dabbey120dsFor the Medicare program, guidance has become an ever-evolving saga.


A recent trend has seen guidance from The Centers for Medicare & Medicaid Services (CMS) in which certain terms, phrases and/or directives are left open to interpretation. In releasing such guidance, CMS is moving the burden source of establishing compliance from precise definitions that can be revised over to policies and procedures that hospitals and other healthcare providers must formulate themselves.


Unfortunately, because of this ambiguity, hospital administrators cannot always be certain that they are maintaining compliance without becoming excessively conservative, which then reduces reimbursement.


Consider the following four issues:


1.   Active Monitoring – Compliance for coding and billing observation services has been in a state of constant evolution for the last 10 years. One of the more recent issues involves subtracting time from observation hours when services that require active monitoring are being provided. What is needed is a precise definition of “active monitoring.” For instance, do routine hydrations and infusions meet this definition? While CMS provides some guidance, it is still difficult to determine if an observation patient receiving hydration represents active monitoring; if it does, the time for the hydration should be subtracted from the observation hours.


2.   Physician Supervision – The physician supervision requirement, which generally involves the provider-based rule (see 42 CFR §413.65), was quiescent from 2000 until 2008, when physician supervision for on-campus services unexpectedly became an issue. But since 2008, the rules governing this topic have changed. Currently, a physician or a qualified non-physician practitioner must be immediately available and ready to take over an applicable therapeutic procedure. The requirement that the physician or practitioner has to be on campus since was removed for 2011. What still is missing is a precise definition of what “immediately available” means. Ostensibly, this should involve some proximity or time metric. You can establish your own metrics if desired, for example mandating that the supervising physician or practitioner must be within 50 yards or be available within five minutes. There is also the issue that you should be able to establish who the supervising physician/practitioner was for any given location and time period.


3.   Related Services Under the Three-Day Pre-Admission Window – The healthcare world changed on June 25, 2010, when legislation was passed generalizing the concept of what constitutes related services under the pre-admission window.  This is a process through which certain related services that are provided on an outpatient basis must be bundled into inpatient billing. Prior to this change in the Social Security Act, there was a very precise mandate that services provided in the pre-admission window had to be such that the primary diagnosis was an exact match to the principal diagnosis occasioning the admission. Following this change, the guidance simply involves diagnoses being related, and hospitals now bear the burdens of determining what is related and defending themselves relative to their policies and procedures in this area.


4.   Technical Component E/M Mappings – The mappings of resources utilized at the various E/M levels of technical component billing is an example of a long-term issue with significant ambiguity. The issue’s emergence coincided with the implementation of APCs (Ambulatory Payment Classifications) back in 2000. At that time hospitals expected that CMS would issue national guidelines so compliance could be weighed easily by everyone. The simple fact is that 11 years later, there still are no national guidelines, and there seems to be little indication of CMS issuing any in the near future.  Thus every hospital in the country has developed their own mappings with the understanding that there is no way to verify that any of them are viable.


If we start looking at common features of specific trends in guidance from CMS, at least for these examples there are some concerns.


  • An increasing degree of ambiguity in guidance is quite evident. Key terminology is being used without precise definitions. This is often true even when healthcare providers ask CMS to provide clear, precise guidance that can be audited and also internalized to allow for proper billing.
  • The burden of ensuring the ability to establish compliance has shifted from external sources to individual providers. Thus, hospitals and other healthcare providers must make policy decisions and establish procedures to ensure that documentation is maintained to establish compliance.
  • These trends seem almost a ploy to allow the RACs and other governmental auditors to come in years later and determine after the fact that hospitals were not compliant based on refined or clarifying guidance.



The last concern involves clarifying guidance. The concept of clarifying guidance versus changed guidance has become a significant topic of discussion relative to the physician supervision requirements. Why? If the guidance being provided, possibly years after the fact, is clarifying, then there is no change in guidance, just a refinement. If the guidance involves an actual change, then Section 903 of the MMA (Medicare Modernization Act) comes into play because changed guidance cannot be applied retroactively. If it is simply clarifying guidance, however, ostensibly that guidance can be applied retroactively.


Of course, this fits very nicely into the whole RAC process. If the RACs pursue an issue, they must have some sort of guidelines or clarifying guidance from CMS. Based on events involving the physician supervision rule issue, CMS seems willing to go to great lengths to argue that significant shifts in guidance are simply clarifications.


Given these issues and possible trends, what should hospitals and healthcare providers do in order to protect themselves? There is no easy answer to this question. One approach is to craft policies and procedures that are quite conservative, but again, this approach tends to reduce reimbursement. For instance, regarding the three-day pre-admission window, a conservative approach would be to bundle any service rendered during the window that appears related in any way, shape or form. Procedurally, based on this policy a hospital would have to review every case manually to make a conservative judgment.


For the active monitoring issue, a conservative approach would be to designate any sort of hydration or infusion as fitting the applicable criteria, thereby reducing the number of hours of observation services. For the physician supervision rule, a conservative approach would be to require that a physician or qualified non-physician practitioner be in the building where the services are being provided. Additionally, the name of the physician or practitioner for each date and time period also would be documented.


While the Medicare RACs continue to come into full play, there are also ever-increasing numbers of audits being performed by entities including the Medicaid RACs. We are at a point in time in which precise guidance that can be audited accurately is genuinely needed. As the Medicare bureaucracy grows, anticipate further guidance that probably will be ambiguous.


Duane Abbey, PhD., CFP


Duane C. Abbey, Ph.D., CFP, is an educator, author and management consultant working in the healthcare field. He is President of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University.


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