CMS Updates Medicare Outpatient Observation Notice (MOON)

By Juliet Ugarte Hopkins, MD, ACPA-C

On Friday, February 20, 2026, the Centers for Medicare & Medicaid Services (CMS) officially reauthorized the Medicare Outpatient Observation Notice (MOON). The MOON informs Medicare and Medicare Advantage beneficiaries that they are receiving Observation services as Outpatients rather than being hospitalized as Inpatients. Hospital compliance and case management teams along with physician advisors must be aware of this recent update to the notice to ensure seamless implementation and avoid regulatory penalties.

CMS updated the Office of Management and Budget (OMB) expiration date to February 28, 2029.  Fortunately, when CMS updates the OMB expiration date on a required notice, hospitals are not expected to pivot overnight. They can continue using existing stock of the expired MOON for 60 days until April 20, 2026, at which point the new form should be used. Hospitals still utilizing the old version of the MOON after this deadline risk compliance violations.

The purpose of the MOON remains unchanged; however, it does look a bit different from the last version. As before, it requires some reasoning about why the patient is not in Inpatient status. There is space in a white box on the first page of the form to include this information and hospitals can even add standard, printed verbiage to which staff can write in more specifics pertaining to the patient. Given many hospitals may rely on non-clinical staff to deliver this notice, the most simplified options to include may be the best ones, such as:

1. Your physician has determined a period of observation services will be needed before they can determine if your medical condition [EHR-inserted diagnosis code] requires further treatment as a hospital inpatient, based on Medicare policy, or if your medical condition can be treated as an outpatient followed by discharge from the hospital.

2. Upon further review of your hospital admission, your physician and the hospital have determined that your medical condition [EHR-inserted diagnosis code] does not meet Medicare inpatient criteria. As a result, your physician has ordered the discontinuation of inpatient services and initiation of outpatient observation services.

While transitioning to the newly dated form, hospital staff must ensure they continue to meet CMS's procedural requirements for the MOON. Namely, delivery is required for all patients covered by Medicare as primary or secondary coverage in addition to patients covered by Medicare Advantage (Medicare Part C) plans; it is required for all patients who have received at least 24 hours of Observation services while in Outpatient status (but can compliantly be given to patients who have received less than 24 hours); it must be delivered to the patient no later than 36 hours after Observation services begin; there must be a clearly documented clinical reason explaining why the patient is receiving Outpatient Observation services rather than being admitted as an Inpatient; providing the physical document is not enough – the written notice must be accompanied by an oral explanation to ensure the beneficiary fully understands the financial and clinical implications of their status as Outpatient.

To facilitate the transition to the updated MOON, hospitals should reference the following official CMS resources:

• FFS & MA MOON: This is the primary portal for the most up-to-date form downloads. Hospitals can access the latest English and Spanish versions of the MOON, available in both standard and large-print ZIP files.

• Beneficiary Noticed Initiative (BNI): Compliance officers should use this page to monitor the "What's New" section for any upcoming policy shifts regarding the MOON or other critical discharge notices.

• CMS Manual System Pub 100-004 Medicare Claims Processing Transmittal 3695 Change Request 9935: Though this reference is on the older side, it remains the definitive primary reference for form completion requirements, delivery protocols, and documentation standards.

Hospital compliance and IT departments should update their EHR systems as soon as possible with the new version of the MOON and prepare updated workflows to integrate the new MOON before the 60-day grace period expires on April 20, 2026.

Can Any Physician Enter an Inpatient Order?

By Juliet Ugarte Hopkins, MD, ACPA-C

Let’s talk about the term “attending physician.”  The simplest definition is the physician primarily responsible for a hospitalized patient’s care. 

While there may be many physicians and other practitioners involved in the hospital care of a single patient, there is only one designated “attending physician.”  This individual generally owns the responsibility of creating the initial documentation about the patient’s hospitalization – the History and Physical, or H&P – in addition to the final Discharge Summary. 

Many times, they also are considered the ringleaders of the patient’s care – deciding when specialists need to be involved and if specific investigations, testing, or imaging must take place during the hospitalization or if they can wait until after discharge in the outpatient setting. 

While there’s one attending physician listed on a patient’s record, clearly, that physician isn’t working 24 hours a day, seven days a week. They have at least one peer designated as a covering physician while they are not available. This is almost always a member of their practice team or medical group. 

Generally, this individual is “covering” multiple patients of more than one attending physician during overnight or other hours when the attendings are not on service. Their work shift in the hospital starts with a report of some sort whereby the attending physician briefly describes the patients’ reasons for hospitalization, gives a brief update of their current condition, lists specific concerns which might materialize over the coverage timeframe, and so on. 

Commonly referred to as a “sign-out,” this report from the attending physician to the covering physician serves to give the covering physician a basic introduction to the patients they may be called about by nurses or others on the medical team during the coverage period. 

A call about a patient generally requires the covering physician to at least review the most recent documentation if not also physically examining and speaking with the patient to make appropriate decisions about how to address new situations or assess changes in condition. On the flip side, the covering physician might not hear anything about most of the patients signed out to them from the attending physicians and therefore, won’t even review the charts. Despite this, they are considered the point-person for the medical team and the physician to call in place of the attending physician. But does this include questions about patient status?

Per the Code of Federal Regulations, Title 42, Chapter IV, Subchapter B, Part 412, Subpart A, Section 412.3, “…an inpatient admission is generally appropriate for payment under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses two midnights…The expectation of the physician should be based on such complex medical factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event.” Similarly, per the Medicare Benefit Policy Manual, Chapter 1, Section 10.2, “The order must be furnished by a physician or other practitioner (“ordering practitioner”) who is…knowledgeable about the patient’s hospital course, medical plan of care, and current condition at the time of admission.”

Granted, the Medicare Benefit Policy Manual also states, “CMS considers only the following practitioners to have sufficient knowledge about the beneficiary’s hospital course, medical plan of care, and current condition to serve as the ordering practitioner: the admitting physician of record (“attending”) or a physician on call for him or her, primary or covering hospitalists caring for the patient in the hospital, the beneficiary’s primary care practitioner or a physician on call for the primary care practitioner, a surgeon responsible for a major surgical procedure on the beneficiary or a surgeon on call for him or her, emergency or clinic practitioners caring for the beneficiary at the point of inpatient admission, and other practitioners qualified to admit inpatients and actively treating the beneficiary at the point of the inpatient admission decision.” However, it’s important to note this extensive list of physicians and practitioners involves those who could “have sufficient knowledge about the beneficiary’s hospital course, medical plan of care, and current condition” and does not indicate all these individuals fit the bill as a provider who can compliantly assign the patient to Inpatient status.

Let’s get back to the covering physician who is working in the hospital overnight. They have a baseline, relatively minimal understanding of the patients in their charge from the attending physicians who were working during the day. If they are called from someone on the medical team with a question about a patient, that covering physician will undoubtedly perform at least a cursory review of the day’s documentation from the attending and consultant physicians. They might also review the latest radiological reports and lab values before making any decisions about next steps in the assessment of the patient or changes to the plan of care. In this instance, if the covering physician completes their assessment of the patient and documents how they are addressing the question posed to them, it could be considered appropriate for them to address the issue of patient status. Their more thorough review of the patient’s hospital course, current condition, and plan of care would meet the description outlined in the Code of Federal Regulations and the Medicare Benefit Policy Manual.

