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Strengthening Program Safeguards for Short Inpatient Stays
Published on Jun 19, 2024
 | OIG 

On June 13, the OIG published the report CMS Could Strengthen Program Safeguards To Prevent and Detect Improper Medicare Payments for Short Inpatient Stays. This audit was initiated to assess program safeguards for ensuring that Medicare claims for short inpatient stays complied with Medicare Requirements.


Two-Midnight Rule

It is hard to believe that so much time has passed since the Two-Midnight Rule went into effect on October 1, 2013. In general, when a hospital stay does not span two midnights, inpatient status is not appropriate. There are caveats, for example, procedures designated as “inpatient only” are appropriate for inpatient billing regardless of the length of stay.


Post two-midnight rule implementation, the OIG concluded in a report that “hospitals were still billing for many short inpatient stays that were potentially inappropriate under the two-midnight rule, and Medicare paid almost $2.9 billion for these stays.” At that time, CMS agreed with the OIG recommendation that they improve oversight of hospital billing under the two-midnight rule.


About the June 13, 2024 13 OIG Report

The OIG focused on program safeguards for short inpatient stays for calendar years 2016 through 2020. Program safeguards used by CMS and it contractors include measuring improper payment rates through the Comprehensive Error Rate Testing (CERT) Program, implementing claims processing edits, and conducting post payment review claims. The audit covered:

  • $19.7 billion in Medicare Part A claims, and
  • 2.5 million short inpatient stays at 3,340 acute-care hospitals.

    After the two-midnight rule went into effect, the CERT added a table to their supplemental improper payment data highlighting projected improper payments by length of stay. The first year this was reported the 0- or 1-day stays projected improper payment rate was 27.8% with a projected improper payment of $2.1B. In the December 2023 data, the 0- or 1-day stays improper payment rate remained high at 21.7% with a projected improper payment of $1.7B.


    Report Conclusion

    Three weaknesses in the established program safeguards for preventing and detecting improper payments for short inpatient stays and recovering payments. Specifically, the OIG concluded that CMS did not have:

  • Adequate information to identify short inpatient stays at risk for noncompliance with the two-midnight rule,
  • Prepayment edits for claims at risk for noncompliance with the two-midnight rule, and
  • Adequate policies and procedures to review claims at risk for noncompliance with the two-midnight rule and to recover payments.


Weaknesses occurred from CMS mostly relying on post payment reviews by BFCC-QIOs to ensure compliance with the two-midnight rule. Although thousands of claims were reviewed and denied $49.2 million in improper payments during the audit period, this represents only 0.6 percent of the $7.8 billion in improper payments estimated by CMS CERT reviews.


Recommendations to CMS

The OIG made the following four recommendations to CMS:

  • Add information to inpatient claims indicating any stay that did not span two or more midnights because of an unforeseen circumstance,
  • Develop a list of inpatient-only procedure codes associated with the outpatient procedure codes on the inpatient-only procedure list,
  • Implement prepayment edits for claims for short inpatient stays at risk for noncompliance with the two-midnight rule, and
  • Update policies and procedures for post payment reviews to focus on claims for short inpatient stays identified as at risk for noncompliance with the two-midnight rule and to focus on overpayment recoveries.

CMS Response to Recommendations

CMS neither agreed nor disagreed with the OIG recommendations, merely stating that they will take them into consideration as it determines appropriate next steps.


I would not get too excited about the recommendation to develop a list of inpatient-only procedure codes associated with outpatient procedure codes on the inpatient-only procedure list. MMP clients have often asked if there was such a list available as hospitals work to identify inpatient-only procedures. Currently, there is no such list. Also, I agree with CMS in that this task would be a challenge as “the ICD-10 and HCPCS code sets are intended to reflect and represent services in different healthcare settings that there would limitations in developing a one-to-one mapping.”


In the meantime, I encourage you to take the time to read this report in its entirety for additional information regarding the OIGs findings, the BFCC QIO 2 Midnight Claim Review Guideline that Livanta, the National Medicare Claim Review Contractor, utilizes in performing short stay audits nationwide, and CMS comments in response to the OIG’s recommendations. 

Beth Cobb

Potential Health Disparities for Patients Leaving a Hospital AMA
Published on Jun 19, 2024
 | Coding 
 | OIG 

The OIG’s updates its Work Plan on their website monthly and they have indicated that their “work planning process is dynamic, and adjustments are made throughout the year to meet priorities and to anticipate and respond to emerging issues with the resources available.”

For June 2024, the OIG has added eleven items to their Work Plan. One of the items of interest for hospitals is titled Medicare Enrollees Leaving Hospitals Against Medical Advice. The OIG notes that “according to some academic researchers, the AMA designation indicates a higher risk that a patient experienced poor quality health care. The researchers also note that hospital stays coded with the AMA designation may be associated with increased patient morbidity and mortality percentage rates. In addition, the researchers note that historically medically underserved groups of patients are more likely than other groups to receive the AMA designation. The percentage rates that hospitals have been designating that Medicare enrollees left AMA have increased over the past three decades. This data brief will analyze the percentage rates and outcomes for enrollees that hospitals designate as left AMA as well as provide CMS and other stakeholders with information that can be used to address health disparities and improve enrollee outcomes.”

The OIG is expected to issue a report in FY 2025. In the meantime, I turned to our sister company, RealTime Medicare Data (RTMD) to learn about this group of Medicare beneficiaries in CY 2023. The RTMD database includes paid claims data for all fifty states and Washington D.C.

The following insights were pulled from all Medicare Fee-For-Service paid claims in calendar year 2023 with a discharge disposition code of “07” which stands for “left against medical advice or discontinued care.” 

