Level of care is increasingly becoming a source of payer utilization review denials
It was widely recognized after the Centers for Medicare & Medicaid Services (CMS) adopted meaningful use and the widespread transition to electronic medical records (EMR) that EMR transition affected billing by hospitals.
For payers that have per diem contracts with hospitals for inpatient care, different facility fee rates are often negotiated for a medical/surgical floor bed, intermediate care bed, and ICU bed. Identifying discrepancies between what the payer determines as the correct bed level and what the hospital bills is referred to as “bed-leveling.”
In Maryland, due to the state’s all-payer rate-setting CMS waiver, all hospital-payer contracts are per diem, and the issue of bed-leveling is of particular import. Hospital bed rates are set by the state and are identical for all payers, but vary hospital to hospital. Most hospital bed rates are charged per diem at three levels – floor, intermediate, and ICU – with adjustments for special subgroups of patients such as oncology, transplant, and pediatric. Unlike with DRGs, under this system payers review each day for the appropriateness of visit class (inpatient versus outpatient), and also whether the bed level of care billed is medically appropriate.
Sometimes, discrepancies occur because there is a difference in opinion between the treating physicians and the payer as to the medically appropriate bed-level for an inpatient. Unlike visit class disputes, payers may not refer to this as a “denial,” but the end result is the same; the payers do not want to pay what the hospital feels is appropriate.
Other discrepancies can occur due to automated billing practices accomplished through EMRs. One such example is when a patient is determined by his or her physicians to be “stable for downgrade” and a transfer has been initiated but not yet effectuated due to lack of an available bed, such as waiting in the ICU for an available floor bed.
The bed level of care to be billed determined in the EMR is based on an “accommodation code:” ICU/intermediate/floor, which may be programmed to default to the patient’s current location. This corresponds to the charge routed and ultimately the bed charge billed. An obvious EMR-based solution to ensure the correct bed-level charge is an automated one that would change the accommodation code upon a downgrade order. However, based on some contracts, the exact accommodation code and corresponding bed charge also varies from unit to unit within the hospital, even within the same care level (i.e. cardiac ICU versus neuro ICU or transplant floor versus oncology floor). It becomes exceedingly complex for the EMR to determine which exact new accommodation code is appropriate, because it depends on numerous patient and hospital factors – and ultimately, it may not be known until the patient actually gets to his or her new location. A manual process with review by nurses to change the accommodation code is possible, but labor-intensive.
This problem is of particular relevance in Maryland because all in-state patients are charged per diem rates. Exploring this topic further with colleagues in other states, we have found that a varying proportion of the commercial contracts used similar per diem rate setting with daily payer review of bed level of care, so this issue has a broader impact. Bed-leveling discrepancies may not have been emphasized by payers in past, perhaps due to lack of savings given the amount of effort needed to identify these discrepancies. However, due to ever-increasing financial pressures and the potential for billing errors resulting from automated EMR billing practices, payer scrutiny of bed level of care is likely only to increase. Workflow development and EMR vendor partnership to address this issue will be increasingly important in the future.