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Inpatient Only List -

An Avoidable Denial

florida chapter


Presented By

William L. Malm, ND, RN, CRCR, CMAS, is a Managing Consultant with Berkley

Research Group (BRG)’s Health Performance Improvement group. He is a nationally

recognized author and speaker on topics such as value-based care, healthcare

compliance, charge masters, and CMS recovery audits. He also brings a decade of

experience with payer acute care audits. Malm has over 25 years of experience,

with a combination of clinical and financial healthcare knowledge that

encompasses all aspects of revenue integrity. Previously, Malm played a key role in

providing revenue integrity and data expertise for Craneware, PLC. He also serves

as the president for the Certification Council of Medical Auditors. He has extensive

experience with all prepayment and post payment audits, having worked as a

systems compliance officer at a large for-profit healthcare system. Malm also co-

hosts Appeal Academy’s “Finally Friday” discussions.

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Agenda

• Source Authority for Inpatient Only List (IOP)

• Understanding inpatient-only regulations for Medicare

• Understanding the internal control stops for the Inpatient Only List

• People – Process and Technology required to implement IOP

• Non-Medicare implications of the IOP

• Technology or no technology?

• What is your action plan look like

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Objectives

At the conclusion of this program, participants will be able to:

• State the source authority citations for OPPS Inpatient only list

• Be able to find Addendum E for the IOP list

• Be able to create a “map” with internal control points for IOP at your facility

• Understand what technology could provide that people & process may not

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1 IOP Overview


Source Authority – 100-04, Chapter 4

• 10.12 – Payment Window for Outpatient Services Treated as Inpatient Services

• 180.7 – Inpatient-Only Services

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OPPS

Overview:

• CY 2000 – First OPPS final rule states: (65 FR p. 18455)

• “1,803 codes that represent procedures that our medical advisors and staff determined

require inpatient care because of the invasive nature of the procedure, the need for

postoperative care, or the underlying physical condition of the patient who would require the

surgery”

• “regardless of how a procedure is classified for purposes of payment, we expect, as we stated

in our proposed rule, that in every case the surgeon and the hospital will assess the risk of a

procedure or service to the individual patient, taking site of service into account, and will act in

that patient’s best interests”

• IOP is an outpatient concept

• Formalizes what procedures cannot seek reimbursement from the OPPS payment system

(Medicare Part B)

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OPPS – Elements of Rule

History & Overview:

• “In general terms, as stated above, we define inpatient procedures as those that require

inpatient care because of the invasive nature of the procedure, the need for at least 24 hours of

postoperative recovery time or monitoring before the patient can be safely discharged, or the

underlying physical condition of the patient who would require the surgery. In other words,

inpatient procedures are those that, in the judgment of our medical advisors and staff, would not

be safe, appropriate, or considered to fall within the boundaries of acceptable medical practice if

they were performed on other than a hospital inpatient basis.” (65 FR p. 18455)

• Conditions to document in record on pre-review to determine if IOP

• Invasive

• Post op recovery

• Physical Condition

• Unsafe within medical practice standards

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OPPS – Removing an IOP procedure

History & Overview:

• CY 2012 OPPS/ASC final rule with comment period (76 FR 74352 through 74353) for a full

historical discussion.

• Removal from the list is based on certain measures.

• Procedure is not required to meet all of the established criteria to be removed from the inpatient-only

(IPO) list. The criteria include the following:

− Most outpatient departments are equipped to provide the services to the Medicare population.

− The simplest procedure described by the code may be performed in most outpatient departments.

− The procedure is related to codes that we have already removed from the IPO list.

− A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis.

− A determination is made that the procedure can be appropriately and safely performed in an ASC and is on the list of

approved ASC procedures or has been proposed by us for addition to the ASC list (83 FR, p. 58999)

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OPPS – Removing an IOP procedure

History & Overview:

• CY 2012 OPPS/ASC final rule with comment period (76 FR 74352 through 74353) for a full

historical discussion.

• Each year all the inpatient-only procedures are listed in an Addendum. In 2019, Addendum E is

the comprehensive list.

