In the April 2015 Network Bulletin, UnitedHealthcare (UHC) once again reaffirmed that it has “fully integrated the two-midnight rule into our Medicare Advantage (MA) inpatient management medical necessity review process.” While at first glance that sounds just about as straightforward as something can be, the rest of the notice and the experience of at least one hospital case manager says otherwise.

A hospital case manager noted a large number of UHC denials for inpatient admissions of MA patients. She carefully reviewed the charts and determined that patients were initially classified as outpatient with observation services, but then when their condition did not improve and the physician determined and documented that they needed additional care in the hospital, the second midnight would pass and an inpatient admission order would be written. Within the next day or two (or even three), many of the patients had improved and were able to be discharged. But when the claims were reviewed by UHC, the inpatient admission was denied.

She contacted a UHC medical director in February and started a dialogue, explaining that these patients clearly met the requirements set down by the two-midnight rule – specifically, that they required hospital care but were nonetheless denied for not meeting MCG criteria for inpatient care. The medical director assured her that he would investigate, but the issue was handed over to another medical director. Fast forward a month and the other medical director contacted her with the response that UHC will use both evidence-based guidelines from MCG and the two-midnight rule in their decision-making.

In fact, technically the medical director’s assertion is correct, as the Network Bulletin also states that “UnitedHealthcare will continue to use evidence-based guidelines to support consistent and clinically valid decision-making for medically necessary hospital stays, in conjunction with the two-midnight rule.” 

Unfortunately, that is not what they are doing in practice, because they seem to be leaving out a crucial step. As most know, guidelines such as MCG have two sets of criteria, one to initially qualify patients for inpatient care, representing sicker patients who will need a longer stay in the hospital, and a less stringent set of criteria for observation care for patients who need hospital care but are not expected to need it for more than a day. It must be remembered that there are not, and according to the Centers for Medicare & Medicaid Services (CMS), never were, two levels of hospital care; if a patient warrants care in the hospital, time is the deciding factor for choosing outpatient with observation or inpatient status, and not the intensity of service or severity of illness. 

Granted, a patient who is less sick is likely to need less time in the hospital, so there is some correlation, yet according to CMS, if a patient needs a low level of services but it will extend over two midnights, the patient should be admitted as an inpatient. 

So when a patient first presents with minor symptoms that warrant hospital care but are not expected to persist until the second midnight, they would likely “pass” observation criteria but “fail” inpatient criteria and should be placed in outpatient with observation. But if those same symptoms persist past the first midnight and the patient continues to require hospital care, the patient will obviously continue to “fail” inpatient criteria (meaning they remain not sick enough to warrant inpatient care, by criteria) – but the two-midnight rule requires that the patient be admitted as inpatient. 

What UHC seems to be doing is requiring both to admit a patient for that second midnight; the patient must not only require care beyond the second midnight, but they must worsen clinically so they “pass” inpatient criteria.  

MCG criteria do seem to refute what UHC is doing, as they specify that inpatient admission is warranted for patients whose clinical condition is judged not to be within the scope of observation care. And according to the two-midnight rule, a patient who requires continuing hospital care beyond the second midnight requires care beyond the scope of observation. But UHC is using the more literal definition of scope, meaning there must be a more severe intensity of service or severity of illness, no matter the length of care, to warrant inpatient admission.

What can hospitals do about this? First, it is important to establish if UHC (or any insurer that is invoking the two-midnight rule and evidence-based criteria as their standard) is contending that the patient does not need hospitalization at all, or whether they are claiming that hospitalization is needed, but that it does not “meet criteria” for inpatient admission. In the former case, the hospital will need to argue that the patient did in fact require hospital care by citing the therapy provided and the short-term risk to the patient if he or she was treated in a less intensive setting. If the contention is that the patient did not require inpatient care but did in fact need hospital care, the hospital should then cite the 2014 Inpatient Prospective Payment System Final Rule, specifically the portion noting that “this means that the decision to admit becomes easier as the time approaches the second midnight, and beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written. 

In other words, if UHC is agreeing that the patient required hospital care, it is required by federal regulation to approve inpatient admission. There is absolutely no option to keep the patient who requires hospital care as outpatient with observation past that second midnight. 

UHC certainly has the right to follow MCG guidelines or to follow the two-midnight rule, but it cannot claim to follow both and then just take the most financially advantageous parts of each and morph it into the monster it created. Also, do not forget to read how your contract addresses admission determinations, and make sure UHC honors it. 

Continue to appeal inappropriate denials and if you have arbitration rights, use them; there is nothing more frustrating to a bully than having someone standing between them and their victim.

About the Author

Ronald Hirsch, MD, FACP, CHCQM 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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