All Claims with Discharge Disposition “07”

Volume: 72,370

Total Payment: $779,351,684.25

Average Payment: $10,769.14

ALOS: 3.054 Days


Surgical Claims with Discharge Disposition 07

Surgical Volume: 5,021

Total Payment: $134,587,109.49

Average Payment: $26,810.18

ALOS: 6.089


Top 5 MDCs by Surgical Volume

MDC 5: Circulatory System: 1,335 claims

MDC 8: Musculoskeletal System & Connective Tissue: 828 claims

MDC 18: Infectious & Parasitic Disease: 517 claims

MDC 6: Digestive System: 411 claims

MDC 11: Kidney & Urinary Tract: 363 claims


Top Surgical MS-DRG Group: MS-DRGs 853 and 854: Infectious & Parasitic Diseases with O.R. Procedures with and without MCC: 465 claims


Top 5 Provider States by Surgical Volume

California: 734 claims

Florida: 575 claims

Texas: 372 claims

New York: 354 Claims

Pennsylvania: 188 claims


Medical Claims with Discharge Disposition 07

Medical Volume: 67,349

Total Payment: $644,764,574.76

Average Payment: $9,573.48

ALOS: 2.82


Top 5 MDCs by Medical Volume:

MDC 5: Circulatory System: 13,664 claims

MDC 4: Respiratory System: 7,808 claims

MDC 1: Nervous System: 5,976 claims

MDC 6: Digestive System: 5,860 claims

MDC 18: Infectious & Parasitic Diseases: 5,692 claims


Top MS-DRG Pair: MS-DRGs 871 and 872: Septicemia or Severe Sepsis without MV >96 hours with and without MCC respectively: 5,320 claims


Top 5 Provider States by Medical Volume

California: 9,962 claims

Florida: 8,334 claims

New York: 5,595 claims

Texas: 5,330 claims

Pennsylvania: 2,334 claims


Social Determinants of Health and Discharge Disposition 07

As mentioned previously, “researchers note that historically medically underserved groups of patients are more likely than other groups to receive the AMA designation.”


Social determinants of health (SDOH) are the conditions in the environment where people are born, live, learn, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks. ¹ For this reason, I also looked for claims with a Social Determinant of Health (SDOH) Z code listed as a secondary diagnosis.


Out of this group of claims where the beneficiary left AMA, 3,519 Z-Codes were listed as a secondary diagnosis. Note, there were claims where more than one Z code had been coded so this number does not represent 3,519 individual Medicare beneficiaries. That said, there were 2,354 unique claims where one of the homelessness Z-codes was on the claim and 24 unique claims where one of the inadequate housing Z-codes were on the claim.



U.S. Department of Health and Human Services: Office of Disease Prevention and Health Promotion: Health People 2030: Social Determinants of Health webpage:

Beth Cobb

OIG Releases Semi-Annual Report to Congress
Published on Dec 06, 2023
 | OIG 

The OIG released its semiannual report to Congress on December 1st. In a related fact sheet they indicated the report highlights over $3.44 billion in expected recoveries resulting from HHS-OIG audits and investigations conducted during fiscal year (FY) 2023.


This report “describes OIG’s work on significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to the administration of HHS programs and operations during the reporting period. In this report, we present OIG expected recoveries, criminal and civil actions, and other statistics as a result of our work for the semiannual reporting period of April 1, 2023-September 30, 2023. We also provide data for accomplishments for fiscal year (FY) 2023 and highlight some of our work completed during this semiannual reporting period.”


For this article, we will focus on one report completed by the OIG that impacts inpatient claims in acute care hospitals. In September 2023, OIG released the report Medicare Improperly Paid Acute-Care Hospitals for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy Over a 4-Year Period, but CMS’s System Edits Were Effective in Reducing Improper Payments by the End of the Period (A-09-23-03016), September 2023.


About the Post-Acute-Care Transfer Policy

Medicare makes the full Medicare Severity Diagnosis-Related Group (MSDRG) payment to an acutecare hospital that discharges an inpatient to home or certain types of health care institutions but pays an acute-care hospital that transfers an enrollee to post-acute care a per diem rate for each day of the enrollees stay in the hospital.


Post-acute care settings that are subject to this policy includes transfers to:

  • Inpatient rehabilitation facilities and units (Patient discharge status code 62 or planned acute care hospital inpatient readmission patient status code 90),
  • Long-term care hospitals (Patient Status Code 63 or planned acute care hospital inpatient readmission Patient Status Code 91),
  • Psychiatric hospitals and units (Patient discharge status code 65 or planned acute care hospital inpatient readmission patient status code 93),
  • Cancer hospitals (Patient discharge status code 05 or planned acute care hospital inpatient readmission patient status code 85),
  • Children’s hospitals (Patient discharge status code 05 or planned acute care hospital inpatient readmission patient status code 85),
  • Skilled nursing facility (Patient discharge status code 03 or planned acute care hospital inpatient readmission patient status code 83),
  • Hospice care at home (Patient status code 50) or Hospice Medical Facility (Certified) providing hospice level of care (Patient status code 51)
  • Home under a written plan of care for the provision of home health (HH) services from a HH agency and those services occurs within 3 days after the date of discharge (Patient discharge status code 06 or planned acute care hospital inpatient readmission patient status code 86).


MS-DRGs Subject to the Post-Acute-Care Transfer Policy in the CMS FY 2024

  • 764: The overall number of MS-DRGs for FY 2024
  • 282: The number of MS-DRGs subject to this policy
  • 148: The number of surgical MS-DRGs subject to this policy
  • 134: The number of medical MS-DRGs subject to this policy


Specific regulations regarding the transfer policies can be found in Chapter 4 of the Medicare Claims Processing Manual, section 40.2.4.


Why OIG Did The Audit

OIG notes that compliance with the transfer policy has been an issue for a long time and this audit was conducted to evaluate whether Medicare properly paid acute-care hospital claims subject to the policy for claims with dates of service from January 1, 2019, through December 31, 2022.


