2016 OPPS Rule Moratorium Update

by Stefani Daniels, Managing Partner
Published on Sep 16, 2015

The RAC moratorium expires on Sept 30 and will not be extended. Rather, as part of the proposed 2016 OPPS rule, the CMS announced that the QIOs will be doing the reviews.


The moratorium on Recovery Audit Contractors (RACs) patient status reviews will expire on October 1, 2015 (Section 521 of the Medicare Access and CHIP Reauthorization Act of 2015, (Pub. L. 114-10)). However, CMS will not approve RAC auditors to conduct patient status reviews for dates of admission of October 1, 2015 through December 31, 2015.  Instead, earlier this summer, the CMS proposed that quality improvement organizations (QIOs) begin reviewing short stay claims October 1, 2015. Readers should be reminded that the reviews conducted by the QIO between Oct 1 and Dec 31 "will be based on Medicare’s current payment policies."  It appears that Medicare has basically taken enforcement oversight away from RACs. RACs have returned nearly $10 billion in mis-billed taxpayer dollars to the Medicare Trust Fund over the past five years while reviewing less than 2 percent of Medicare claims. Despite this success, the waste-busting RAC program is essentially sidelined.  According to the proposal, effective January 1, 2016 RACs would review only those claims that QIOs refer from providers "exhibiting persistent noncompliance with Medicare payment policies, including, but not limited to:  having high denial rates and consistently failing to adhere to the Two Midnight rule (including repeatedly submitting inappropriate inpatient claims for stays that do not span one midnight), or failing to improve their performance after QIO educational intervention."   

Claiming to be making the rule’s review process more “flexible” and less troublesome for providers, CMS' CY 2016 OPPS Rule did not change the two-midnight presumption, meaning that if a patient is in the hospital two-midnights, s/he is presumed to be an inpatient. However, the proposed OPPS rule removes the presumption that a hospital stay less than two midnights is outpatient. Instead the CMS will return control of patient status for short stays to physicians and allow them to admit a patient to inpatient even if it is for just one midnight. However, and this is a major caveat, the physician's decision must be based on documented evidence supporting the medical necessity of the inpatient admission and is still subject to medical review. 

As part of the proposed rule, CMS invited public comment on specific medical review criteria which PHOENIXMed did before the August 31st deadline. Since Medicare does not ‘endorse’ or use a standard validated criteria set on which to base utilization review, for years utilization review specialists have been asking for more decision support that complements the CMS published Local Coverage Determination, now known as the Medicare Coverage Database guidance. 

The key implication for the hospital exec team is to make sure that the hospital's utilization review team has a robust presence as a member of the Access Management program. Their value at the point-of-entry is essential to prevent time-consuming, back-end work and to preserve revenue integrity.  Consider integrating the URS role with the CDI role so that 1 person has the skill and knowledge to coach the ED nursing personnel and the access-to-care team and to help the admitting physician document for medical criticality, presented problem, treatment plan and anticipated patient disposition components.