Now, let’s think about the covering physician’s knowledge of and involvement with the patient before anyone on the care team asks them to assess or intervene. Remember, the sign-out they received from the attending physician was likely minimal, with only the most high-level points shared in the event an emergency developed. Does the covering physician have the breadth of knowledge about the patient’s hospital course, current condition, and plan of care to qualify them for placement of an Inpatient status order? 

If the patient is about to cross a second midnight or has already crossed a second midnight and clearly, they’re still receiving medically necessary hospital services, the answer seems to be yes. The Centers for Medicare and Medicaid Services already indicated in the Fiscal Year 2014 Inpatient Prospective Payment System Final Rule, “the decision to admit becomes easier as the time approaches the second midnight, and beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written.” Therefore, even if a covering physician isn’t intimately knowledgeable about a patient’s hospitalization or plan of care, they would likely be able to identify the patient continues to require hospital services and appropriately enter an Inpatient order if asked to do so. 

In contrast, if a covering physician is asked about a patient who has passed zero or only one midnight, the patient details allowing valid determination of Inpatient assignment likely will not be known. As such, a utilization manager contacting a covering physician in the evening hours for an Inpatient order in this scenario is unlikely to be a compliant practice. Similarly, a physician working for a medical group who scans all of their practice’s hospitalized patients in the electronic health record and enters Inpatient orders for each patient who is about to or has passed a second midnight would not be compliant. 

Keep in mind, neither of these scenarios are specifically called out in the formal Medicare rules or regulations. It’s advised you take time to consider this situation and talk it through with your own hospital utilization management and compliance teams to come to a final decision on practice within your institution.

CMS Rural Health Transformation Program

By Tiffany Ferguson, LMSW, CMAC, ACM

The Centers for Medicare & Medicaid Services (CMS) has launched the Rural Health Transformation (RHT) Program, a $50 billion, five-year federal initiative to strengthen healthcare delivery in rural America and expand access to quality care. A centerpiece of this effort is helping rural systems weather structural financial challenges and promote innovative care models, workforce development, and technology adoption.

Yet, as policymakers and rural health stakeholders grapple with this opportunity, much of the conversation has centered on how the RHT Program fits into a broader policy environment marked by significant cuts to federal Medicaid funding. Understanding this relationship is critical to assessing the program’s real impact on rural health systems.

It cannot be discounted that the RHT Program, authorized under Public Law 119-21, is a significant contribution to rural America, directing up to $10 billion per year from the 2026 through 2030 fiscal years (FYs) to help states reimagine and transform rural health delivery systems. The goals include expanding preventive care, stabilizing providers, building workforce capacity, and deploying innovative models of care. Each state must submit a detailed transformation plan that demonstrates how it will use funds in alignment with program goals. CMS has also provided extensive guidance and FAQs to clarify eligibility, application requirements, allowable uses, reporting, and partnership approaches.

However, while the federal government was enacting the RHT Program, Congress passed significant reductions in Medicaid funding, primarily through broader budget and reconciliation legislation. Estimates suggest that Medicaid could be cut by roughly $911 billion to more than $1 trillion over 10 years, according to KFF, with rural areas shouldering a disproportionate share of that burden. In rural counties, where Medicare and Medicaid are the primary payors for hospitals and clinics, these cuts could translate into millions of people losing coverage and facilities facing revenue shortfalls.

So, the question remains, can the Rural Health Transformation Program offset Medicaid cuts?

When Congress created the RHT Program as part of broader health policy reforms, lawmakers included the $50 billion fund in part to respond to concerns about Medicaid cuts and rural hospital closures. CMS’s own public statements have framed the program as addressing rural healthcare challenges in a period of federal spending change. However, the RHT funding is temporary (five years), while Medicaid cuts are longer-term. This timing mismatch means the RHT Program isn’t a direct financial replacement for Medicaid funding. Several analyses, including research from the KFF and other health policy experts, indicate that the total RHT Program funding represents only a fraction of projected Medicaid losses in rural areas.

Unlike Medicaid reimbursements, which directly support care provision and provider revenue, the RHT Program is intended to transform care delivery and build long-term sustainability. That means spending on workforce development, digital infrastructure, and preventive initiatives areas that can strengthen systems, but do not directly replace revenue lost through Medicaid reimbursement cuts.

Experts caution that while the RHT Program can help rural systems adapt and innovate, it isn’t structured to be a direct financial backstop against Medicaid reductions.

How the Elimination of the IPOL Will Impact the Frontline Case Manager

By Tiffany Ferguson, LMSW, CMAC, ACM

The phased elimination of Medicare’s Inpatient-Only List (IPOL) represents more than a regulatory change that will impact utilization review and the surgical authorization process; it will also alter daily workflows, risk exposure, and clinical judgment demand for frontline case managers.

While the policy intent emphasizes site-neutral care and physician flexibility, the downstream operational consequences increasingly will be felt operationally, from a transition-of-care perspective.

One of the most immediate impacts is the heightened risk of inpatient status not being established at the time of admission, either because of lack of process or lack of payer authorization. Procedures previously designated as inpatient are at risk of not having the necessary documentation demonstrating risk and acuity; thus, they may default to outpatient or observation. For case managers, this results in a surge of mid-stay status conversions, shifting patients from outpatient/observation to inpatient after care has already begun.

These conversions can create retroactive utilization review pressure, increased denial risk, and coordination of post-acute service delays.

The consequences are particularly significant for traditional Medicare beneficiaries requiring post-acute skilled nursing facility (SNF) care, as the three-day inpatient stay requirement remains unchanged. When inpatient status is delayed, patients may remain hospitalized for a longer period of time to obtain their medically necessary nights to qualify for SNF placement.

Case managers are ultimately left managing the throughput pressures, despite having little control over the preoperative decisions on how the patient was admitted and/or placed into a status.

To effectively adapt to the removal of the IPOL, case management leaders must proactively redesign workflows to shift from reactive to anticipatory practice. First, earlier case management (CM) engagement is essential, to be able to anticipate patient risk factors for potential SNF placement. Embedding case management involvement in pre-procedural or pre-admission workflows, particularly for high-risk surgical populations such as patients with chronic conditions or advanced age, allows for early identification of clinical, functional, and social risk factors that may influence admission status, length of stay, and discharge needs.

Standardized pre-admission screening tools can support consistent risk stratification and ensure that documentation reflects acuity and anticipated post-acute requirements.

Additionally, case management must strengthen real-time collaboration with utilization management (UM), physician advisors, and perioperative teams. This is a great time for CM and UM to enhance communication via secure chat and ensure real-time visibility into one another’s workflows.

Data and predictive analytics should be leveraged to support proactive planning. Identifiers that can support procedure types previously listed on the IPOL, conversion alerts, and therapy evaluation outcomes can guide workflows and early intervention.

As adjustments continue, case management will remain central to protecting patient access, throughput, and safe transitions of care.

