Last week the Centers for Medicare & Medicaid Services (CMS) issued Transmittal 543. And while we all expected it to be a correction to Transmittal 541, it actually addressed a new issue.

In this transmittal, CMS announced that it is requiring the Medicare Administrative Contractors (MACs) to become more involved in administrative law judge (ALJ) hearings with physician representation.

But because CMS did not want to disappoint or surprise us, the instructions to the MACs were remarkably ambiguous as to which cases require MAC participation.

Nonetheless, assuming that the MACs will be involved in more cases, this may actually be a good thing for hospitals. As we all know, many appeals make it all the way to the ALJ before the hospital’s appeal letter is even read. If the MACs must participate in ALJ hearings, their medical directors are going to have to get involved at earlier levels and supervise the nurses performing the reviews to make sure denials have merit so they are not embarrassed in front of the ALJ. As a result, this should result in more overturns of the many inappropriate first-level RAC denials by the MACs.

We are also hearing from hospitals that the managed care plans are finally adopting the two-midnight rule for their Medicare Advantage patients, but as expected, they are misinterpreting the rule. UnitedHealthcare has started asking hospitals to fax a copy of the signed admission order and clinical notes documenting the expectation of two midnights prior to giving admission authorization. 

Several hospitals have pointed out to UHC that the signature on the admission order is not required until prior to discharge – and UHC stopped requiring it from those hospitals. One hospital actually had to remind UHC that they already have access to the hospital electronic medical record (EMR), so the hospital will not be faxing them clinical notes or the admission orders.

I know some managed care plans listen to Monitor Mondays, so I hope they take the time to watch my six-minute video on my webpage,, and use it to train their staff on the two-midnight rule as CMS intended it to be interpreted.  

That’s all for today.

About the Author

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at Accretive Physician Advisory Services at Accretive Health. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the American Case Management Association and a Fellow of the American College of Physicians.

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