About the Audit

  • $198 million: The Medicare Part A payments covered in the audit.
  • 12,133: the number of inpatient claims subject to the transfer policy.
  • Claims included in the audit had a discharge status code to home or certain types of health care institutions on the claim.
  • OIG used Medicare enrollee information to identify post-acute services settings that began on the same day as discharge for SNF claims, and within 3 days of inpatient discharge for home health claims.


What OIG Found

Medicare improperly paid $41.4 million to acute-care hospitals for inpatient claims subject to the post-acute-care transfer policy. This amount of money represents the difference between the amount of the full MS-DRG payments and the amount that would have been paid if the per diem rates had been applied.


These improper payments were made because CMS’s system edits were not effective in detecting inpatient claims subject to the transfer policy in October and November 2019 and from October 2020 through March 2022. However, after CMS fixed the edits in April 2022, improper payments significantly decreased through the end of the audit period.

Beth Cobb

The OIGs GCPG and ICPGs, Oh My!
Published on Nov 15, 2023
 | OIG 

Did You Know?

On November 6, 2023, the Office of Inspector General (OIG) released General Compliance Program Guidance (GCPG).

Per the OIG’s announcement, “the GCPG is a reference guide for the health care compliance community and other health care stakeholders. The GCPG provides information about relevant Federal laws, compliance program infrastructure, OIG resources, and other items useful for understanding health care compliance. The GCPG is voluntary guidance that discusses general compliance risks and compliance programs. The GCPG is not binding on any individual or entity.”

You can download the complete guidance or  individual sections.

Why it Matters?

The OIG first published compliance program guidance documents (CPGs) in 1998. Historically, guidance has been published in the Federal Register. However, moving forward, updates or new guidance will no longer be published in the Federal Register.


The GCPG guidance applies to all individuals and entities involved in the health care industry and addresses:

  • Key Federal authorities for entities engaged in health care business.
  • The seven elements of a compliance program,
  • Adaptations for small and large entities, other compliance,
  • Other compliance considerations, and
  • OIG processes and resources.


Moving forward, the OIG anticipates updating the GCPG as changes in compliance practices or legal requirements may warrant.



Starting in 2024, the OIG will begin publishing industry specific CPGs (ICPGs) that “will be tailored to fraud and abuse risk areas for each industry subsector and will address compliance measures that the industry subsector participants can take to reduce these risks. ICPGs are intended to be updated periodically to address newly identified risk areas and compliance measures and to ensure timely and meaningful guidance from the OIG.”

Moving Forward

Ultimately, the goal of both guidance documents (GCPG and ICPGs) “has been, and will continue to be, to set forth voluntary compliance guidelines and tips and to identify some risk areas that OIG believes individuals and entities engaged in the health care industry should consider when developing and implementing a new compliance program or evaluating and updating an existing one.”

I encourage you to take the time to read this latest guidance, pay close attention to the information in the blue boxes and tips throughout this document. For example, in the “Auditing and Monitoring” section of this document an OIG tip reminds providers that “Medicare requires, as a condition of payment, that items and services be medically reasonable and necessary. Therefore, entities should ensure that any claims reviews and audits include a review of the medical necessity of the item or service by an appropriately credentialed clinician. Entities that do not include clinical review of medical necessity in their claims audits may fail to identify important compliance concerns relating to medical necessity.”

Finally, if you are not already signed up for the OIG newsletter, I encourage you to do so. You can sign up on the website by scrolling to the bottom of page and clicking “Subscribe to Our Newsletter.”  

Beth Cobb

The OIG, SMRC, MACs and Severe Malnutrition
Published on Jun 07, 2023
 | Coding 
 | OIG 

Did You Know?

In the OIG’s 2022 Top Unimplemented Recommendations report, they focus on the top 25 unimplemented recommendations that in their view would most positively affect HHS programs in terms of cost savings, public health and safety, and program effectiveness and efficiency, if implemented. One of the three Medicare Parts A and B unimplemented recommendations in this report is related to coding malnutrition. Specifically, the OIG has recommended that “CMS should recover overpayments of $1 billion resulting from incorrectly assigning severe malnutrition diagnosis codes to inpatient hospital claims, ensure that hospitals bill appropriately moving forward, and conduct targeted reviews of claims at the highest severity level that are vulnerable to upcoding.” (OIG Report A-03-17-00010 dated July 2020)


Why It Matters?

The OIG reports that CMS has taken the following three initial steps to implement recommendations related to severe malnutrition.


Step One: CMS Tasked the Supplemental Medical Review Contractor (SMRC) with research and analysis to develop a medical review strategy for Malnutrition claims. The SMRC determined providers’ use of the severe malnutrition diagnosis code (E41 and E43) continued to trend upward and made several recommendations to CMS, including development and creation of policy regarding malnutrition diagnostic criteria in the form of local coverage determinations (LCDs) to provided consistent guidance from the Medicare Administrative Contractors (MACs).


While I have not read about the development of an LCD, I have recently noticed that several of the MACs have published guidance for providers related to malnutrition:


Novitas JL

May 16, 2023 Article: Coding Guidelines: Part A Inpatient Billing for Malnutrition Diagnosis Codes (


Fist Coast JN

May 17, 2023 Article: Coding Guidelines: Part A Inpatient Billing for Malnutrition Diagnosis Codes (


Palmetto GBA JJ

On May 18, 2023, Palmetto GBA JJ: Severe Malnutrition Diagnosis Codes Checklist (


Palmetto GBA JJ

May 23, 2023 Article: DRG 640 Miscellaneous Disorders of Nutrition, Metabolism, Fluids and Electrolytes with MCC, 641 without MCC (


National Government Services (NGS) J6

May 31, 2023 Article: Hospitals Must Correctly Assign Severe Malnutrition Diagnosis Codes to Inpatient Claims (



Step Two: With respect to net overpayments, CMS has so far recovered $400,208 of the $505,400 that was within the 4-year reopening period.


