October 2011 Vol. 8, No. 10
Inpatient vs.
observation: A primer
denials by understanding Medicare criteria for outpatient versus inpatient status, said Deborah K. Hale,
CCS, CCDS, president of Administrative Consultant
Service, LLC. Hale spoke at the July audio conference
­“Observation Services: Assign Proper Level of Care to
➤➤ Understand the differences between inpatient and
Prevent ­Denials,” presented by HCPro, Inc.
­observation services
➤➤ Learn how to correctly assign patients to either
­inpatient or observation status
Assigning status
First, consider the patient’s condition at the time
the physician admitted him or her as an inpatient to the
Determining whether a patient should be an inpatient or on observation services can be a challenging
call. If the wrong decision is made or the right deci-
hospital or as an outpatient with a referral for observation services.
Medicare speci-
sion isn’t properly documented, the claim will likely be
fies that if a physi-
denied. Case managers can help facilities guard against
cian decides to
admit the patient,
he or she must
IN THIS ISSUE
have “the reason-
p. 4 Condition code 44 checklist
able expectation
Use this guide to help you make sure you’re
getting it right when it comes to condition
code 44.
Case managers can help
facilities guard against
denials by understanding
Medicare criteria for
outpatient versus inpatient
status, said Deborah K.
Hale, CCS, CCDS.
that the patient is going to remain overnight and occupy
a bed,” said Hale. If the patient doesn’t need the bed and
is discharged or transferred, that’s okay. Sometimes a
p. 5 Outpatient vs. inpatient
Decisions can be complicated when it comes to choosing inpatient or
outpatient status, but establishing a few simple processes can make these
decisions easier. And encouraging physicians to document the reason for
turning a high-risk outpatient into an inpatient ensures that Medicare and
other payers reimburse you appropriately.
p. 7 Case management in the ED
one-day stay is medically necessary, said Hale.
But the inpatient/observation decision must be
based on what the physician knew about the patient’s
condition at the time the level of care decision had to
be made.
It is the ED case manager’s job to focus not only on the immediate
concerns of patients in the ED, but to recognize the overall needs of
the patient.
he or she expects the patient to need care that can only
From the Director’s Desk
be provided in a hospital setting for 24 hours or more.
The physician should base the decision on whether
Patients requiring intensive, high-cost care for a chronic illness or acute
episode who no longer require all the services provided by the short-term
acute care hospital are the perfect candidates for transfer to a long-term
acute care hospital.
Patients who will need care beyond that 24-hour mark
Complex case
viral gastroenteritis.
Family relationships and extenuating circumstances can make things
complicated for case managers. These disruptions may not always be
evident until the patient arrives at the next setting in the continuum
of care.
should be admitted as inpatients, said Hale.
Consider the following cases of two ­patients with
The first is a healthy Medicare patient who has been
vomiting for three or four days and is slightly dehydrated. Upon examination, the physician believes the
Case Management Monthly October 2011
Page 5
Deciding when outpatient procedures warrant
inpatient status
➤➤ Is the procedure medically necessary? For example, does the patient really need a pacemaker? Some
➤➤ Understand when Medicare patients with complications may be eligible for inpatient status when undergoing a procedure that is traditionally performed on
an outpatient basis
procedures may not satisfy the Medicare coverage
requirements.
➤➤ If the procedure is appropriate, what is the correct
setting for the procedure to be performed?
➤➤ Learn to properly assign patients with health concerns
to the proper status
Inpatient-only procedures
When it comes to Medicare patients, the govern-
It’s a scenario that plays out at hospitals across the
country each day. A Medicare patient is scheduled for a
procedure typically performed on an outpatient basis.
But the patient has a number of preexisting health conditions, such as chronic obstructive pulmonary disease
or diabetes, which are going to make the surgery and
recovery more complicated.
What do you do?
Should the patient be admitted as an inpatient? And
if so, will the procedure be eligible for the inpatient DRG
rather than the outpatient APC?
While these decisions can be complicated, establish-
ment has published a list of inpatient-only procedures.
This list should be the first reference when making the
inpatient/outpatient decision, says Taylor. If a procedure, such as coronary artery bypass surgery, is on the
inpatient-only list, the decision of how to assign the
patient is simple.
However, the process gets tricky when the physician
performs a procedure not on that inpatient list.
These other procedures can be performed in the inpatient or outpatient setting, depending on the particular
procedure being performed and the individual patient’s
risk factors.
A low-risk procedure can pose a higher risk for a
ing a few simple processes can make these decisions
patient with a number of comorbidities or preexisting
easier. And encouraging physicians to document the
conditions, which may call for an inpatient setting,
reason for turning a high-risk outpatient into an inpa-
says Taylor.
tient ensures Medicare and other payers reimburse
you appropriately.
