Transcript Medicare Appeals - Community Legal Services of Philadelphia

Medicare Hot Topics: Observation
Status v. Inpatient & The
“Improvement Standard” Myth
Issues and Advocacy
Brenda L. Marrero, Esq.
Community Legal Services, Inc.
[email protected]
Also see acknowledgement to Center for Medicare
Advocacy
Community Legal Services
 We are a non profit public interest agency
serving low income Philadelphians in a
variety of legal areas
 Aging and Disabilities: this unit serves
low income seniors and those with
disabilities
 We handle Medicare cases—quality of
care, access/coverage, denials, appeals
2
Center for Medicare
Advocacy
 See their website
www.medicareadvocacy.org
 Source for much of the materials and
information presented today is from their
website. Being used with their permission
is a portion of their presentation titled
“Overcoming Barriers to Medicare
Coverage of SNF Care”
3
Medicare basics
 Medicare is a federal health insurance
program for those who are at least 65
 You may also get it if you are disabled
and receiving Social Security Disability
Insurance (SSDI) or have end stage
kidney disease
 It is run by the federal government
 Red/white/blue card
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Medicare Basics, con’t
 Part A—hospital insurance
 Part B—doctor’s visits, outpatient
services, medical equipment
 Part D—prescription drug coverage
 You can also choose to have your
Medicare through an HMO—Medicare
Advantage Plan (Part C)
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When can a beneficiary
lose SNF coverage?
 Observation services, which prevent
coverage and admission to skilled
nursing facility (“SNF”)
 The myth of medical improvement, which
prevents continued Medicare coverage
when the resident is not “improving”
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New phenomenon
 In the context of a hospital setting, a
patient may be told that their stay is not
“inpatient” but instead they have been in
“observation status”, receiving
“observation services”
 Why is this happening? One possibility:
the evolution of the RAC program
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Recovery Audit Contractor
(RAC)
 Section 306 of the Medicare Prescription
Drug, Improvement and Modernization
Act of 2003 (MMA) authorized RAC’s to
detect and correct improper payments in
the traditional Medicare program, both
overpayments and underpayments
 Started as demonstration project—
moving to permanent nationwide
program
8
RAC con’t
 The 3 year demonstration project found that
RAC contractors (who were paid on a
contingency basis) identified $1.03 billion in
improper payments
 96% in overpayments, 4% in underpayments
 Most of the overpayments (85%) were
collected from inpatient hospitals
 Few providers appealed (14%) and few RAC
overpayment determinations were overturned
on appeal (4.6%)
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UR Committee Authority
 Even if admitted as an inpatient by a patient’s
attending physician, the hospital’s utilization
review committee may retroactively reverse the
admission determination to outpatient
observation services
 Condition Code 44, Transmittal 299 (Sep. 2004),
now at Medicare Claims Processing Manual, CMS
Pub. No. 100-04, Ch. 1, §50.3,
http://www.cms.hhs.gov/manuals/downloads/clm104
c01.pdf (scroll down to §50.3 at p. 138)
10
UR Committee Authority
con’t
 Since 2004 CMS has authorized hospital
UR Committees to change patients’
status from inpatient to outpatient, but
such a retroactive change may be made
only if:
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When can change be
made retroactively?
 (1) the change is made while the patient
is in the hospital
 (2) the hospital has not submitted a claim
to Medicare for the inpatient admission
 (3) a physician concurs with the UR
committee’s decision, and
 (4) the physician’s concurrence is
documented in the medical record
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Effect of “observation
status”
 Why does this matter?
 Because a beneficiary could then lose
coverage for subsequent stay in a skilled
nursing facility (“SNF”), since Medicare
statute requires a “3 day qualifying hospital
stay” as an Inpatient
 Time spent in observation status does not
count towards that 3 day qualifying hospital
stay statutory requirement!
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Effect, con’t
 Beneficiary liability—cost is shifted
 Consequences for beneficiaries whose entire
time in hospital is considered to be observation
 Denied Part A coverage for hospital stay
 Denied Part A coverage for prescription drugs
received while in hospital
 Denied Part A coverage for SNF stay
 Some beneficiaries who cannot afford to pay for
SNF care go home or to assisted living,
foregoing needed care
14
Definition of “3 day
qualifying hospital stay”
 “The beneficiary must have been
hospitalized . . . for medically necessary
inpatient hospital care . . . for at least 3
consecutive calendar days, not counting
the day of discharge.” 42 C.F.R.