Step Three: CMS also tasked the SMRC with post-payment review of claims with E41 and E43 from calendar year (CY) 2019. The SMRC posted notification of this medical review (Project 01-045) on January 10, 2022 and published their review findings on December 13, 2022. They reported a 53% error rate for claims reviewed. Most concerning to me is that the number one reason cited by the SMRC for denials was no response to the documentation request. You can read the entire medical review findings at


OIG Active Work Plan Item

In addition to malnutrition being included in the OIG’s top unimplemented recommendations for 2022, it is also an active Work Plan item focused on Medicaid inpatient hospital claims with severe malnutrition. The OIG notes they will conduct statewide reviews to determine whether hospitals complied with Medicaid billing requirements when assigning severe malnutrition diagnosis codes to inpatient hospital claims. The expected issue date of a report with their review findings is in FY 2023.


In addition to being an active Work Plan item, if you search the word malnutrition on the OIG website, you will find links to reports and work plans as far back as 2021.


What Can You Do?

Hospitals should never have a claim denied due to lack of response to a request for records. Be sure your hospital has a process in place to respond to additional documentation requests (ADRs) in a timely manner.


Specific to severe malnutrition, take the time to read the review results and articles mentioned above as they contain links to additional resources (i.e., ASPEN guidelines, ACDIS Q&A Documentation and ICD-10-CM coding for severe malnutrition by ACDIS) and share this information with Clinical Documentation Integrity (CDI) specialists and coding professionals at your facility.


Severe malnutrition is also a current target area on the Short-Term Acute Care Program for Evaluating Payments Patterns Electronic Report (PEPPER). Yesterday, June 6, 2023, the PEPPER team announced the release of the Q1 FY 2023 PEPPER. Review this report and if you are a high or low outlier, the User’s Guide provides suggested interventions for sampling your medical records.



2022 OIG’s Top Unimplemented Recommendations: Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs:


PEPPER User’s Guide Thirty-Sixth Edition for Short-Term Acute Care Hospitals available on PEPPER Resources website at

Beth Cobb

New PEPPER Target: Severe Malnutrition
Published on Jan 12, 2022
 | Billing 
 | Coding 
 | OIG 
Did You Know?

Malnutrition and more specifically, severe malnutrition has been in the audit spotlight for several years. Historically, the OIG completed a series of reviews of hospitals with claims that included the ICD-9 diagnosis code for Kwashiorkor (260). In a December 2017 Report Brief (link), the OIG “reviewed the medical records for 2,145 inpatient claims at 25 providers and found that all but 1 claim incorrectly included the diagnosis code for Kwashiorkor, resulting in overpayments in excess of $6 million.”

They identified a discrepancy in the ICD-CM coding classification between the tabular list and the alpha index on the use of diagnosis code 260 and stated “CMS did not have adequate policies and procedures in place to address this discrepancy, resulting in a total potential loss of approximately $102 million during CYs 2006 through 2015. Even though CMS was aware of the discrepancy, it did not take any separate action to address it.”

In July 2020, the OIG published a Report Brief (link), looking at ICD-10-CM severe malnutrition diagnosis codes E41 (nutritional marasmus) and E43 (unspecified severe protein calorie malnutrition). The OIG found that 164 of 200 claims had billing errors resulted in net overpayments of $914,128 and stated, “the errors occurred because hospital used severe malnutrition diagnosis codes when they should have used codes for other forms of malnutrition or no malnutrition diagnosis code at all.” Based on the sample of claims reviewed, the OIG estimated hospitals received overpayments of $1 billion for FYs 2016 and 2017.

Most recently, in November 2021, the OIG added a review of Medicaid inpatient hospital claims with severe malnutrition to their Work Plan (link). The Work Plan issue description, indicates “adding an MCC to a claim can result in an increased payment by causing the claim to be coded in a higher diagnosis-related group.”

In addition to the OIG, the Q3 Fiscal Year (FY) 2021 Program for Evaluation Payment Patterns Electronic Report (PEPPER) became available and includes the new risk area, severe malnutrition. More specifically, this new PEPPER Target Area focuses on DRGs assigned based on an MCC with one of the following malnutrition ICD-10-CM diagnosis codes as the only MCC:

  • E40: Kwashiorkor
  • E41: Nutritional Marasmus
  • E42: Marasmic kwashiorkor
  • E43: Unspecific severe protein-calorie malnutrition

The Thirty-Fourth Edition of the Short-Term Acute Care PEPPER User’s Guide (link) provides the following guidance for hospitals that are high outliers for this new risk area:

“This could indicate that there are coding errors related to unsubstantiated coding of one of the severe malnutrition codes (i.e., E40, E41, E42, or E43) as the only MCC. A sample of medical records with a severe malnutrition code as the only MCC should be reviewed to determine whether coding errors exist. A diagnosis of severe malnutrition must be determined by the physician. A coder should not code based on laboratory findings or nutritional consultation without seeking physician determination of the clinical significance of the abnormal findings.”

Severe Malnutrition by the Numbers

As severe malnutrition has been and continues to be a focus of audit, I turned to our sister company RealTime Medicare Data (RTMD) to try and understand how often one of the above severe malnutrition ICD-10-CM diagnosis codes continues to be the only MCC coded on a record. RTMD data is Medicare Fee-for-Service specific and includes inpatient discharges, outpatient services, and CMS 1500 Professional services. It is full-census, non-modeled, and typically available 90 days post-payment.

The data provided by RTMD for this article includes calendar years (CYs) 2019 and 2020 inpatient claims for the entire RTMD footprint. Here is what I found.

CY 2019 and 2020 combined:

  • 188,383 total claims paid where a severe malnutrition code was the only MCC on the claim.
  • Actual Total Payment: Just over $2.9 billion
  • >
  • The five states with the highest number of claims for both CYs included Florida, California, New York, Texas, and Illinois.