OIG Flags Deficiencies in Post-Discharge Suicide Care for Medicaid Youth

By Tiffany Ferguson, LMSW, CMAC, ACM

In my travels to hospitals across the country and time spent in emergency rooms shadowing the critical work of social workers, I’ve seen first-hand the challenges they face in coordinating outpatient behavioral health follow-up for children and adolescents coping with suicidal ideation, anxiety, depression, eating disorders, and other mental health conditions.

Recently, while visiting a children’s hospital in Florida, these struggles reminded me of an email I received from Dr. Hirsch about an OIG report released in September 2025. At the time, other CMS updates overshadowed it, but its findings are too important to ignore.

The OIG report, issued in September 2025, evaluated how often children enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) receive follow-up care after hospitalization or an emergency department (ED) visit for suicide-related issues and what barriers may be preventing timely care. The “why now” for this report discussed how suicide is the second leading cause of death among American children aged 10–17, and rates of suicidal thoughts and behaviors have risen sharply over the last decade. In 2023, nearly 225,000 insured children in this age group were treated in a hospital or ED for suicidal ideation or behavior. The report discusses the value of the critical period immediately following discharge, especially the first week, that carries extraordinarily high risk for repeat attempts or suicide death. Timely follow-up care can not only lower overall healthcare costs by decreasing rehospitalizations and emergency visits, but frankly reduce risk and save lives.

OIG’s comprehensive analysis of Transformed Medicaid Statistical Information System (T-MSIS) data reveals several concerning trends. In 50% of hospitalizations or ED visits for suicidal thoughts or behaviors, children did not receive a follow-up visit within 7 days of discharge; a timeframe most professional and public health organizations recommend as critical for safety and stabilization. And of that missed follow-up percentage, 21% did not have any follow-up visits in the 60 days post discharge, even though risk remains elevated well beyond the first week. When follow-up care occurred, 71% of visits were with behavioral health specialists such as counselors, social workers, psychiatrists, psychologists, and psychiatric nurse practitioners, while the remainder were delivered by other clinicians such as case managers and pediatricians.

To better understand low follow-up rates, OIG interviewed subject-matter experts from organizations such as SAMHSA, the American Foundation for Suicide Prevention, and the National Alliance on Mental Illness. The consensus was that two main obstacles persist: There is a behavioral health provider shortage in the US, and there are systematic challenges to connecting children to care. In fact, the U.S. faces a nationwide shortage of qualified behavioral health clinicians. More than 120 million Americans live in areas designated as mental health professional shortage areas with wait times for appointments spanning weeks to months. Even when providers exist, families often struggle to navigate the system. Discharge planning may not result in scheduled follow-ups, and barriers such as lack of transportation, caregiver stigma, and difficulties accessing appointments further hinder timely care.

To address this issue, the experts in the report recommended the value of bridge brief interventions, such as outreach “caring” contacts, warm handoffs from acute to ambulatory providers and comprehensive safety planning.

Words Matter – Outside of The Hospital Setting and Within

By Juliet Ugarte Hopkins, MD, ACPA-C

It’s often said that “words matter.”  For those who work with patients and their families, the implications of this are clear.  But have you ever thought about how word choice might affect the way others on the hospital care team think about your direction?

What do you say when a patient is hospitalized in Inpatient status, but it’s not supported by the patient’s medical condition or plan of care?  How about the reverse - when a patient was initially hospitalized as Outpatient but now it’s clear that change to Inpatient is appropriate?  Does your physician advisor recommend “downgrading” the first case and pursuing a Condition Code 44?  Or, does a utilization manager call the attending physician for a new order to “upgrade” the second case to Inpatient status?

Patient status is a tricky enough concept for people to understand without assigning it positive or negative connotations. True, in many instances – but not all! – there is more reimbursement to the hospital for an Inpatient claim compared to an Outpatient claim with Observation services. However, this does not legitimize equating Inpatient with an “upgrade” in patient status compared to an Observation case. The status is the status wherever it falls with whatever criteria or rule the payor follows. There shouldn’t be any concerted effort on the staff’s behalf to work toward “upgrading” as many patients as possible. If change to Inpatient is appropriate, then fine. Work to obtain the Inpatient order from the clinician, but eliminate the term “upgrade.”

Similarly, changing a patient from Inpatient to Outpatient with or without Observation services isn’t a “downgrade.” It’s an appropriate change in status when we discover the initial determination was faulty. Also, beyond the insinuated messaging about status to our case and utilization management staff, nurses, and physicians, can you imagine the unease a patient might feel when overhearing this kind of comment? Increasingly, I’m seeing hospitals elect to carry out their daily unit rounds out in the open at the nurses’ station as multitudes of patients and their family members stream by. How would you feel if you didn’t know what your grandma’s nurse meant by, “I’ll ask the doctor to downgrade her, today”? If you think the COW and CABG debacles from the past were a shame, just wait until this bombshell of misunderstanding hits your local news outlets!

Anyone who’s worked with me knows my bug-a-boo involving the term “admission” when referring to any patient who’s been hospitalized. If I had a quarter for everyone who’s rolled their eyes when I made the distinction, I would be well beyond ownership of a Bitcoin by now! But, I WILL die on this hill, and I maintain it’s incredibly important not to interchange the words, especially when speaking to folks from multiple different disciplines and departments within the hospital. Yes, the physicians and APPs who accept new patients from the Emergency Department are referred to as “admitters” and I’m not suggesting they be called “hospitalizers.” But, too many equate an “admission” with “patient in Inpatient status” that I truly think assuming they don’t is a huge mistake.

Take for example, a hospital which had regulations referring to the need for discharge summaries. Creation of a discharge summary by the attending physician was noted to be required within two weeks of discharge, “for all patients discharged following an admission to the hospital.” The hospital’s new physician advisor was confounded after a few months as it became seemingly clear there was a rash of non-compliance with this rule. Multiple cases reviewed as part of a workgroup he was part of had no discharge summaries. When he brought it up to the hospital’s vice president of medical affairs, he was astounded at the lack of concern. “Patients discharging as Outpatient in a Bed or Observation don’t count as admissions,” she said. “Only patients in Inpatient status require discharge summaries.” 

Being a stickler for detail like any good physician advisor should be, this situation ultimately led to identification that nowhere in the hospital regulations did it specify “admission” equaled “patient discharged in Inpatient status” even though this was understood to be the case. As such, it could have been construed that “admission” meant any hospitalized patient and the organization would have some explaining to do if auditors came knocking. The regulations were ultimately updates to specify a discharge summary was required for, “all patients discharged following hospitalization.”

“Admission” vs. “hospitalization” terminology can also make an enormous difference when collecting and assessing specific metrics within your hospital. Interested in addressing the average length of stay of patients hospitalized with a primary diagnosis of COPD exacerbation? The number you initially receive might be skewed if patients hospitalized in Outpatient with Observation services are not included in the mix. Readmissions classically involve patients re-hospitalized in Inpatient status who have an index or, initial hospitalization which ALSO involved Inpatient status assignment. But, from a patient care perspective, is this really the right way to look at it? Should we care any less about a patient who is re-hospitalized for Observation services or who a week before was hospitalized for Observation services? 

