmittal is here:

Relief is in sight for Physician Fee Reductions previously scheduled to take place April 1, 2015

The medical community has actively encouraged Congress to repeal the Sustainable Growth Rate (SGR) bill, and instead, design a truly sustainable solution that affords seniors access to quality health care and stability for the physicians who care for them.   With rare bipartisan support, bills have been introduced in both houses to replace the SGR formula with a formula that provides a very small annual increase in physician fees each year between 2015 and 2019 and then to be sustained at that time through 2025.  Since 2003, 17 patches have been enacted in order to prevent the unsustainable cuts in Medicare reimbursement to physicians.  It appears likely that the bills will pass and be reconciled in the next few days.

Probable delay in RAC reviews of short stays

It appears likely that enforcement of the Two Midnight Rule through RAC auditors will be delayed until September 2015.  Audits by the MAC will continue, and there is continuing audit activity by the Department of Justice.  The medical necessity of every service paid by Medicare is ALWAYS subject to review so it is imperative to establish processes to ensure that appropriate documentation is in the chart.

New CMS State Operations Manual Provides Important Updates to Conditions of Participation and Addresses Ordering of Outpatient Services 

The update to the CMS State Operations Manual provides that certain practitioners without medical staff privileges may order outpatient services at the hospital for their patients in accordance with a policy adopted by the hospital medical staff.  The policy must address the outpatient services covered (or whether the hospital allows all outpatient services to be ordered), how the hospital will verify that the practitioner is appropriately licensed, and how orders will be verified, and processes to ensure compliance.  The section providing details on orders outpatient services is 482.54 in the following link:

It is worth the time to review carefully those sections in the State Operations Manual relevant to services provided.

Let us know how we can help you

If you have questions about this (or other) CMS communications or compliance requirements, please do not hesitate to contact any of MedManagement’s experts. Our physician advisors, nurses and legal experts are available to provide education as these new rules, regulations and guidance go in to effect. MedManagement staff continue to stay focused on serving clients with medical necessity determinations, regulatory & compliance education and other compliance solutions.

Joan C. Ragsdale, JD                                                    Ann M. Purdy
Chief Executive Officer                                                Chief Compliance Officer
Direct Line: 205-970-8804                                           Direct Line: 205-314-8859     

1500 Urban Center Drive, Suite 325
Birmingham, AL   35242 

Client Bulletin: March 31, 2015