CY 2019:

  • 102,874 total paid claims
  • Actual Total Payment: $1,543,413,978
  • Volume of claims by ICD-10-CM diagnosis code:
    • E40 Kwashiorkor – 13 claims
    • E41 Nutritional Marasmus – 235 claims
    • E42 Marasmic Kwashiorkor – 4 claims
    • E43 Unspecified severe protein-calorie malnutrition – 102,622 claims
  • Claims where one of the four severe malnutrition codes was the only secondary diagnosis on the claim:
    • 8,506 claims
    • Actual Total Payment: $114,480,291

CY 2020

  • 85,509 claims
  • Actual Total Payment: $1,367,094,959
  • Volume of claims by ICD-10-CM diagnosis code:
    • E40 Kwashiorkor – 12 claims
    • E41 Nutritional Marasmus – 117 claims
    • E42 Marasmic Kwashiorkor – 10 claims
    • E43 Unspecified severe protein-calorie malnutrition – 85,370 claims
  • Claims where one of the four severe malnutrition codes was the only secondary diagnosis on the claim:
    • 8,101 claims
    • Actual Total Payment: $114,246,389
Moving Forward
  • Make sure key stakeholders (i.e., Physicians, Coding Professionals, Clinical Documentation Integrity Specialists, and Registered Dieticians) at your facility are familiar with the 2012 ASPEN/AND criteria and the 2018 Global Leadership Initiative on Malnutrition (GLIM) criteria,
  • Partner with your medical staff to standardize the criteria your hospital uses to define the types of malnutrition (i.e., Kwashiorkor, Nutritional Marasmus),
  • Monitor your quarterly PEPPER to see if your hospital is an outlier in this risk area,
  • Respond in a timely manner to medical record requests made by auditing entities.

Beth Cobb

P.A.R. Pro Tips: News from the MACs
Published on Dec 15, 2021
 | Billing 
 | Coding 
 | OIG 

MMP’s Protection Assessment Report (P.A.R.) combines current Medicare Fee-for-Service review targets (i.e. MAC, RAC, OIG, etc.) with hospital specific paid claims data made possible through a collaboration with RealTime Medicare Data (RTMD). Monthly, our newsletter spotlights current review activities. This month we highlight recent CMS and Medicare Administrative Contractor (MAC) eNews reminders for Providers.

P.A.R. PRO TIPS: eNews Reminders for Providers

November 29, 2021: WPS J8 eNews: Prior Authorization for Hospital Outpatient Department Services Tips and Reminders

After noting they continue to find errors, including omissions, on prior authorization requests that may result in processing delays, WPS offered the following tips and reminders related to the CME Prior Authorization for Hospital Outpatient Department Services Program (link) in their daily eNews:

Vein Ablation

  • Prior authorization requests should clearly identify which extremity and vein(s) the request is for, and
  • Documentation should include conservative measures and the length of time the conservative measures were tried.
    • Implantation of Spinal Neurostimulators

      • The Unique Tracking Number (UTN) assigned to an affirmed implantation of spinal neurostimulators trial is the same UTN that shall be used for the permanent implantation,
      • A new UTN for the permanent implantation is only required if more than 120 days have passed since the trial UTN was issued or if the trial and permanent Provider Transaction Numbers (PTANs) are different, and
      • Documentation should include a psychiatric evaluation and support of tried and failed conservative treatment.

      WPS provides a more detailed article on their website about this program (link)

      December 1, 2021: Palmetto GBA eNews: Aftercare, Musculoskeletal System and Connective Tissue Diagnosis Related Groups (DRGs)

      “This article (link) includes a description of the DRG codes for Aftercare, Musculoskeletal System and Connective Tissue and a list of Principal Diagnosis Tips. Please review this information and share it with your staff.” For example, Palmetto advises that ICD-10-CM Diagnosis code M48.4 (Fatigue fracture of vertebra, should not be used for acute traumatic fracture.

      Comprehensive Error Rate Testing (CERT) Question & Answer Fact Sheet

      A second article of interest (link) in Palmetto’s December 1st eNews answers who, what and how questions about the CERT. For example:

      • Question: “Are healthcare providers required to comply with CERT’s request for medical records?
      • Answer: Yes, the CERT is a federally mandated program. Non-submission of medical records will result in a denial of all services billed on the claim.”
      December 2, 2021: CMS MLN Connects eNews: Skilled Nursing Care & Skilled Therapy Services to Maintain Function or Prevent or Slow Decline

      CMS included the following reminder to providers in the December 2nd edition of MLN Connects (link):

      “Medicare covers skilled nursing care and skilled therapy services under skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care to maintain function or to prevent or slow decline, as long as:

      • The beneficiary requires skilled care for the services to be provided safely and effectively
      • An individualized assessment of the patient's condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist are needed for a safe and effective maintenance program

      Visit the Jimmo Settlement Agreement webpage for more information.”

      December 2, 2021: Palmetto GBA eNews: Responding to CERT Documentation Request

      As a follow-up to the previously mentioned CERT FAQ document, Palmetto published an article (link) detailing why you are required to respond to CERT requests, what you need to send, and where to send the documentation to.

      December 7, 2021: Novitas Solutions JL eNews: Prior Authorization: Cervical fusion with disc removal

      Novitas noted in their eNews that the A/B MAC Prior Authorization Collaboration Workgroup has published an article (link) about cervical fusions with disc removal and reminds providers that this procedure is part of the prior authorization program for certain hospital outpatient department services.

      December 10, 2021: Protecting Medicare and American Farmers from Sequester Cuts Act

      President Biden signed this Act into law on December 10th (link) and while this is not a Pro Tip, passage of this Act does impact hospitals. Among other items in the Act, it amends the CARES Act to extend the 2 percent sequestration suspension until March 31, 2022. Beginning April 1, 2022, and ending June 30, 2022, the sequestration payment reduction will be 1.0 percent. The full 2 percent Medicare sequester cut will begin again on July 1, 2022.

