The CMS' lack of guidance on a new requirement for hospitals to notify Medicare patients why they are receiving observation care could cause hospitals to lose billing privileges and patients, providers say.
On March 8 hospitals had to begin giving out the notices, which alert patients that they received observation care rather than being admitted as an inpatient. The CMS estimates as many as 1.4 million beneficiaries will receive the notices every year, and they are meant to cut down on the surprise bills observation patients tend to receive.
The CMS requires hospitals to give patients a reason for their observation status, but the CMS has declined repeated requests from hospitals to suggest language that providers should use. Providers are concerned that the vague instructions put them at risk of auditor citations.
Hospital accreditors surveying facilities could say that hospitals didn't adequately explain to patients why they are on observation status and cite them for noncompliance with the notice requirement, even though providers feel they don't have adequate guidance from the CMS to create the rationales. In a worst-case scenario, the auditors could advise the CMS to end facilities' Medicare contracts, potentially cutting of millions in revenue.
“The stakes are huge in that without guidance from CMS, each auditing organization is left only with their personal interpretation if a hospital is in compliance or not,” said Dr. Ronald Hirsch, a vice president at R1 Physician Advisory Services, a consulting firm on billing matters for providers.
Providers are concerned the lack of clarity from the CMS could not only affect their Medicare contracts but also encourage patients to seek healthcare elsewhere.
“It feels like we are expected to look at someone and say, 'You're on observation status because your asthma is just not that bad, but not that good either,' " said Dr. Bartho Caponi, medical director for case management and utilization review at the University of Wisconsin Hospital and Clinics.
Specific examples would potentially allow providers and organizations to protect themselves from patients angered by their status, Caponi said.
Several providers asked CMS officials for appropriate write-in statements during a town hall-style call on Feb. 28, but the agency declined to do so.
A CMS spokesman declined to comment on the matter, but pointed to an FAQ document on the agency's website that encourages providers to use their clinical judgment when writing the notices and make them "reasonably understandable" to the beneficiary.
Beneficiaries must spend three consecutive nights as an admitted patient in a hospital in order for Medicare to cover subsequent skilled-nursing facility costs; observation days don't count. Patients treated under observation care also face unexpected Medicare Part B copayments for drugs received during those stays because they were never actually admitted into the hospital and the drugs therefore are not covered under Part A.
The observation notices are meant to inform Medicare beneficiaries receiving observation services for more than 24 hours. The notices must be provided no later than 36 hours after observation services are initiated.