“Would I want to do a thyroidectomy on a 95-yearold who is diabetic, hypertensive, with heart disease,
in an outpatient surgery center? Definitely not,” says
Assessing patient needs
When a procedure is scheduled, physicians have a
decision to make: Inpatient or outpatient? While the decision ultimately rests with the physician, case managers
­Ronald Hirsch, MD, medical director of case management at Sherman Hospital in Elgin, IL, and physician
advisor for B. E. Smith, Inc.
Other conditions that might warrant an inpatient
should also review scheduled procedures to make sure
placement include patients who need additional monitor-
patients are properly assigned, says Michael Taylor,
ing or treatment postop, such as those who have had ad-
MD, vice president of clinical operations at Executive
verse reactions to anesthesia or who have mental issues
Health Resources in Newtown Square, PA.
or dementia and may not be able to follow the ­traditional
With this in mind, ask two questions up front when a
patient is scheduled for surgery:
© 2011 HCPro, Inc.
postoperative instructions, such as taking deep breaths to
prevent pneumonia, says Sandra ­McCune, BSN, RN, a
For permission to reproduce part or all of this newsletter for external distribution or use in educational packets, contact the Copyright Clearance Center at www.copyright.com or 978/750-8400.
Case Management Monthly
Page 6
utilization management specialist at Lakeland HealthCare
October 2011
For example, don’t merely say that a patient has diabe-
in St. Joseph, MI. Patients might also need more monitor-
tes; state specifically why he or she will need additional
ing if they have recently been taken off blood thinners,
care and monitoring due to that condition, says McCune.
McCune says.
Physicians should not assume that someone reading the
Some points physicians should consider when making
chart will infer from their description of the patient’s con-
the decision are:
dition why the procedure was performed on an inpatient
➤➤ What are the medical needs of the patient?
basis, says Taylor. Often, the people reviewing the notes
➤➤ What are the risks of an adverse event?
are not physicians, and it may not be apparent to them
why the patient needed an additional level of care, he says.
Making the decision
Another guide in making that decision is to determine
whether the situation meets InterQual inpatient stan-
Procedures to follow
If your organization is struggling with inpatient/out-
dards. But just because a procedure is on the InterQual
patient decisions, implement steps to make them easier.
list does not mean that Medicare will accept it, Taylor
For example, when a doctor schedules a procedure and
notes. The list is simply one more tool to help the physi-
anticipates an overnight stay, a case manager should take
cian make his or her decision.
a closer look at the case prior to the procedure to see
Some organizations develop their own formulas for
determining which complications warrant inpatient
whether it is on the inpatient-only list, says Taylor.
If not, case managers can then check to see if the pro-
placement, says Hirsch. But that also doesn’t guarantee
cedure meets admission screening criteria. After a review
Medicare will agree, he says.
of the case, a physician advisor can render an opinion on
Ultimately, when it comes to electively scheduled
whether the inpatient setting is appropriate for that pa-
procedures that are not on the inpatient-only list, the
tient. If your organization has electronic medical records,
physician must use his or her judgment to make the
it may be easier to review cases because software can
decision. Remember, it’s not enough to place someone
help spot red flags. But if this process isn’t automated, it
on inpatient status simply because he or she will likely
will have to be done manually, says McCune.
require an overnight stay. Outpatient procedures can
“Depending on the size of your facility, you might
also include an overnight stay, says Taylor. There must
want to just focus on certain higher-risk populations or
be an additional reason why inpatient status is necessary,
procedures,” such as urological, cardiac interventions, or
he says.
certain orthopedic conditions, says McCune. Narrowing
down the cases you review can help you squeeze this
Education and documentation
To educate surgeons and office staff, teach them the
oversight into a busy schedule.
Be sure to outline this new review process in the
definition of an inpatient procedure, says McCune. In-
facility procedures, including the requirement that case
form physicians that if a traditionally outpatient proce-
managers document their activities and report them to
dure is performed on an inpatient basis, they need to
their respective managers. “No one should tell a doctor
document the reasons for their decision to admit the
not to admit a patient because the procedure is not on
patient, she says.
the inpatient-only list,” says ­Taylor, noting that the en-
The physician should explicitly document why the
tire review process should be documented. Nevertheless,
setting he or she chose is appropriate, says Taylor. The
case managers can provide decision support and educa-
reasons for the decision should be outlined clearly in the
tion to help make sure patient procedures are performed
medical record.
in the appropriate setting. n
© 2011 HCPro, Inc.
For permission to reproduce part or all of this newsletter for external distribution or use in educational packets, contact the Copyright Clearance Center at www.copyright.com or 978/750-8400.