Beth Cobb

OIG Overpaid $636 Million for Neurostimulator Implantation Surgeries
Published on Oct 20, 2021
 | Billing 
 | Coding 
 | OIG 

I have recently noticed a resurgence of a favorite commercial from my childhood featuring a little boy, Mr. Turtle, Mr. Owl, and a tootsie roll pop (link). Although it’s a given that we will never know how many licks it takes to get to the center of a Tootsie Roll pop, it’s no mystery as to why the OIG believes CMS has paid millions in overpayments for neurostimulator implantation surgeries. Let’s unwrap this OIG report (link) and get to the center of it.

Why This Audit was Conducted

CMS analysis revealed that claims for spinal neurostimulator implantation surgeries increased by nearly 175 percent between 2007 and 2018. “CMS researched possible causes for the increased volume of these procedures that would indicate the services are increasingly necessary, but CMS did not find any plausible reason for the increase in services and concluded that a financial motivation was the most likely cause for the increase.”

Strategic Health Solutions, the first Supplemental Medical Review Contractor (SMRC), was tasked with reviewing post-payment claims of Medicare Part B spinal neurostimulator implantation surgeries. They reviewed claims with dates of service from January through September of 2014 and identified a 72% error rate.

Without a “plausible reason for the increase in services” and the SMRC review’s high error rate, the OIG conducted this review to “determine whether health care providers complied with Medicare requirements when they billed for neurostimulator implantation surgeries.”

What are Neurostimulators?
  • What is it? A battery-powered electronic device enclosed in a small metal container that is surgically implanted under a patient’s skin and connected to wires called leads
  • Types of Neurostimulators: Spinal cord, deep brain, and vagus nerve stimulator (VNS) devices.
  • Conditions that can be treated with neurostimulator: chronic pain, Parkinson’s disease, essential tremor, dystonia, obsessive-compulsive disorder, seizures, and epilepsy.
Medicare Coverage Requirements for Neurostimulators

As noted above, there are several conditions where treatment with a neurostimulator implant may be warranted. Medicare has several National Coverage Determinations (NCDs) related to neurostimulators that detail the indications and limitations of coverage, including:

  • NCD 160.2: Treatment of Motor Function Disorders with Electrical Nerve Stimulation,
  • NCD 160.7: Electrical Nerve Stimulators,
  • NCD 160.18 – Vagus Nerve Stimulation, and
  • NCD 160.24 – Deep Brain Stimulation for Essential Tremor and Parkinson’s Disease.
OIG Claims Selection by the Numbers
  • 2016-2017: The audit period for this review,
  • $1.4 billion: The Medicare payments made to providers during the audit period,
  • 58,213: The number of beneficiaries who had at least one neurostimulator implantation during the audit period.
  • HCPCS Codes 61885, 61886, or 63685: The codes used to identify beneficiaries who had undergone a neurostimulator implantation surgery.
  • 124 claims: The stratified random sample of claims reviewed in this audit.
  • $1,000: All claims reviewed were for paid amounts greater than $1,000.
  • $3.4 million: The amount paid to 102 providers for the 124 claims in the audit sample.
  • Audit sample claim specific indication for neurostimulator:
    • 87 claims were for treatment of chronic pain,
    • 4 claims were for treatment of seizures, and
    • 13 claims were for essential tremors and Parkinson’s disease.
    • Note, the remaining two claims involved a neurostimulator implant with an investigational device exemption.
Audit Error Rates

The OIG found that 40% of health care provided did not comply with Medicare requirements. Based in this finding, they estimated that:

  • Providers received $636 million in unallowable Medicare payments, and
  • Medicare beneficiaries paid $54 million in related unnecessary coinsurance amounts.

An independent contractor reviewed the medical records and determined that 48 (49%) of the 106 claims did not contain documentation supporting compliance with the applicable NCD indications. The OIG report lists types of missing/incomplete documentation by NCD, for example:

  • NCD 160.7:
    • No documentation of other failed treatment modalities or that other treatment prior to a neurostimulator was felt to be unsuitable or contraindicated, and
    • No documentation of the multidisciplinary screening includes a psychological evaluation.
OIG Audit Conclusions & Recommendations

The “tootsie-roll center” of this audit are the OIG’s audit conclusions and recommendations. Both lay the groundwork for steps for providers moving forward. The OIG concluded that:

  • Medical records lacked documentation to support the NCD coverage requirements for neurostimulator implants,
  • There were limited instances when providers “stated that they did not fully understand these Medicare coverage requirements,”
  • These claims did not require prior authorization, nor were they subject to pre-payment reviews, and
  • There is no edit in the CMS software to initiate such a review.
  • It was not until after the completion of this audit that CMS published the CY 2021 OPPS Final Rule that added prior authorization of spinal neurostimulators to the Prior Authorization for Certain Hospital Outpatient Department Services program effective for services on or after July 1, 2021(link). The OIG notes that this final rule does not include claims for neurostimulator implantation for Parkinson’s disease or seizure disorders.
    • Note, in May of 2021, the CMS limited the prior authorization requirement to CPT code 63650 (implantation of spinal neurostimulator electrodes, accessed through the skin).

Based on their conclusions, the OIG recommended that CMS instruct the Medicare Administrative Contractors:

  • Recover overpayments,
  • Advise applicable providers to exercise reasonable diligence to identify, report, and return over-payments in accordance with the 60-day rule,
  • Conduct provider outreach and education regarding Medicare coverage requirements, and
  • Require prior authorization for procedures for Parkinson’s disease and seizures.

CMS agreed with all recommendations but indicated that neurostimulator implantation for Parkinson’s disease and seizure disorders are currently on the Medicare Inpatient Only (IPO) Procedure List and their prior authorization authority does not extend to inpatient services. The OIG noted that “CMS’s inability to implement this control for inpatient claims…leaves this area vulnerable to future overpayments.”