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https://www.cms.gov/apps/ama/license.asp?file=/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1695-FC-2019-OPPS-FR-Addenda.zip


Current Regulatory Guidance

CMS 100-04, Chapter 4, Section 180.7 is the most complete guidance

• Section 1833(t)(1)(B)(i) of the Act allows CMS to define the services for which payment

under the OPPS is appropriate, and the Secretary has determined that the services

designated to be “inpatient only” services are not appropriate to be furnished in a

hospital outpatient department. “Inpatient only” services are generally, but not always,

surgical services that require inpatient care because of the nature of the procedure, the

typical underlying physical condition of patients who require the service, or the need

for at least 24 hours of postoperative recovery time or monitoring before the patient

can be safely discharged.

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Current Regulatory Guidance

• There is no payment under the OPPS for services that CMS designates to be “inpatient-only”

services. These services have an OPPS status indicator of “C” in the OPPS Addendum B.

• Note the regulation moves the liability from Medicare Part B to Medicare Part A for budgeting processes

• CMS does not pay for an “inpatient-only” service furnished to a person who is registered in the

hospital as an outpatient and reported on the outpatient hospital bill type (TOB 13X). CMS also

does not pay for all other services on the same day as the “inpatient-only” procedure.

• Take Away any IOP listed procedure on a 131 will receive a denial for payment for the claim.

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CMS Regulatory Exceptions

Two specific exceptions to outpatient procedures performed on the same day as an

inpatient procedure:

Exception 1:

• If the “inpatient-only” service is defined in CPT to be a “separate procedure” and the

other services billed with the “inpatient-only” service contain a procedure that can be

paid under the OPPS and that has an OPPS SI = T on the same date as the “inpatient-only”

procedure or OPPS SI = J1 on the same claim as the “inpatient-only” procedure, then the

“inpatient-only” service is denied but CMS makes payment for the separate procedure

and any remaining payable OPPS services. The list of “separate procedures” is available

with the Integrated Outpatient Code Editor (I/OCE) documentation.

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CMS Regulatory Exceptions

Exception 2:

• If an “inpatient-only” service is furnished but the patient expires before inpatient admission or

transfer to another hospital and the hospital reports the “inpatient-only” service with modifier -

CA, then CMS makes a single payment for all services reported on the claim, including the

“inpatient-only” procedure, through one unit of APC 5881 (Ancillary outpatient services when

the patient dies).

• Hospitals should report modifier-CA on only one procedure.

• The procedure which constitutes the reason for inpatient status only

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Nuances of the IOP Process

Nuances:

• Since IOP is an OPPS phenomenon it utilizes CPT codes not the ICD-10 PCS codes for the

procedure

• This is a good thing as physicians and their staff really understand CPT!

• Due to a list of procedures in advance it behaves more like a pre-authorization process, known

to managed care payors, than retrospective process associated with Medicare

• A physician, who properly documents medical necessity, will still be paid for an inpatient-only

procedure performed while the hospital will be denied.

• In other words the doc gets paid no matter what and it is the facility revenue at risk

• Makes it harder to engage physicians and their staff to remediate

• For employed physicians the risk for the facility can be integrated into their RVU measurement

to provide “risk” to the physician

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IPO Performed as an Outpatient but Converted to Inpatient

If an "inpatient-only" procedure is performed in the outpatient setting, and the patient is

subsequently admitted as an inpatient, the "inpatient-only procedure" can be reported on the

inpatient claim when the services are:

• Provided on the date of inpatient admission

• Provided within 3 days of inpatient admission

• This is an about-face by CMS from their earlier guidance of 2014

• Deemed related to inpatient admission per the payment window policy

• Medicare 3 day payment window:

• CMS 100-04, Chapter 3, § 40.3

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https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS018912.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending


Inpatient-Only List

The list changes every year with the January 1 updates to OPPS

• Not with the October 1 updates to IPPS (counter intuitive)

Recommendation:

