The price of admission

Federal rules say that doctors, and only doctors, are supposed to decide whether a Medicare patient gets admitted to a hospital for care.

But inpatient care is expensive. Concerns about overuse and inappropriate payments have brought unprecedented scrutiny to physicians' decisions to admit patients. Much of it is from Medicare's aggressive Recovery Audit Contractors who use electronic “decision-support” programs that were originally intended as a way to force healthcare providers to deliver evidence-based care.

Critics of the two major systems on the market today—McKesson Corp.'s InterQual and the Milliman Care Guidelines—say such systems have helped erode physicians' power to make hospital admission decisions, potentially to the detriment of patients' health and finances.

And while the trend has been growing because of the RACs' use of the systems, the maker of one of them, Milliman, says work is already under way to make it even more ubiquitous by merging it with patients' electronic health records.

The Milliman and InterQual systems are not new: Experts say that most hospitals in America already use one of them. For-profit hospital chain Community Health Systems actually found itself accused in a lawsuit from for-profit Tenet Healthcare Corp. last year of manipulating admissions because some CHS hospitals had been using custom-written criteria instead of one of the two proprietary systems on the market.

That lawsuit was dismissed with prejudice by a judge in March, and CHS said it decided to switch all of its hospitals to InterQual before the case was ever filed. CHS officials declined interviews for this story, citing pending litigation and an ongoing federal investigation.

In defending themselves against Tenet's allegations, CHS officials noted in an April 28, 2011 SEC filing: “CMS does not dictate or endorse any particular criteria. CMS does not endorse any particular brand of screening guidelines.”

Yet experts say Medicare's Recovery Audit Contractors have been using Milliman and InterQual to scrutinize admission decisions, particularly in cases of short stays in the hospital.

Short stays have become a favorite target for auditors' payment denials, according to the American Hospital Association. And the prospect of being denied payment retroactively for short-stay inpatient admissions has caused hospitals to start aggressively applying the complex, multistaged analyses to Medicare bills before the claims go out the door.

In some cases, hospital utilization-review committees will override a doctor's initial decision and reclassify inpatients under less-expensive “observation status” that is less likely to attract scrutiny from the auditors, using the obscurely titled procedure, “Condition Code 44.”

Observation is a kind of quasi-acute care, in which patients may go to regular medical-surgical beds for testing and medical monitoring even though they don't need or receive full-blown acute care. Such a difference in status might be virtually invisible to patients, but it can be critical financially because it increases Medicare copayments and may limit the amount of rehabilitation care Medicare will cover after discharge.

Use of observation status is on the rise. The prevalence of observation stays among Medicare beneficiaries increased 26% between 2007 and 2009, compared with a 6% drop in the prevalence of acute-care inpatient admissions during the same time, according to a June 2012 report in Health Affairs written by researchers from Brown University.

Hospitals “are probably making too many patients observation. And part of that is driven by the fear of the RAC, and part of it is driven by the fear of a RAC that InterQual provides,” says Dr. Michael Ross, an emergency physician and director of observation medicine at three-hospital Emory Healthcare in Atlanta.

The use of InterQual and Milliman by payers and providers “is one of the biggest drivers of uses of observation services for patients in the past few years,” he says.

Ross, who has in the past served as an adviser to the CMS on observation status, offered the example of an elderly Medicare patient who comes to a hospital emergency room complaining of back pain.

Such patients meet “every criteria I can think of” for inpatient admission, he says, yet InterQual criteria advise against admitting back-pain patients.

“This is one area, and I'm sure there are more, where there is really a disconnect between the evidence and what is being imposed on the public by the admission-criteria vendors,” Ross says. “They are setting a standard that the payers are using to deny payment to hospitals. And because of RAC audits, I know of several hospitals that are admitting every patient into observation for 24 hours while they sort out their status.”