Steps Moving Forward

I encourage you to:

  • Become familiar with the Medicare coverage requirements at the National and Local MAC level,
  • Identify the documentation deficiencies by NCD detailed in this OIG report,
  • Work with your Physician’s offices to ensure all documentation needed to support the medical necessity of the procedure is in the medical record, and
  • Learn about current MAC specific provider outreach and education activities in a related article in this week’s newsletter.

Beth Cobb

October 2021 P.A.R. Pro Tips: Neurostimulator Implantation Surgeries
Published on Oct 20, 2021
 | Billing 
 | Coding 
 | OIG 

MMP’s Protection Assessment Report (P.A.R.) combines current Medicare Fee-for-Service review targets (i.e. MAC, RAC, OIG, etc.) with hospital specific paid claims data made possible through a collaboration with RealTime Medicare Data (RTMD). Monthly, our newsletter spotlights current review activities in this P.A.R. Pro Tips article. This month’s focus is on neurostimulator implantation surgeries.

Did You Know?

Effective for services on or after July 1, 2021, implanted spinal neurostimulator procedures was one of two new procedures added to the list of procedures included in the Prior Authorization for Certain Hospital Outpatient Department (OPD) Services program (">link).

On October 5, 2021, the Office of Inspector General released the report Medicare Overpaid More Than $636 Million for Neurostimulator Implantation Surgeries (link). The OIG made several recommendations to CMS in response to the review findings. One recommendation being that MACs conduct provider outreach and education.

Pro Tip: MAC Neurostimulation Implantation Surgery Provider Outreach and Education Efforts

In response to neurostimulation implantation being added to the Prior Authorization for Certain OPD Services program and to recommendations made by the OIG in their report, the MACs have been conducting provider outreach and education. This article highlights resources available by the different MACs. You can read more about the OIG report in a related article in this week’s newsletter.

CGS (Jurisdiction 15)

The CGS OPD Prior Authorization webpage (link) includes medical record documentation needed to meet coverage criteria for all procedures in this program including implanted spinal neurostimulators.

First Coast Service Options, Inc. (Jurisdiction N)

First Coast published the article Implantation of spinal neurostimulator in their October 13, 2021, First Coast eNews article (link).

You can also find general documentation requirements and links to Local Coverage Determination (LCD) and Local Coverage Article (LCA) for Spinal Cord Stimulation for Chronic Pain on their PA Program general documentation requirements webpage (link).

National Government Services (J6 and JK MAC)

In July, NGS posted a news article (link) to their website highlighting information about prior authorization for implanted spinal neurostimulators including:

  • The applicable HCPCS code,
  • Documentation Requirements, and
  • Links to related content.

You will find a link to the required coversheet to request prior authorization for performing an implanted spinal neurostimulator procedure and National Coverage Determination (NCD) 160.7 Electrical Nerve Stimulators on the NGS Prior Authorization Documentation webpage (link) includes a

Noridian (JE and JF MAC)

Both Noridian JE (link) and Noridian JF (link) have an article posted under Medical Review on their website, that provides general documentation requirements and links to their LCD and LCA for Spinal Cord Stimulators for Chronic Pain.

Novitas Solutions Jurisdiction (JH and JL MAC)

Novitas recently published the article Prior Authorization: Implantation of Spinal Neurostimulator in (link), highlighting the components of the spinal cord neurostimulator system, documentation requirements, best practice documentation feedback/tips and links to related content including their LCD and LCA titled Spinal Cord Stimulation.

In July 2021, Novitas updated their Prior Authorization Program for certain hospital outpatient department services general documentation requirements article to include guidance for implanted spinal neurostimulators (trial or permanent) and cervical fusion with disc removal (link).

Finally, in case you missed it, you can view a September 8, 2021 webinar (link) recording focused on reviewing the two new services requiring PA effective dates of service on and after July 1, 2021.

Palmetto GBA (JJ and JM MAC)

On October 12, 2021, Palmetto GBA updated their article titled Implantation of Spinal Neurostimulator. You can find this article on their Outpatient Department Prior Authorization (PA) webpage (link). Additional resources available on the Palmetto website includes:

  • A Documentation Checklist (link) highlighting the documentation requirements for trial or permanent implanted spinal neurostimulators,
  • An on-demand webinar video (link) highlighting the two services added to Outpatient PA program effective July 1, 2021 (implanted spinal neurostimulators and cervical fusion with disc removal), and an
  • Links LCD (L37632) and LCA (A56876) for Spinal Cord Stimulators for Chronic Pain (link).

WPS (J5 and J8 MAC)

WPS has published an article (link) highlighting the July 1, 2021 addition of implanted spinal neurostimulators to the hospital outpatient department Prior Authorization Program.

On August 18, 2021, WPS posted a YouTube video (link) detailing the process for submitting a prior authorization request for implanted spinal neurostimulators.

WPS also has a live event scheduled for October 26, 2021, titled Prior Authorization – Understanding Implanted Spinal Neurostimulators in the Hospital Outpatient Department (">link). They note in the announcement that this teleconference will answer questions on:

  • Inpatient Psychiatric Facility (IPF),
  • Inpatient Rehabilitation Services,
  • Routine Foot Care, and
  • Wound care in a Critical Access Hospital (CAH).

What Can You Do?

Take advantage of resources made available by your MAC related to implanted spinal neurostimulators.

Beth Cobb

Medicare Quarterly Provider Compliance Newsletter and a Tangled Web
Published on Sep 29, 2021
 | CERT 
 | OIG 
“Oh, what a tangled web we weave…when first we practice to deceive.”
- Sir Walter Scott

“Oh, what a tangled web we weave…. when first we practice to protect.” Changing just one word in this quote from “deceive” to “protect” makes it become an apt description of the numerous medical review contractors that are part of the CMS Medical Review and Education Program (link).

This premise is supported by CMS’ stated purpose for this interconnected web of medical review contractors as being to “identify errors through claims analysis and/or medical review activities. Contractors use this information to help ensure they provide proper Medicare payments (and recover any improper payments if the claim was already paid.) Contractors also provide education to help ensure future compliance.”