• Download the specified Addendum

• Circulate the IPO to physicians, physician services, HIM/coding, pre-auth nurses & patient access, surgical

scheduling, care management, utilization review, and denials management team

• Consider building a software solution or purchasing a software solution that will automate the acquisition

process for the order

• We will present a case study demonstrating the improvements seen when using a software solution over a paper

model

• Create policy, procedure, and job aids for the IPO list and make it part of yearly competency testing for

stakeholders

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Once IPO Identified the Physician Order Requirement

Section 42 CFR §412.3 (Code of Federal Regulations) states the inpatient order must be

created for three scenarios:

• The physician expects the beneficiary to require hospital care spanning at least two midnights

• The physician provides a service on Medicare’s inpatient-only list

• The physician expects the beneficiary to require hospital care for less than two midnights but

feels that inpatient services are nevertheless appropriate

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Denials: What do they look like?

• As part of a sustainable process, the denial management team must continually work with the

front end and middle revenue cycle to ensure remediation and avoidance

• Most denials have a “5” somewhere in the CARC / RARC Codes

• B5 – Frequently seen as a CARC code on IPO claims

Code # Code Description Contractual

Adj Denied Non Covered Other Not Used

B5Payment adjusted because coverage/program

guidelines were not met or exceededCO/PR/OA PR/OA CO/PR/OA

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Denials: What do they look like?

• 50 – Many of the IPO denials are for medical necessity as a result of an NCD. These are

not a status denial but medical necessity.

• A physician advisor firm noted that most of their IPO failed the NCD such as the

Watchman, TAVR, TMVR.

• In essence, CMS is not taking the IPO as the only approach but looking at medical necessity as

another form of denial

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2 People – Process and Technology


Inpatient-Only List Process: Pre-Operative

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• If patient procedure on IPO list, obtain IP order

• If not, proceed without order

• Determine CPT code• Send CPT to patient access and

surgical scheduling

Physician Office

• Review the CPT with inpatient-only list

• Commercial patients pre-authorize per normal process

Patient Access

Surgical Scheduling/

OR


Inpatient-Only List Process: Post-Operative

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Operating Room

HIMCare

ManagementDischarge Process

• Determine if there was a change in procedure from proposed

• Notify HIM for potential recoding and patient access for potential authorization update

• Review and recode as required

• If now IPO procedure, notify physician, physician service to obtain a new order

• Review admissions to look for IPO procedure

• If IPO procedure found notify and obtain new order for IP status

• Review procedure performed and do not discharge until IPO procedure has IP order

• Last chance to get the order and retain the revenue


Inpatient-Only List Process: Back Office

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• The denial adjustment code must be fed by the denials management group back to the front end and work through the process again

• Claim scrubber should have IPO list embedded as an edit

Claims Scrubber

• If a denial occurs, record the denial code‒ Should have a transaction write-off/adjustment

code for the purposes of appropriate clarification

Denial

Feedback Loop


Avoidable Denials Are Key to Revenue Integrity

• The reason for a sustainable process is DENIAL AVOIDANCE

• Root cause analysis with sustainable remediation is key to ensuring preventable hard

denials do not occur

• Because they are avoidable, a systematic process must be designed to ensure all

requirements and processes ensure compliant IPO billing

• Denial avoidance is key to all revenue integrity efforts

• Goal is to reduce impactable denials

• IPO denials are always classified as “avoidable” denials

• Failure to attain a failsafe process will result in denials and reimbursement losses!

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Importance of a Sustainable Process

The process must be precise, repetitive, understood, and user-friendly in order to ensure success

• Two models for the process:

• Human process (P-P)

• For process portion must be repetitive and well understood through job aids

• For the people portion it has to be user friendly

• Failures in either process can lead to revenue leakage and denials

• Human process with software enhanced key interventions (P-P + T)

• IPO denials must be classified accurately and monitored in denials “dashboards” by procedure,

physician, and root cause

• People and process alone generally is not sustainable and requires the technology component

to be successful

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Importance of a Sustainable Process

Data – Data – Data – Analyze – Analyze and more data

• The key to any sustainable process is predictive analytics, based on historical events, where

aberrant results are identified as early in the process as possible.

• Must be key ”internal control” points in the process where the prior step is rechecked to ensure

sufficiency before moving to the next step, making the process sustainable.