As with essentially every other scenario in life, words matter. Sometimes, the words we use are so ingrained in the culture that we lose sight of how others might perceive them. Keep an ear out for these and other potentially misleading or misguided words and phrases and consider how a change in a turn of phrase might benefit your operations.

Case Management Corner: Close Ties In Rural Communities Can Mean Ethical Complexities

By Kelly Bilodeau

Licensed clinical social workers working in rural areas quickly learn how tightly winding country roads can bind everyone together.

“Your child may attend school with a client’s child. You may see a client in the grocery store, at church, or on the sidelines of a soccer game,” said Kalie Wolfinger, manager of clinical services at Phoenix Medical Management, Inc.

Unlike urban settings, where it’s relatively easy to maintain clearly defined professional boundaries, rural social workers often struggle to do the same, particularly when they take on multiple roles in the same community.

“This versatility is a strength of our profession, but it also places us in ethically gray spaces more frequently than those whose scopes of practice are narrowly clinical,” she said.

These intersecting relationships often create ethical tensions that traditional professional frameworks weren’t designed to address and suggested solutions are often impractical or unworkable.

“Licensing boards sometimes recommend documenting every incidental encounter or role overlap but in a small town, how feasible is that?” Wolfinger asked. “Should every unexpected hallway greeting or school pickup interaction become a clinical note?”

Navigating a crisis

These shortfalls can leave social workers flying blind in moments of crisis, a fact that was brought into sharp relief for Wolfinger during one late-night tragedy. At the time, Wolfinger was working as an inpatient therapist at her local hospital, while also seeing private practice therapy clients part-time to meet the requirements for her LCSW.

A child arrived at the emergency department in critical condition. “Resuscitation efforts were underway, and it was becoming increasingly clear that the injuries sustained were not survivable,” Wolfinger recalled. Then she heard the name and realized it was a patient’s child.

“Time slowed, and everything around me faded into the background as I realized the gravity of what I was facing,” she said. “There was no guidance from the Arizona Board of Behavioral Health for this specific kind of moment.”

The first ethical dilemma was whether to retrieve the family’s contact information from her private practice records because the hospital didn’t have it.

“I remember thinking, if I don’t contact this parent now, they may miss the last moments of their child’s life,” Wolfinger said. “So, I made the decision. I logged in, found the number, and called.” The challenges didn’t end there. Should she help the patient navigate the crisis? Should she continue to be the client’s therapist after that day? “I wondered whether this traumatic overlap in roles would rupture the therapeutic space or shift the power dynamics between us in ways that could undermine the work,” Wolfinger said.

Ultimately, when given the choice, the patient asked Wolfinger to continue their therapeutic relationship because of their shared history and reluctance to start over with someone new. But that decision raised even more questions.

“I sought multiple professional consultations with other licensed clinicians and engaged in my own trauma therapy to process the emotional toll of what I had witnessed,” Wolfinger said. “These steps weren’t optional. They were essential to maintaining the integrity of the work and ensuring that my presence in the therapeutic space remained grounded, ethical, and client-centered.”

Ethics codes versus rural reality

The experience underscored why rigid professional ethics guidelines often fall short in rural care.

“While the Arizona Board of Behavioral Health provides clear ethical standards to help protect both clients and clinicians, applying those standards can sometimes feel more nuanced in rural communities where clinicians are often called to respond in multiple roles, across systems, and in real time,” Wolfinger said.

Certain situations in rural clinical practice simply require greater flexibility.

“This includes weighing professional guidelines alongside community context, urgency, and the clinical necessity of maintaining relational continuity, especially in trauma care,” she said.

Wolfinger argues that it’s time to develop new frameworks that uphold ethical client-centered care while allowing for informed, flexible decision-making in critical moments, like the one she experienced. “The ethical boundary between roles, emergency clinician and therapist, was crossed and not by my actions, but by the circumstances,” she said. “And yet, the situation demanded immediate decisions. The most ethical choice wasn’t obvious. It was urgent.”

The most responsible response sometimes requires setting aside textbook solutions in favor of humanity.

“The most ethical course of action, in this case, was not rigid adherence to policy,” Wolfinger said. “It was a compassionate, competent, trauma-informed response that honored the dignity of both the client and the clinician.”

Case Management Corner is your go-to source for insightful discussions on relevant topics in case management. Through an engaging interview-style format, our team members share their expertise, experiences, and best practices to keep you informed and empowered. Whether you're looking for industry updates, practical strategies, or real-world perspectives, we bring you valuable conversations designed to enhance your knowledge and support your professional growth. Stay tuned for expert insights straight from the field! Kelly Bilodeau has been a longtime writer for HCPro’s Case Management Monthly. 

PEPPER Back After Two Years

By Tiffany Ferguson, LMSW, CMAC, ACM

The PEPPER is back.

After a two-year hiatus, hospitals once again have access to their Program for Evaluating Payment Patterns Electronic Report. If you haven’t seen it yet, your organization can log in here: https://pepper-file.cbrpepper.org/index.html#/login

Despite having two full years to modernize, the newly released PEPPER is 99% identical to prior versions.

• No new measures.

• No measures removed.

• No recalibration to reflect how care delivery has evolved.

So what does this mean for hospitals, physician advisors, and UM/CM?

First, a reminder worth repeating: Being an outlier does not automatically mean you are doing something wrong. PEPPER flags are statistical variation, not intent, quality, or appropriateness. Context, documentation, physician practice patterns, and patient complexity still matter.

Second, PEPPER should never be used in isolation. It is a starting point for inquiry. The real work happens when PEPPER data is paired with utilization review insight, physician advisor engagement, and service-line level analysis.

And for those newer to this space, a quick housekeeping note: the “R” in PEPPER stands for Report. Please don’t call it the “PEPPER report.” 😉

At Phoenix Medical Management, we view PEPPER as a tool for education, alignment, and proactive risk mitigation. Special thanks to Dr. Ronald Hirsch for the update! 

You Down With CfC?

By Juliet Ugarte Hopkins, MD, ACPA-C

Anyone who has worked within the scope of hospital case/utilization management for any period of time has heard of the Centers for Medicare & Medicaid Services (CMS) Conditions of Participation (CoPs).

For those who are not familiar, these are processes related to health, safety, and quality standards meant to protect patients. Hospitals and many other healthcare facilities are required to have these standards in place in order to participate in the Medicare and Medicaid programs. Failure to follow the CoPs can result in corrective action plans, sanctions, or monetary fines with the most egregious fallouts, leading to exclusion of the facility from participating in Medicare, Medicaid, or TRICARE (and therefore, rendering them unable to be reimbursed for care of patients covered by those governmental plans). 

The CoPs for hospitals can be found in the Code of Federal Regulations, Title 42, Chapter IV, Subchapter G, Part 482. The CoPs include direction regarding hospital medical staff, patient rights, medical records, utilization review, and much more. In particular, the CoPs involving utilization review include the rules related to one if not two physician members of a hospital’s utilization review committee being involved with changes in patient status from inpatient to outpatient (in other words, the processes related to Condition Code 44 and Condition Code W2 scenarios).