§409.30(a)(1)
15
“Observation Services”
 Neither the Medicare statute nor the
Medicare regulations define “observation
services”
16
CMS Manual definition
 Defined in CMS’s manuals as “a well-defined
set of specific, clinically appropriate services,
which include ongoing short term treatment,
assessment, and reassessment, that are
furnished while a decision is being made
regarding whether patients will require further
treatment as hospital inpatients or if they are
able to be discharged from the hospital.”
Medicare Benefit Policy Manual, CMS Pub. No.
100-02, Ch. 6, §20.6. Same language in
Medicare Claims Processing Manual, CMS
Pub. No.100-04, Ch. 4, §290.1.
17
Time spent in ER?
 Time spent in observation status in the
emergency room prior to (or instead of)
an inpatient admission does not count
toward the 3-day qualifying inpatient stay.
Medicare Benefit Policy Manual, CMS
Pub. No. 100-02, Ch. 8, §20.1.
18
CMS Manual threshold
 Manuals say observation should not
exceed 24-48 hours
 Now, increasingly, Medicare
beneficiaries’ entire stay in an acute care
hospital is called observation services
 Cases of multiple days and weeks in the
hospital, all in observation
19
What is the criteria?
 Hospitals generally use InterQual criteria
(McKesson Corp.) to make coverage
decisions
 Proprietary process
 Proprietary criteria, with screens for
diagnoses
 Severity of illness
 Intensity of service
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Beneficiary Notice
 When is written Notice required in the
hospital?
 Notice issues unclear
 CMS Manual says beneficiary must be
notified by hospital if hospital retroactively
changes status from inpatient to outpatient
 Few beneficiaries are receiving notices;
notices do not give appeal rights
21
Beneficiary Notice-SNF
 SNF’s that believe that Medicare
coverage will be denied for a technical
reason, such as a lack of the 3 day
qualifying hospital stay, may give the
resident a Notice of Exclusion of
Medicare Benefits (NEMB). But use of
this Notice by SNF’s is optional
22
What does a NEMB do?
 Beneficiary is given 3 options:
 Option 1: Check Yes beneficiary wants to
receive the services and wants Medicare to
make a decision about coverage. SNF must
submit the claim with supporting evidence to
Medicare. If denied, beneficiary agrees to
be personally and fully responsible for
payment
23
NEMB options con’t
 Option 2: Check Yes that beneficiary
wants to receive services, but does not
want the claim to be submitted to
Medicare
 Option 3: Check No, beneficiary does not
want to receive the services and that no
claim will be sent to Medicare
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Liability to beneficiary
 The Medicare Act states that when a
determination is made that a service was
not medically necessary and that
Medicare will not pay for it, payment will
nevertheless be made if the beneficiary
did not know, and could not reasonably
be expected to know, that payment would
not be made. 42 U.S.C. §1395pp, 1879
of the Social Security Act
25
Liability, con’t
 A beneficiary is presumed to not know
“that services are not covered unless the
evidence indicates that written notice was
given to the beneficiary.” Medicare
Claims Processing Manual, CMS Pub.
100-04, Ch. 30, §30.1
26
Liability to provider?
 A Medicare contractor has the authority
and discretion to shift payment liability to
the provider. Provider then has appeal
rights.
 Failure to inform the beneficiary when
services are not medically necessary will
relieve the beneficiary of responsibility of
paying for the service.
27
How to advocate?
 Always appeal
 Call CLS for legal representation
 Contact the Quality Improvement
Organization (QIO) for your State. PA’s is
Quality Insights of PA.
