Five Points of Focus for Utilization Review Teams

Implementing the 2024 CMS Final Rule

Five Points of Focus for Utilization Review Teams

Utilization management teams and physician advisors can expect to see Medicare Advantage Organizations (MAOs) adhere to the same guidelines as Traditional Medicare as the Center for Medicare and Medicaid Services’ (CMS) new Rule 4201-F takes effect. The new rule, finalized in April 2023, rose from concerns that the MAOs were delaying care and payment to hospitals based on “internal, proprietary or external clinical criteria that are not found in Traditional Medicare coverage policies.”¹ Implementation of the rule which begins January 1, 2024, aims to avoid delays in medically appropriate and necessary care. MAOs can no longer be more restrictive than Traditional Medicare and must follow the Two-Midnight rule for all Medicare Advantage (MA) patients. Finally, MAOs are expected to use the same definitions as Traditional Medicare, no longer allowing commercial products to change coverage or payment criteria already established under Medicare law.

At AppriseMD, although this is new territory for MAOs, we believe MA patients will eventually be treated the same as Traditional Medicare patients under this new rule given CMS’s standard and the considerable support by hospitals, physician advisors, and the America Hospital Association. It may take time for the complete change to happen. Some MAOs will not comply. Some will try and get it wrong. Some will comply and get it right. We’ve outlined five important points utilization review teams and physician advisors should focus on moving into 2024 as the rule implementation takes shape. 

1. The Two-Midnight Rule Applies 

The final rule is very clear that MA plans are bound to follow the Two-Midnight rule, matching the Medicare/Traditional Medicare (MCR) patients. There should be no deviation from this according to CMS. Utilization management teams and physician advisors should shore up their understanding of the Two-Midnight rule, which CMS interprets as an admission where an “admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supported that reasonable expectation.”² If the Two-Midnight benchmark is met based on the patient’s clinical condition and time needed to deliver hospital-based care, MA plans must honor the inpatient status. Many hospitals and healthcare organizations have clear guidelines on how to view MA patients so the discussion now turns to applying the changes made by CMS.

According to CMS, any Traditional Medicare patient whose care is expected to require more than two midnights of hospital care, and meets medical necessity for an inpatient stay, should be admitted as inpatient. However, both MCR and MA patients must have accompanying medical conditions to meet the criteria required by CMS. A Two-Midnight presumption based on the length of stay alone is not a reason for inpatient admission and does not meet CMS’s Two-Midnight rule.

2. Monitor Denials for Non-Compliance

Utilization management teams and physician advisors should closely monitor MAO denial letters for non-compliance with the new rule.

“Patients and health care providers have a high degree of interaction with MAOs as users and providers of health care services and are therefore well-positioned to identify suspected violations of CMS rules that warrant further investigation.”³ Terminology changes circumventing the new rule may say that an admission was under “payment review” rather than “level of care review” as a way to skirt the medical necessity claim. According to the American Medical Association, this is already happening and likely to continue without strict enforcement of the new rule.

Some denials are “disguised as contractual adjustments. In other words, the MAO system adjusted the entire balance of these accounts to zero as a contractual write-off and did not identify any amounts as denials. This prevented these claims from hitting the hospital’s denial workflow, leaving them undiscovered for several months.”² This could continue without hypervigilance from providers. Moving forward, MAOs must apply the same definitions as fee-for-service Medicare and cannot change coverage or payment criteria which is already established under Traditional Medicare law. MAOs are allowed to use publicly available utilization criteria, however, they cannot use internal or proprietary criteria to deny inpatient stays.

3. Focus on Medical Necessity

The biggest challenge in our opinion is MAOs getting away from commercially available utilization review criteria thinking and focusing on medical necessity. MAOs must make medical necessity determinations that are not more restrictive than Medicare and cannot adopt utilization management policies that would result in denials. On the other side, treating physicians need to ensure accurate, clinical documentation which is essential for the patient’s diagnosis and treatment. Having strong CDI teams ensure that documentation stands up to scrutiny for inpatient stays.

Proper documentation must include an assessment coinciding with a detailed treatment plan updated throughout hospitalization. Medical necessity is the foundation of utilization management, making this vital in the decision to deny or uphold an admission.

CMS defines medically necessary services as “services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.”⁴ This definition leaves room for interpretation, which MAOs have capitalized on to deny care. Physicians will need to work with their physician advisors throughout the hospitalization to ensure medical necessity determinations are accurate, detailed, and compliant. This leads us to number four: documentation.

4. Documentation is Key

Insurance companies require detailed documentation. Lack thereof is often the leading factor in level of care and admission denials across the board, from commercial insurance companies to MAOs. The importance of providing complete documentation never goes away; it is now in the spotlight as MAOs adapt to the new CMS rules. Treating physicians and utilization review managers must ensure that every admission includes the following:

• A detailed record of the patient’s medical history as well as detailed subjective account of the patient’s current clinical presentation.

• Documentation should include complete comorbidity, current medical needs, and the risk of an adverse event When care crosses two midnights. Strong clinical rationale for a stay beyond two midnights is needed for MA plans to determine inpatient status.

• A record updated throughout the hospitalization. Avoid copy and paste. Remember the saying, “if you didn’t document it, then you didn’t do it.”

• The documented complete thought process that went into the admission, including the discussion of differential diagnoses and comorbidities.

• The treatment plan should include the diagnostic recommendations, treatment options and follow-up plans.

Without this documentation, cases are much more likely to be denied or pushed to a lower level of care by the MAOs. One point to remember: an inpatient admission for a procedure on the Inpatient Only List is fully applicable to Medicare regulations and the MAOs have to follow this guidance.

5. Track Denials

Ensure your monthly utilization management reports are tracking all MA denials with both quantitative and qualitative data to understand why denials are happening. The U.S. Department of Health and Human Services (HHS) released a report last year “that found every year Medicare managed care organizations inappropriately deny medically necessary care to tens of thousands of people enrolled in private Medicare Advantage plans.”⁵

Utilization management data analysis illustrates insights into a hospital’s reimbursement practices, which can aid in the root cause identification of denials, highlighting areas that require more attention, and education as everyone adapts throughout this year. Closely tracking and documenting denied appeals for MA patients will help hospitals with revenue management. For every upheld denial, ask the question, “Did the MAO follow the Two-Midnight rule?” Arming your revenue cycle team with utilization management data on a consistent basis leads to improved utilization review, better care, and increased revenue for the provider.

Summary

In its final rule, CMS does not dictate which plans they are going to review, so ensuring all MAOs are following the rule will fall on all parties involved. We view the CMS changes clearly, however the MAOs may struggle with compliance as these new rules take effect, especially with MA market penetration expanding tremendously over the past two decades. Utilization review teams and physician advisors will be in a unique position to monitor the changes and must remain vigilant. Capturing and reviewing the data is essential for optimizing reimbursement while also identifying areas that require more education and attention.

For sources, see the downloadable document.