• Key takeaway: Early warning prevents a denial though actionable control points.

• Follow Six Sigma with control points and each step must evaluate the prior step

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P-P-T to Success

The key elements of all revenue integrity involves:

• People (P)

• Process (P)

• Technology (T)

• People and process are the two most difficult portions to ensure denial avoidance

• Technology has proven successful in overcoming some of the weaknesses within the

people and process component

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Common Pitfalls

Pitfalls that ensure a failed IPO

• People:

• Lack of education/understanding of process

• Medicare requirements/insurance requirements not well understood

• Coding is insufficient or inaccurate

• Surgical scheduling does not ensure procedure checked against IPO list

• Patient access not verifying procedure at time of registration

• Staff turnover

• Working in silos – requires significant interaction and control points

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Common Pitfalls

Pitfalls that ensure a failed IPO outcome

• Process:

• Lack of a diagrammed process (consider six sigma approach)

• Lack of clear and consistent policies/procedures/education

• Lack of clearly defined internal control points

• Lack of a feedback loop to remediate flaws in the process

• A process that has a lot of variables that require subjective decisions

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Common Pitfalls

Pitfalls that ensure a failed IPO

• Technology:

• Using technology that is not designed to identify the IPO

• Using medical necessity software determinations for the NCD/LCD but failing to recognize

the process is IPO

• The IPO list in the software is not current or accurate

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Overcoming Pitfalls

• Have a clear objective and goal definition(s)

• Diagram the process to the smallest detail

• Use Six Sigma teams to isolate all potential

failures

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Identify control points

• Physician office

• Patient access/pre-registration

• Surgical scheduling

• Pre-operative testing (if required)

• Pre-op in the OR

• Post-op notification of procedure change to

HIM immediately after OR

• Post-op day #1 (review of procedure)

• Day of discharge (review of procedure)


The Process

Physician Office

Patient Access

Surgical Scheduling

Pre-Op Testing

Pre-op in ORPost-op

Notification to HIM

Post Op Day 1 – Care Management

Day of Discharge

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• Green shaded = optimal period to obtain the IP order

• Blue shaded = indicates a threshold point – last chance to get order BEFORE procedure

• Red = already behind the optimal period and represents a crucial process for obtaining the

order before losing the revenue

• At each step the preceding step must be validated again as an internal control point

• Failures at an earlier step will likely result in complete failure and denial downstream


Aligning Staff & Resources

Many consulting firms use a workforce methodology that matches people, process, and

technology to the task or stated requirement

People:

• Right person, right education, right culture, and proven track record

• This component has the highest failure rate due to disengaged personnel or disenfranchised personnel

Process:

• Diagram

• Define process through policy and procedure and create job aids to customise to the control point

+ Technology:

• Dynamic reporting

• Technology to assist with IPO determination and automated processes to ensure success

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Aligning Staff & Resources

People Example: Surgical Scheduling

• Personnel will review the CPT code and diagnosis with HIM

• Confirm procedure with the surgeon

• Ensure care management is contacted

• Verify demographics, eligibility, and Medicare IPO list

• Classify as IPO or OP procedure

• In order to ensure success, an employee in surgical scheduling personnel would need:

• Clear policies and procedures

• Appropriate education

• Repetitive validation of control points through checklists

• Concrete action steps when an aberrancy occurs (i.e., who to notify and within what time frame)

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3 Non-MedicareImplications


Commercial Contract Implications

IPO is a traditional Medicare concept

• Has been adopted in some degree to many managed care contracts

• For commercial/managed care payers, this takes the form of an authorization

• Key elements between IPO and the commercial concept

• Accurate and complete CPT coding prior to the procedure to ensure requirements are met

• Area of concern: CPT is not accurately determined by appropriate staff

• Office staff use CPT of “most frequently performed procedures by physician”

• Physician uses a “superbill” concept checking off a CPT and the form has not been updated

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• Commercial/managed care payers are a “pre-procedural” concept