http://www.qipa.org/pa/default.aspx
28
Clarification
 Distinguish
 Observation status
 Inpatient hospital denial
 Patient gets notice, with expedited appeal rights
that should be exercised by noon of the first
working day after written notice is received. 42
C.F.R. §405.1206
 If expedited appeal is not exercised, patient can
appeal non-covered charges using the standard
appeal system. 42 C.F.R. §405.900 et seq
29
Advocacy con’t
 CMA and many Medicare advocates take
the position that CMS requires hospitals
to give a beneficiary an Advance
Beneficiary Notice (ABN) if their
observation status exceeds the period of
time (threshold) authorized for
observation services
 In CMA’s experience, hospitals are NOT
giving such notice of non-coverage
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Appeals and notice
scenarios
 If notice rec’d: appeal so Medicare can
make initial determination of coverage
 No notice rec’d: file request with
Medicare Administrative Contractor
(MAC), asking that the contractor review
the information and determine whether
they met inpatient criteria
31
Appeals con’t
 If receive denial of coverage for
subsequent SNF stay, should appeal that
at the same time they appeal their
observation status in the hospital
 If beneficiary is billed for prescription
drugs during their hospital stay, they
should use their Part D plan’s process for
submitting claims from an out of network
pharmacy
32
Appeals: What To Do
 Ask hospital for copy of
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Emergency room records
Admission records
Physician orders
Consultation reports
Lab reports
Diagnostic imaging
Medication records
Nursing narratives
Discharge summary
Social service documentation
33
Appeals…
 Review records with nurse or physician
to determine whether care was rendered
at an inpatient level of care
 Services required can only be provided in a
hospital
 24-hour availability of a physician
 Special equipment available only in a hospital
34
Hospital inpatient level of
care
 The severity of signs and symptoms exhibited by the
patient
 The medical predictability of something adverse
happening to the patient
 The need for diagnostic studies that appropriately are
outpatient services (i.e., their performance does not
ordinarily require the patient to remain at the hospital
for 24 hours or more) to assist in assessing whether
the patient should be admitted
 The availability of diagnostic procedures at the time
when and at the location where the patient presents.
Medicare Benefit Policy Manual, Pub. 100-02, Ch. 1, §10
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Redetermination
 Obtain from beneficiary Medicare
Summary Notice (MSN) for the days
beneficiary was at the hospital
 MSN is quarterly notice from CMS
 All pages (appeal information on last page)
 Find hospital services billed to Medicare Part
B, which will have a “control number.”
 120 days to appeal (last date to appeal is
identified on last page of MSN)
36
Redetermination con’t
 Request redetermination
 If late, assert good cause. For example,
 The party was prevented by serious illness from
contacting the contractor, or
 The party had a death or serious illness in his or
her immediate family.
42 C.F.R. §405.942
37
Redetermination, con’t
 In cover letter, write that the services
billed by hospital under control number:
xxx were inappropriately billed to
Medicare Part B. The beneficiary was
receiving an inpatient level of care during
the days at issue and thus the care
should have been billed to Medicare Part
A.
38
Reconsideration
 Redetermination is denied (hospital and SNF)
 180 days to request Reconsideration
 If hospital redetermination does not address
observation issue, write the Medicare contractor and
ask that the issue be addressed.
 Request Reconsideration. On hospital
reconsideration request, reiterate language
regarding inappropriate billing to Medicare Part B.
 Get physician statements in support of hospital
inpatient level of care and SNF level of care.
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ALJ level of appeal
 Reconsideration is denied (Hospital and
SNF)
 60 days to appeal
 If observation status is not addressed by
redetermination, write to Medicare Contractor
and request that it be addressed.
 On Administrative Law Judge request, indicate
that reason for appeal is that Part B was
inappropriately billed for Part A hospital inpatient
care.
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The Hearing
 Administrative Law Judge hearing

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Request hearing by video teleconference
If possible, have a medical expert testify
Have family testify
Try to have both hospital and SNF case heard by
same ALJ on the same day
 Get a copy of the Office of Medicare and Appeals’
case file. 42 C.F.R. §405.1042.
 Submit additional records and statements, as
needed (permissible under 42 C.F.R. §405.1018).
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Appeal and appeal…and
appeal
 Many of the observation status cases are
won at the higher level of appeals
 Don’t give up if the first levels of appeal
are not in beneficiary’s favor
 Keep appealing to ALJ level where many
favorable decisions are being made
42
Favorable Decisions
 ALJ Appeal No. 1-517883673 (Jan. 8, 2010),
http://www.medicareadvocacy.org/InfoByTopic/Observa
tionStatus/Decisions/VT_ALJ_01.10.pdf
 Patient required monitoring, assessment,
intravenous fluids (including intravenous morphine)
 ALJ overruled Maximus Federal Services and held
entire 5-day hospital stay was covered
 ALJ relied on Medicare Benefit Policy Manual, CMS
Pub. No. 100-02, Ch. 1, §6; and QIO Manual, CMS
Pub. No. 100-10, Ch. 4, §4110, describing complex
medical judgment that considers patient’s medical
history, current medical needs, severity of signs and
symptoms
43
Favorable Decisions con’t
 ALJ Appeal No. 1-380068132 (April 9, 2009),
http://www.medicareadvocacy.org/InfoByTopic/
ObservationStatus/Decisions/WI_ALJ_04.09.0
9.pdf
 ALJ addressed denial of 30-day SNF stay for lack of
3-day hospital stay, when resident had been in
hospital for 13 days
 ALJ found resident met hospital stay and needed
and received Medicare-covered care in SNF
44
The myth of
“improvement”
 Medicare coverage of care and services
in a SNF does not depend on the
resident’s “improving.”