But are you familiar with the CMS Conditions for Coverage (CfCs)? 

Sometimes referred to as “conditions of payment,” these requirements must be met in order for federal health plans to pay a healthcare facility for their submitted claim.  Some of the CfCs reside in the Code of Federal Regulations, just like the CoPs (Title 42, Chapter IV, Subchapter B, Part 424) and are referred to as “Conditions for Medicare Payment.”  However, they are also found in sections of the Medicare Benefit Policy Manual and the Medicare Program Integrity Manual. 

Some situations involve both CoPs and CfCs. For example, payment of an inpatient hospital claim requires a signed inpatient status order placed by a clinician. But many forget that CoPs associated with patient notices are not part of the CfCs. Notices called out in the CoPs include the Important Message from Medicare (IMM), Medicare Outpatient Observation Notice (MOON), and notification related to Condition Code 44 situations. 

Taking Condition Code 44 as an example, the CoPs within the Code of Federal Regulations state that if a hospital’s utilization review committee decides that an inpatient hospitalization is not medically necessary, notification must be given to the patient no later than two days after the determination is made.

Yes, there’s a Medicare fact sheet titled “Medicare Hospital Benefits,” last revised in March 2024, which includes “…the hospital must tell you in writing – while you’re still a hospital patient, before you’re discharged – that your hospital status changed from inpatient to outpatient.”  But this is from a publication created for beneficiary education, and is superseded by the weight of the Code of Federal Regulations, which specifies that patient notification is required within two days of the decision. 

Keeping this in mind, let’s get back to the misconception many have about claims billing in the event of a Condition Code 44.  While many if not most of us follow the direction from the CMS patient fact sheet and strive to inform patients of their change in status from inpatient to “not-inpatient” before discharge, per the CoPs, this isn’t actually required! The CoPs say the patient needs to be notified within two days. So, if the change is made on the day of discharge, the hospital technically has until two days after discharge to provide the notification. Additionally, remember, the CoPs are not CfCs, or, conditions of payment. This being the case, even if the hospital didn’t follow through with notification of the patient within two days, this simply means the hospital failed to meet the CoPs, in that case. Nothing in the CfCs demand notification of the patient of the change in status.

As such, as long as there’s an observation order from the clinician placed before discharge, the hospital can proceed with a Part B claim with APC 8011 for Comprehensive Observation Services if at least eight hours of observation services were required before discharge.

If you’re transitioning to a self-denial, Condition Code W2 is used for patients when the Condition Code 44 process was not met – including an outpatient order, with or without observation services – but if the patient was not notified before leaving the hospital, consider stopping this practice.

Yes, put a process in place to secure notification to the patient within two days, but don’t let the fallout lead to a more time-consuming Part B rebilling scenario. Your outpatient or observation order is valid, and you should proceed with Part B billing from the start. 

Phasing Out the Inpatient-Only List: Changes Needed for Utilization Review

By Tiffany Ferguson, LMSW, CMAC, ACM

Beginning in 2026, the Centers for Medicare & Medicaid Services (CMS) will begin phasing out the Inpatient-Only (IPO) List by removing predominantly musculoskeletal and complex surgical procedures – and, in parallel, adding many of them to the Ambulatory Surgery Center (ASC) Covered Procedures List.

As these codes lose their “inpatient-only” protection, hospitals can no longer rely on the procedure itself to justify status and inpatient-level reimbursement. Instead, the expected need for hospital care spanning two midnights, supported by clinical risk and post-operative needs, is expected to be the new determinant.

Thanks to Dr. Ronald Hirsch’s summarized lists of the IPO List tables, in my review of the “removal file,” I thought I would provide some highlights from the removed cases, starting with anesthesia codes for radical pelvic, rib, hip, shoulder, and cervical spine procedures, including forequarter and hindquarter amputations, all being eliminated.

Many spine surgeries have also been removed from the List, including several thoracic and lumbar procedures, anterior and posterior arthrodesis across multiple segments, and posterior segmental instrumentation spanning 7-13+ levels; there have also been revisions or removals of lumbar and cervical total disc arthroplasty. For the limbs, those procedures previously involving limb salvage or amputations have been removed.

Additionally, prior procedures that seemed off-limits, such as opens, resections, and revisions, are no longer of a protected class. Removed were flaps, plus resections of the chest well, sternum, pelvis, femur, tibia, and fibula.

Additionally, there have been many revisions, such as the common total hips and knees, especially those with the complex procedures related to hardware removals, spacers, and eventual replacements. Other procedures that are more general surgery-related include the removal of major bowel perforations and ostomy revisions.

In short, these are not “easy day surgery” cases. Many of these cases present with blood loss, prolonged operative times, significant rehabilitation needs, likely post-operative management in the hospital setting, and complex discharge planning.

The wind-down of the IPO List will fundamentally change the pre-operative workflow for utilization review (UR). A major consideration in preparation for this change is the expectation that payors will contest more of these procedures as outpatient. That means the evaluation must occur, from not only matching codes to see if the procedure is “on the list,” but really, shoring up the front-end documentation and ensuring that the medical picture tells the true risk story. This requires appropriate documentation of comorbidities and anticipated post-operative medical complexity that may require hospitalization.

As we prepare for the wind-down of the Inpatient-Only List, it is critical to remember that a procedure’s removal from the list does not mean that inpatient hospitalization is always no longer necessary. It does mean that UR practices must adapt, with stronger partnerships between UR teams and surgeons’ offices to ensure that authorization requests clearly meet the Two-Midnight Rule, and that documentation justifies the need for an inpatient level of care.

For cases that begin as outpatient but evolve into hospitalization, UR must be ready to promptly reassess for medical necessity, determine whether conversion is appropriate, and obtain updated authorization for payers, particularly Medicare Advantage.

2026 Expansion for Community Health Integration (Coding G0019)

By Tiffany Ferguson, LMSW, CMAC, ACM

In the CY 2026 Physician Fee Schedule (PFS) Final Rule, the Centers for Medicare & Medicaid Services (CMS) made significant changes to the applicable use and providers in the Community Health Integration (CHI) space. If you all recall this was a big win in 2024 for the ability to receive reimbursement for community health workers. I would say the refinements and clarifications in the CY 26 PFS ruling have made it easier for CHI services to be performed and for coding G0019.

Expansion of certified or trained auxiliary personnel

Originally finalized in 2024, G0019 describes 60 minutes per month of CHI services performed by certified or trained auxiliary personnel, including community health workers, functioning under the direction of a physician or other qualified practitioner. In 2025, CMS clarified that clinical social workers (CSWs) fall within this category.

Additionally, this key quote was clarified which I would suggest also includes the ability for registered nurses to provide CHI services.

“As we stated previously in the CY 2024 PFS final rule (88 FR 78926), the codes do not limit the types of other health care professionals, such as registered nurses and social workers, that can perform CHI services (and PIN services, as we discuss in the next section) incident to the billing practitioner’s professional services, so long as they meet the requirements to provide all elements of the service included in the code, consistent with the definition of auxiliary personnel at § 410.26(a)(1).”