• This is one area where Medicare and the commercials are similar

• As a general rule, Medicare is a post-procedural review, but in the case of IPO, it is

similar to the process for the commercial payers

• Commercial payers generally authorize only the first or highest-weighted procedure, so

if multiple procedures, will need only the highest-weighted to authorize

• However, for the IPO, will require each procedure to be reviewed to see if it is on the

IPO list, not just the highest-weighted

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Contract Implications:

• When contracting, the facility will want to ensure that there is contractual language

to ensure the authorization of the CPT code is following the inpatient-only list

whenever possible

• Ensure that the Medicare Advantage plans contracted with are in fact following the

IPO or they are only requiring authorization

• Key takeaway: Have as many contracts mirror the IPO list as possible in your facility

and therefore have only one sustainable process

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The IPO Process for Managed Care/IPO

Medicare Advantage:

• Can choose whether to follow the IPO list, not to follow it, or anything in between

• However, this does NOT mean to change up the people, process, or technology to

meet this “variable”

• Always follow the IPO list and then amend the process during the billing process

based on “contractual requirements”

• Identify the patient as MA

• Follow the MA payer guidelines/requirements

• Pursue IPO process or convert to standard prior authorization process

• Recommend for MA to do both!

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Commercial/MA Plan

Takeaway:

• Always start every process as if it is the IPO process

• Review the patient’s financial class, eligibility, and payer

• Only deviate from the process if the payer requirements would request an authorization

• Continue all medical necessity scrubs if the CPT is not on the IPO list

• KEY: NEVER DEVIATE FROM THE INTERNAL CONTROL STOPS

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4 Add Technology


Technology

We have identified that People and Process are the most difficult portion of the overall process to maintain sustainable results

• Frequent staff turnover

• Staff at a lower pay grade without the requisite education on IPO

• Human nature allows for variability in the tasks used to achieve sustainability

• Staffing operates in a “silo” and has limited interaction with other department

• Generally work load may make the review of the prior step unrealistic

The purpose of the technology is to make the process “repeatable” and sustainable

• Make the language understandable by all parties

• Allow for automated internal control points

• Ensure that milestones are created that must be addressed

• Data collection and analytics

• Tracking of denials to IOP for root cause analysis

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Technology

Technology Requirements:• Should integrate with the current facility EMR and software

• Should be easy to understand for front end staff

• Should have language that is “5th grade” English and not highly complex coding descriptions

• Should be offered to ordering physicians to assist them in selecting correct procedure

• Should be integrated into the full pre-op and surgical scheduling process

Does this software exist today or do we need to build it?

• Both!

• Currently there are several proprietary software that have demonstrated ROI benefits

• Some facilities have created their own templates and required internal controls by using outside programs such as excel and tableau

What is the ROI?

• Outside proprietary software integrated with the process and system software virtually prevents the

loss of revenue at IOP

• Your ROI could be the up to the amount you would have lost determined by historical loss

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5 Summation


Summation

• IPO list, a traditional Medicare requirement, is difficult to implement in most facilities

• Multiple “stops” along the process where the IP order requirement can be reviewed and

obtained as necessary

• Denials must be aggressively reviewed and root cause analysis performed to remediate failures

• People and Process are the two most difficult portions of the process simply do to human

variability in the understanding and performing daily tasks

• Supplementing the people and process with technology will complete the requirements to be

successful

• Addition of technology makes the process repeatable and sustainable and makes failure rates

negligible

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Questions

Contact Info:

Bill Malm

• Managing Consultant

• [email protected]

• 440.376.5978

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What is HFMA?

THE LEADING MEMBERSHIP ORGANIZATION FOR

FINANCIAL MANAGEMENT EXECUTIVES & LEADERS

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TO BE THE INDISPENSABLE

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MEETINGS

Early Careerist Overview

• HFMA created the Early Careerist committee to support and develop future leaders in healthcare finance/accounting.

• Who are Early Careerist? Young Professional under the age of 35 or 40, who have chosen a profession in or related to healthcare finance.

• Develop strategies to engage the young professional demographic in the local Tampa Bay area.

• Articulate the needs and preference of the early careerist market, particularly in terms of learning styles, participation, networking, and communication.

Questions about membership?

Contact:

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