45
Myth, con’t
 Restoration potential is not a valid reason
for denial of coverage
 “Even if full recovery or medical
improvement is not possible, a resident may
need skilled services to prevent further
deterioration or preserve current
capabilities.” 42 C.F.R. §409.32(c)
 Example: “A terminal cancer patient may need
some of the skilled services described in
§409.33.” 42 C.F.R. §409.32(c)
46
Maintenance Level
Therapy
 Maintenance rehabilitation therapy is a
Medicare-covered service
 “. . . when the specialized knowledge of a
qualified therapist is required to design and
establish a maintenance program based on
an initial evaluation and periodic assessment
of a resident’s needs….” 42 C.F.R
§409.33(c)(5)
47
Criteria for Individual
Assessment
 Medicare should not use “rules of thumb,” such
as
 Lack of restoration potential, CMS Pub. No. 100-02,
Ch. 8, 30.2.2 (“When rehabilitation services are the
primary services, the key issue is whether the skills
of a therapist are needed. The deciding factor is not
the patient’s potential for recovery, but whether the
services needed require the skills of a therapist or
whether they can be provided by nonskilled
personnel.”)
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Good case law
 Fox v. Bowen, 656 F. Supp. 1236 (D. Conn. 1987)
 Need for skilled nursing must be based solely upon
beneficiary’s unique condition and individual needs
 Court rejected “informal presumptions” or “rules of thumb” that
denied coverage to beneficiaries who were not in weightbearing stage of rehabilitation, amputees who did not have
prostheses, beneficiaries who could ambulate 50 feet with
supervision
 Court held that the Secretary’s practice of denying Medicare
coverage violated the Due Process Clause of the Fifth
Amendment
49
Favorable ALJ Decisions
 ALJ Appeal No. 1-517589113 (Jan. 25, 2010)
 ALJ reverses QIO decision, which affirmed Medicare
Advantage Plan’s termination of Medicare beneficiary’s SNF
coverage, based on alleged stabilization of therapeutic
regimen and no need for additional skilled nursing care,
http://www.medicareadvocacy.org/ALJDecisions/1517589113.pdf
 ALJ finds coverage for resident with “very complex medical
history.” Additional therapy needed for resident to reach
therapy goals, to prevent deterioration, and to preserve
function. When resident’s medical condition destabilized, she
needed skilled nursing observation and monitoring of her highrisk MRSA infection and “complicating underlying condition.”
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SNF notice of noncoverage
 Ensure the notice is valid
 Is it signed/dated by beneficiary?
 What is the rationale? Lack of improvement,
patient reached a plateau, chronic condition
requires only maintenance therapy
 What is the appeal deadline? To whom do
you appeal?
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Request…
 Statement of support from physician
 Review SNF medical records
 Daily skilled care
 5 times per week, therapy, or
 7 times per week, skilled nursing
42 C.F.R. §§409.32 and 409.33 (definition of
skilled care)
52
Do you have clients
affected?
 If you have consumers who you know
were denied Medicare coverage under
this “improvement standard”, contact the
Center for Medicare Advocacy
 Can also contact CLS
 Litigation is under way regarding this
standard
53
Resources
 Resources
 CMA, Observation Status,
http://www.medicareadvocacy.org/InfoByTopi
c/ObservationStatus/ObservationMain.htm
 Includes links to Weekly Alerts, articles, other
resources
 Community Legal Services, Inc., (215) 2272400, 3638 N. Broad St., Philadelphia PA
19140
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Acknowledgment
 Various slides from this presentation
were taken from the Center for Medicare
Advocacy’s Presentation “Overcoming
Barriers to Medicare Coverage of Skilled
Nursing Facility Care”, authored by Toby
S. Edelman, Esquire, presented to the NJ
Elder Law Section Roundtable, February
14, 2011, copyright @ Center for
Medicare Advocacy, Inc.
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