In the 2026 PFS final rule, CMS further expands that Marriage and Family Therapists (MFTs) and Mental Health Counselors (MHCs) are now included as “certified or trained auxiliary personnel.” This shift acknowledges the CSWs, MFTs, and MHCs already possess training aligned with SDoH assessments, behavioral interventions, and care coordination. Integral to their programs they frequently support patients in navigating community-based and psychosocial resources.

Expansion of eligible initiating visits

Another major update concerns initiating visits, which establish the clinical need for CHI services.  Historically, only E&M visits (excluding low-level staff-performed E&M) and certain preventive services (TCM, AWV) qualified. Stakeholders argued that this limited behavioral health practitioners’ ability to initiate CHI services, even when addressing significant psychosocial barriers to care. In the 2026 ruling additional behavioral health visits were included to service as the initiating visit for establishing CHI services.

This action includes Psychiatric diagnostic evaluation (90791) and Health Behavior Assessment and Intervention Codes (HBAI)

Expansion of qualifying service definition for CHI G0019

The updated G0019 CHI service definition continues to have changed from addressing an unmet SDoH need to addressing any unmet upstream driver. This includes any factors that affect patient behaviors (such as smoking, poor nutrition, low physical activity, substance misuse, etc.) or potential dietary, behavioral, medical, and environmental drivers to lessen the impacts of the problem(s) addressed in the initiating visit.

CMS did not change the requirements what is included in CHI services.  Meaning, CHI services will still be expected to have a person-centered assessment, and care planning that supports coordination of home and community-based services, health system navigation, behavioral change support and self-advocacy building.  This also includes the facilitation of access to community resources and social and emotional support.

These refinements reflect the recognition by CMS that behavioral health professionals routinely address upstream factors that impede diagnosis, treatment, and recovery. By expanding workforce eligibility and clarifying training expectations, CMS demonstrates their interest to improve patient access, reduce care bottlenecks, and better integrate medical and behavioral health care.

This expansion is key, as we continue to see access to care issues in ambulatory settings, particularly in rural communities and areas with limited access to behavioral health services.

CMS Removes SDoH Reporting in OPPS CY 26 Final Rule

By Tiffany Ferguson, LMSW, CMAC, ACM

In the CY 2026 OPPS/ASC Final Rule, the Centers for Medicare & Medicaid Services (CMS) formally finalized the removal of the Screening for Social Drivers of Health and Screen Positive Rate for Social Drivers measures from the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) programs.

Although this was not a surprise, based on the previous rulings, it is helpful to comb through the comments and responses to gain an understanding of why changes were made and what should be anticipated for future CMS changes related to quality reporting for health and wellbeing.

The decision follows a significant volume of public comments that reflected a wide diversity of perspectives on the value, burden, and future direction of SDoH measurements.

According to the final ruling, many commenters did support the removal of the two SDoH measures, emphasizing that the measures require substantial resources for data collection and manual processes. They argued that these activities divert staff from core patient-care activities and do not demonstrate whether facilities are actually addressing the underlying social risk factors identified during screening.

There was also mention of frustration with the duplication of the same screening questions across settings.

Many ambulatory surgery center (ASC) commenters emphasized that ASCs do not provide longitudinal care and often lack social work resources or community-specific knowledge for their patients. Some highlighted that staffing assumptions embedded within the measures, such as maintaining social workers, were unrealistic for ASC settings.

There was also a subset of commenters who understood the removal of these questions but reiterated their commitment to health equity work. These organizations reported positive outcomes in the collection that have already occurred, such as reduced readmissions and lower emergency department use when connecting patients to community-based resources. These providers emphasized they would continue SDoH screening voluntarily.

At the same time, many commenters opposed the removal of the SDoH measures, arguing these measures are in line with the CMS broader health goals and with the Make America Healthy Again initiative. Several urged CMS to either retain the measures or pause implementation to refine measure specifications, rather than a full removal. Others suggested voluntary reporting options to reduce burden while still supporting national data collection.

Commenters also encouraged CMS to use SDoH related ICD-10 Z codes for quality data reporting and consider how to align with external frameworks such as the NCQA HEDIS SNS-E measure, the HL7 Gravity Project, and USCDI standards. There were also recommendations for the development of future measures that assess the connections made to community resources rather than screening alone. The CMS response was telling that their focus is on reducing the cost of unnecessary reporting, while they evaluate alternative measures. However, it still appears that future measures have not been selected at this time.

At this time, the responses from CMS demonstrate an interest more in outcome driven metrics, rather than screening metrics. The agency is clearly signaling a broader, more predictive and holistic direction for future outpatient quality measurement. In the final rule, CMS specifically sought comments on the potential development of health and well-being measures, including tools that capture a person’s overall health, emotional state, social connectedness, sense of purpose, and life satisfaction.

CMS also requested feedback on the relevance and feasibility of tools that assess complementary and integrative health, self-care capability, and patient skill-building. Although commentators provided numerous evidence-based tools options for CMS, no final selection has been made for CY 2026.

Healthcare organizations should be prepared that a likely selection will be assessing patient preventative behaviors, nutritional outcomes, self-management capacity, and non-traditional supports (social connections) that contribute to long-term outcomes and cost containment.

The Removal of SDoH from the 2026 Final Rule

By Tiffany Ferguson, LMSW, CMAC, ACM

The 2026 Medicare Physician Schedule Final Rule includes several distinct policy changes in which the Centers for Medicare & Medicaid Services (CMS) modifies how it uses or pays for services related to social-risk drivers and the social determinants of health (SDoH), by either eliminating these terms altogether or reframing them under different terminology. Below are the principal changes.

Terminology Changes for CHI Services (HCPCS code G0019)

For Community Health Integration (CHI) services listed under HCPCS code G0019, CMS is replacing the descriptor phrase “social determinants of health” with the term “upstream driver(s).” The rule states that this term is “more comprehensive and includes a variety of factors that can impact the health of Medicare beneficiaries, such as smoking, poor nutrition, low physical activity, substance misuse, or potential dietary, behavioral, medical, and environmental drivers.”

In addition, CMS removed the term of an unmet SDoH need from the initiating visit descriptor requirement, to allow for a broader list of eligible initiating services for which CHI can be applied.

Quality-Measure Removal: Screening for Social Drivers of Health

In the policies surrounding the Medicare Shared Savings Program (MSSP), CMS finalized the removal of Quality ID 487, “Screening for Social Drivers of Health,” from the APP Plus quality measure set for 2025 and beyond. The ruling explains that MSSP Accountable Care Organizations (ACOs) will no longer report that measure as part of the required quality set.

Removal of “Health Equity Adjustment” from ACO quality scores

While strictly speaking of a terminology change for SDoH, the rule removes the health equity adjustment applied to an ACO’s quality score beginning in 2026, and revises related terminology by renaming the benchmark adjustment as the “population adjustment.” This change is described in the rule to be part of a broader recalibration of how CMS handles social risk/health-equity in ACO quality and payment.