The Medicare Quarterly Provider Compliance Newsletter is one tool used for provider education. This quarterly newsletter’s aim is to provide guidance to address billing errors identified by Medicare Administrative Contractors (MACs) and other contractors such as Recovery Auditors, the Comprehensive Error Rate Testing (CERT) Review Contractor, and the Supplemental Medical Review Contractor (SMRC). Other governmental organizations, such as the Office of Inspector General (OIG), also conduct reviews and identify issues. The CMS recently announced the release of the July 2021 edition of this newsletter (link).

July 2021 Newsletter Topics:

  • the Comprehensive Error Rate Testing (CERT) program review of glucose testing supplies,
  • Recovery Auditor Issue 0181: Bone Marrow or Stem Cell Transplant: Medical Necessity and Documentation Requirements
  • Recovery Auditor Issue 0081: Negative Pressure Wound Therapy: Medical Necessity and Documentation Requirements.

As I read through the newsletter, I noted that the CERT findings include background information, examples of improper payments and resources. Likewise, the Recovery Auditor review of negative pressure wound therapy includes a problem description, background information, recommendations to prevent denials and improper payments and resources. However, the Recovery Auditor review of bone marrow or stem cell transplant is lacking examples of improper payments and/or recommendations to prevent denials and improper payments. This lack of information led me to the CMS RAC webpage in search of additional information related to the RAC issue 0181. Much to my surprise this issue is no longer on the list of approved RAC issues and is no longer on the individual RACs list of approved issues.

Inpatient Bone Marrow and Stem Cell Transplant Procedures Medical Review Timeline
February 2016: OIG Review

The OIG noted in a February 2016 report (link) that Medicare had paid hospitals $185.9 million for inpatient claims related to bone marrow and stem cell transplant procedures. The OIG identified two hospitals that did not always comply with the Medicare billing requirements for inpatient claims for stem cell transplants that resulted in approximately $4 million in overpayments. In general, lengths of stay (LOS) for these claims ranged from 10 to 21 days. However, the LOS for claims reviewed were one to two days. Based on findings from the two hospitals, the OIG conducted a nationwide review of 143 claims and found that 133 (93%) of the claims did not comply with Medicare billing requirements. The two reasons cited by the OIG for noncompliance included:

  • Hospitals incorrectly billing Medicare Part A for stays that should have been billed as outpatient, or outpatient with observation services, and
  • Hospitals billing an incorrect Medicare Severity-Diagnosis Related Group (MS-DRG).
January 2019: New Review Project for SMRC

In response to the OIG report, the CMS tasked the SMRC (Noridian) with reviewing inpatient bone marrow and stem cell transplant procedures to determine compliance with statutory, regulatory, and sub-regulatory guidance. The SMRC reviewed claims billed on dates of service from January 1, 2017, through December 31, 2017. Specific MS-DRGs requested included:

  • MS-DRG 014: Allogenic bone marrow transplant,
  • MS-DRG 016: Autologous bone marrow transplant with a complication or comorbidity (CC), and
  • MS-DRG 017: Autologous bone marrow transplant without a CC or major CC (MCC).

For this project, Noridian included the following list of specific documentation requirements in each Additional Documentation Request (ADR) sent to providers:

  1. Documentation to support the beneficiary was expected to require an inpatient level of care for at least 2-Midnights
  2. Documentation to support an inpatient level of care was expected and provided. Documentation should include, but is not limited to: Medication Administration Records (MAR), History & Physical, Physician Progress Notes, Nursing Notes, Discharge Summary, Procedure Notes
  3. Inpatient admission order from attending physician
  4. Physician or Non-Physician Practitioner (NPP) order for the stem cell transplant for the dates of service
  5. Medical documentation that supports the beneficiary met criteria for one of the following covered services:
    1. Allogenic Hematopoietic Stem Cell Transplantation (HSCT)
    2. Autologous Stem Cell Transplantation (AuSCT)
  6. Documentation to support enrollment in an approved Clinical Research Study, if applicable
  7. Full detailed itemization of services, including diagnosis codes
  8. Legible handwritten physician and/or clinician signatures
    1. Signature logs and Signature Attestation Statement should be submitted when physician and/or clinician signatures are illegible
  9. Valid electronic physician and/or clinician signatures
  10. Advance Beneficiary Notice of Noncoverage (ABN), if applicable

Results of this review were posted to the SMRC website in October 2019. The error rate for the SMRC Project 01-006 (link) was 86%. Common reasons for denial cited by the SMRC included:

  • Documentation received did not support medical necessity of an inpatient stay,
  • No response by a provider to the documentation request,
  • Signature requirements not being met, and
  • Incorrect coding.
March 2020: RAC Approved Issue 0181: Complex Review of Hospital Inpatient Bone Marrow or Stem Cell Transplants

Six months later, further proof of the interconnected web of medical review contractors concept, a review of bone marrow and stem cell transplants became a RAC approved issue. Each of the 4 RAC Regions added Issue 0181 to their list of Issues in March of 2020 (link). Even Though RAC Issue 0181 is no longer listed on the RAC websites, if your hospital performs these procedures, I encourage you to perform a review of these inpatient records for documentation supporting medical necessity of the procedure and the inpatient stay.

Moving Forward

In July of this year, each of the RACs posted the following notice: “The Centers for Medicare & Medicaid Services (CMS) is required to protect the Medicare Trust Fund against inappropriate payments which pose a risk to the Trust Fund. Therefore, we are resuming Medicare Fee-for-Service medical review activities. The COVID-19 Public Health Emergency (PHE) continues to be monitored very closely.”

It is important to be aware of who your review contractors are, what issues they are focused on, and respond to ADRs in a timely manner. If you are unsure of who your review contractors are you can find out by using the CMS Review Contractor Directory – Interactive Map (link).

Beth Cobb

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