Mike Todai, president and CEO of the consulting firm Hospital Case Management in Signal Mountain, Tenn., says physicians have strong feelings about the admissions criteria, which are not taught in medical schools and are applied retroactively by nonphysicians.

“They hate it,” Todai says. “Because they know their patient, they know their community, and what they can or cannot do. … Their goal is to take care of a patient.”

But defenders of the admissions criteria take every opportunity to stress that the systems are not intended to dictate what physicians should do. Rather, advice from InterQual and Milliman is intended to be guidance based on objective criteria and observed patient symptoms.

“They're designed as a tool to help with that decision. They don't make the decision for you,” says Dr. Garrett Foulke, senior editor in the care guidelines division of Milliman.

In an e-mailed statement, a spokeswoman for Community Health Systems reiterated a statement she said was not new: “The decision about whether to admit, observe or discharge a patient is a clinical assessment made by a physician. In making these decisions, physicians rely on their education, training and experience and a clinical assessment of the individual patient.”

Milliman's Foulke acknowledged that the RAC audits of hospital inpatient admissions have had the effect of sharpening hospitals' attention to the criteria, to the point that many hospital officials want to put the evidence-based criteria “into the hands of the people in the hospital, and have them be used in a real-time basis, rather than a retrospective basis.”

Foulke also says it's true that most physicians don't know all of the admission criteria, even though they play a critical role in determining whether hospitals get paid for the care. “Our solution to that is that these criteria ought to be available at the time the decision is being made at the hospital,” he says.

That could be done by tying it directly into patient EHRs at the point of care. He says Milliman was already working toward an “embedded solution” such as that.

Officials with McKesson, owner of InterQual, declined interview requests for this story, but in response, a spokeswoman provided copies of articles on the use of the tools in evidence-based medicine.

One 2008 article, “The Birth of InterQual” in the journal Professional Care Management, noted that systems like InterQual were explicitly designed to change physicians' entrenched practices: “The history of InterQual continues to be written, but what it has achieved in its 30-year history is a remarkable reminder to everyone working in healthcare today that even a few dedicated individuals can transform the industry for the better. All it takes is a willingness to challenge an existing practice with a better idea and the persistence to convince an industry to listen.”

Hospital officials say they're caught between two extremes. While contract auditors push them to use patient observation more often instead of inpatient admissions, HHS' inspector general's office announced in its annual workplan for 2013 that it is investigating the effects of observation on patients, including how “improper” use of inpatient status subjects Medicare beneficiaries to high cost-sharing.

The American Hospital Association has encouraged members to use thorough documentation as a way to reduce their vulnerability to payment denials by Medicare RACs. Earlier this year, the AHA hosted a webcast session for hospitals featuring speakers from Milliman discussing “proactive steps” hospitals can take to reduce audit vulnerabilities.

But AHA officials say criteria-screening systems are not a panacea. Only proper documentation by clinical staff can prove the efficacy of a decision to admit an inpatient.

Dr. David Ficklen, chief medical officer at Huntsville (Texas) Memorial Hospital, says emergency department physicians also feel caught in the middle.

They know that Medicare auditors and hospital utilization review committees could challenge their decisions to admit patients for acute care, but they also know that hospitals would rather have the higher revenue from an inpatient admission. On top of that, the criteria for admitting inpatients are evolving, and “diseases that we used to slam-dunk admit 100% of the time are no longer always admitted,” Ficklen says.

Given those competing forces, he sees emergency physicians as not hostile toward the systems because they help bring clarity to decisions that may be counter-intuitive. Even in cases where a physician disagrees with an admission-criteria system's recommendation, that could just be signal that there's a problem with the documentation, rather than a challenge to the doctor's judgment and wisdom.

“There are those times when the physician feels like there is more going on than observation, and the guidelines say observation,” Ficklen says. “It prompts them to do a little bit better documentation at that point.”

TAKEAWAY: Admission-criteria software, along with government-contracted auditors, could be playing bigger roles in patient-care decisionmaking.