HCPCS Code G0136 – Reworded So SDoH are Removed

In the proposed rule, CMS proposed to delete HCPCS code G0136 – “Administration of a standardized, evidence-based SDOH risk assessment,” on the basis that the resource costs are already captured in existing evaluation and management (E&M) and behavioral health services. However, in the Final Rule, CMS ultimately did not delete G0136, but revised the descriptor instead. The new descriptor shifts the focus from SDoH risk assessment to “administration of a standardized, evidence-based assessment of physical activity and nutrition, 5-15 minutes, not more often than every 6 months.” At the time of this publication, there is no specific recommended screening tool to use in place of the prior Health-Related Social Needs (HRSN) tool. 

Entities that had structured workflows around “SDoH risk assessments” should start to revise terminology, documentation templates, care-coordination services, and quality-improvement frameworks to align with “upstream driver(s)” language. Although this is a CMS change in terminology, internal organizational considerations must remain on how populations will be managed, given the known risk factors of housing, transportation, food, and utilities impact, in light of how they are so often felt “upstream” in the health and well-being of our patients.

Case Management Corner: Social Workers Essential for Ensuring Cultural Competence

By Kelly Bilodeau

When a patient comes into a hospital, they don’t come alone. They bring ideas, values, and cultural traditions that often play a major role in their health.

As the nation becomes increasingly diverse, understanding these factors is more critical than ever because they strongly influence health outcomes. Black, American Indian, and Alaska Native patients, for example, are much more likely to die from diseases such as cancer and diabetes than white Americans, according to KFF. These poor outcomes are not only a concern at the patient level but also for the overall health system. One study estimates that in 2018 alone, the economic burden from health inequities among ethnic minorities cost as much as $451 billion annually.

Case managers are on the front lines in the effort to reduce health inequities, but they’re also under pressure to discharge patients quickly, leaving little time to fully address these cultural factors, said Kalie Wolfinger, manager of clinical services at Phoenix. Support from social workers can help close that gap.

“Social workers are trained to understand patients as whole people, including their cultural identity, language access needs, beliefs about illness, and family roles,” she said. “While medical teams focus on treatment, social workers ensure the care plan is realistic and respectful of how the patient lives.”

Recent research reinforces this role, showing that innovative case management models led by social workers succeed by strengthening coordination between team members and improving equity, efficiency, and patient engagement. Having this support is crucial because organizations are increasingly being held accountable for providing culturally competent care. In 2023, the Joint Commission introduced six new elements of performance in its Leadership chapter, making the reduction of health care disparities a “quality and safety priority.” To this end, the Culturally and Linguistically Appropriate Standards from the Office of Minority Health offer a blueprint for organizations seeking to improve cultural competence.

What cultural competence means in case management

A patient’s culture encompasses many elements, from religion, language, and immigration experience to beliefs about medicine, gender identity, and family structure. Cultural competence in medicine is about more than just being aware of these differences.

“It means providing care that works for someone in the context of their culture. It affects how we complete psychosocial assessments, how we communicate with loved ones, and how we support discharge planning,” Wolfinger said.

The National Association of Social Workers Standards for Cultural Competence support this perspective, she said. They examine how cultural competence shows up in patient interactions and how professionals understand and address issues that affect patient health.

Understanding the patient’s culture starts with the initial assessment, ideally conducted in the patient’s preferred language. While translators are often in short supply, it’s best to seek professional services whenever possible rather than rely on family members, who can muddy interactions with their own emotions and beliefs. Discussions can also be colored by the interviewer’s personal experiences and biases, so experts recommend approaching conversations with cultural humility, allowing the patient to take the lead in explaining their beliefs and preferences. While much of the discussion will naturally center on medical issues, these conversations should also explore other factors that can affect care, such as spiritual or traditional healing practices, which should be built into the medical plan, Wolfinger said.

Consider the case of a Spanish-speaking heart-failure patient named Maria, who is scheduled to be discharged home from the hospital into the care of her adult children. Through her assessment, the medical team learns that Maria not only takes physician-prescribed medications but also incorporates traditional healing practices. The medical team now knows that instructions should be written in Maria’s native language to ensure comprehension, and the case manager must understand the alternative remedies she uses to protect against dangerous interactions with her prescribed medications.

By taking the time to learn about a patient’s culture, social workers can build crucial bridges between them and the medical team. “They see the full system around the patient and often recognize barriers that others miss,” Wolfinger said.

Overcoming barriers

However, while providing culturally competent care might appear easy on paper, there are major implementation barriers to overcome, including interpreter shortages, personal biases, and a fast-paced hospital environment that often leaves insufficient time for true cultural exploration. Hospital structures frequently prioritize efficiency over individual needs.

“Social workers are critical, because they can identify and push back on harmful patterns,” Wolfinger said.

Despite these barriers, the path to better care is possible if organizations prioritize the following:

• Providing care that includes cultural needs from the start.

• Involving families and communities in supporting the patient’s unique needs.

• Ensuring that information is available to patients in their preferred language.

• Prioritizing both medical and cultural factors when creating a discharge plan.

These priorities align closely with the National CLAS standards, and organizations can support these efforts by designating care coordinators who specialize in cultural needs or by implementing hospital dashboards that track equity outcomes and other metrics related to cultural competence, Wolfinger said.

Ultimately, making this shift requires work. Organizations can benefit from consultants or experts who can help build cultural humility into training and hiring, strengthen interpreter policies, and evaluate organizational outcomes for remaining disparities.

“Hospitals that want to succeed in equity and performance goals must improve cultural competence in case management. Social workers are positioned to lead this work,” Wolfinger said.

Case Management Corner is your go-to source for insightful discussions on relevant topics in case management. Through an engaging interview-style format, our team members share their expertise, experiences, and best practices to keep you informed and empowered. Whether you're looking for industry updates, practical strategies, or real-world perspectives, we bring you valuable conversations designed to enhance your knowledge and support your professional growth. Stay tuned for expert insights straight from the field! Kelly Bilodeau has been a longtime writer for HCPro’s Case Management Monthly. 

Hospitals Brace for Food, Coverage, and Workforce Interruptions Fallout

By Tiffany Ferguson, LMSW, CMAC, ACM

As the federal government shutdown persisted past the one-month mark, the collapse of key safety-net supports such as nutrition benefits, health-insurance subsidies, and the disruption of pay for an estimated 1.4 million furloughed or unpaid federal employees has created a social and operation crisis that reaches into every corner of our communities, including healthcare.

According to The Guardian, over 40 million Americans faced impacts from losing Supplemental Nutrition Assistance Program (SNAP) support and marketplace insurance subsidies remain in jeopardy. For hospitals, clinics, and community organizations, this isn’t only an economic headline; it’s a triggering event for escalating food insecurity, medication non-adherence, and deferred care. Federal workers now missing paychecks join the same vulnerable cohort long supported by social programs. Uncertainty for what the future will look like causes undue stress.

The increased financial strain on these households amplifies the challenges faced by healthcare teams that already manage fragile social conditions.  

When federal food-support systems like SNAP go dark, the consequences are immediate. Families ration meals and reduce caloric intake; those managing chronic illnesses like diabetes can decompensate quickly. On such tight margins, individuals are forced to choose between food, shelter, and medications. The absence of basic needs leads to avoidable hospitalizations, prolonged lengths of stay, and readmissions tied to the social determinants of health (SDoH). Hospitals, particularly care management teams, become the last line of defense, absorbing costs, arranging emergency food or pharmacy vouchers, and connecting patients to overstretched community resources.

Simultaneously, the rising cost of healthcare and premiums is a significant risk to push many households into under-insured or uninsured status. Without coverage, more patients postpone care until conditions worsen.

For healthcare organizations, this translates into a payer-mix shift toward self-pay and charity-care cases, increasing bad debt and straining financial-assistance budgets. But the human cost goes beyond balance sheets.

Patients experiencing benefit loss often disengage from preventive or chronic-care management, eroding the continuity of care that providers work tirelessly to maintain.

Despite lack of federal reporting, now is an important time to continue to identify patients affected by benefit loss, furloughs, or food insecurity early in healthcare settings; this should be linked for continued SDoH Z-code reporting and internal management of the impact of community and societal stressors impacting healthcare services. With the renewed focus on readmissions, high-risk transitions should be prioritized; this includes those without access to food or medications.

Collaboration is necessary with our local communities to support, in any way we can, our food banks, public health departments, and housing/shelter agencies through shared response strategies. Additionally, many hospital and healthcare employees may also be impacted by the shutdown and may be facing the same financial stressors as our patients. 

The shutdown exposes how deeply healthcare depends on the social infrastructure around it. Food access, insurance stability, and workforce pay are not peripheral; they are deeply enmeshed in our healthcare system.

As things drag on, hospitals will continue to shoulder both the medical and social fallout. Our path forward requires humanity, leading with empathy and advocacy.

A Physician Advisor’s Plea: Ask More Questions!

By Juliet Ugarte Hopkins, MD, ACPA-C

Can we talk for a moment? As an educator, I’m obligated to insist that there are no stupid questions. As a physician advisor who works with leaders in case and utilization management who have been immersed in and attuned to rules and regulations from the Centers for Medicare & Medicaid Services (CMS) for multiple years, I desperately insist folks ask more questions.

According to the real-time counter I urged Dr. Ronald Hirsch to add to his website years ago, as of this writing, the Medicare Two-Midnight Rule is 4,003 days, 9 hours, 22 minutes, and a few seconds old. A bit less forgiving is the age of the CMS mandate to Medicare Advantage (MA) plans, that they must follow the Two-Midnight Rule, effective Jan. 1, 2024.

But still!

Despite many years and months and countless educational webcasts, articles, and presentations given by experts in the field – many associated with MedLearn Media and the American College of Physician Advisors – people are not just confused, but actively misinformed.

As someone who has developed, refined, and optimized the physician advisor role at multiple hospitals and health systems across the country (the first being my own, when I was recruited into a position that had never before existed), escalating discoveries of poor regulatory advice gives me heartburn. True, Festivus is still two months away, but I need to air out my grievances. It causes me near-physical pain (see aforementioned gastric reflux) to witness very smart people being led down a briar patch of regulatory slight-of-hand while wearing improved reimbursement-tinted glasses.

So, let’s review the top offenses.  I got a lot of problems, and now you’re gonna hear about it!

1. The crux of the Medicare Two-Midnight Rule involves passage or anticipated passage of two midnights in the hospital due to the patient’s need for services that can only be rendered in the hospital setting – not simply the passage of two midnights. Can determination of medical necessity for that second midnight be tricky? Absolutely. This is where physician advisors, exquisite documentation from clinicians, and a realistic eye on outpatient services comes in. For the love of Athena, stop asking for an inpatient order every time hospital day three is approaching. 
   

2. “Difficulty performing activities of daily living” is not a medical condition requiring hospital care. Full stop. Similarly, listing every complaint and mildly abnormal lab value for a patient remaining hospitalized for a second midnight doesn’t support medical necessity of continued hospitalization. Documenting that the “patient will require a second midnight of hospital care for constipation and leukocytosis” does not cut it without further explanation.
   
   Patients are constipated at home every day; what is it about this patient’s condition that requires hospital care? Leukocytosis is an extremely generalized term, without more specificity, about the severity of the increased white blood cell level or suspected reason for the increase. Please do not think inpatient status will be justified by the Medicare Two-Midnight Rule if your physicians document any condition in a patient passing a second midnight.  
   

3. It’s often a fallacy to assert that there’s a higher financial burden for the patient if they’re not discharged in inpatient status. Outpatient hospitalization involving observation services can be less expensive for the patient than an inpatient hospitalization, depending on the circumstances.
   
   The Medicare Part A deductible of $1,676 is the patient’s responsibility for every inpatient hospitalization if more than 60 days have passed. Meanwhile, the Medicare Part B deductible for outpatient hospitalizations (with or without observation services) is $257 and paid only once a year.
   
   Granted, “observation stays” also involve a 20-percent co-pay, but this can still be significantly less than an inpatient hospitalization, considering that the observation services code, APC 8011, is a charge of $2,607.99, which would be just $521.60 for the patient.
   

4. Status can be compliantly changed until the patient’s “discharge is effectuated,” but there’s no CMS definition as to what this means. To equate it with physically leaving the hospital or hospital unit is a squishy assumption, at best. Opinions vary widely, but in general, your marker should be consistent, reliably timed in the chart, and agreed upon by your compliance team.

These common misconceptions and misguidance promise increased hospital margins and case mix index (CMI) but actually wreak havoc on utilization review efforts and lead to massive increases in MA denials. 

Now, then. Who’s up for a wrestling match?

The Perfect Storm of OBBBA and ACA

By Tiffany Ferguson, LMSW, CMAC, AMC

Hospitals are about to hit a perfect storm of two powerful climate conditions set both to hit in 2026; the One Big Beautiful Bill Act (OBBBA) and revisions to the Patient Protection and Affordable Care Act (ACA).

Together, these laws overhaul Medicaid eligibility, Marketplace enrollment, and subsidy structures beginning in 2026 and 2027 fundamentally altering how hospitals manage a growing population expected to have limited to no coverage resulting in uncompensated care and increasing emergency service utilization.

Enacted as Public Law 119-21, the OBBBA represents the largest Medicaid policy reversal in a decade. Its core provisions include:

• Effective January 1, 2027, able-bodied adults aged 19–64 in expansion states must verify at least 80 hours per month of employment, school, or volunteer activity to maintain Medicaid coverage. For reference 40 states and Washington, DC participate in the Medicaid expansion program.

• States must verify eligibility every six months, instead of annually.

• For expansion populations, the retroactive coverage period shrinks from 90 days to 30 days, limiting hospital reimbursement for newly eligible or reinstated patients.

• Certain lawful immigrants, including some refugees and asylees, will lose eligibility.

• Caps on provider taxes are expected to decrease states’ payments to hospitals and providers.

• Enhanced matching funds from the American Rescue Plan Act expire January 1, 2026, removing the incentive for non-expansion states to grow coverage.

• Federal Medicaid funding is suspended for one year from certain nonprofit reproductive health providers, including Planned Parenthood.

According to the AMA, there is an estimated 12–16 million people who are projected to lose coverage nationwide. The highest impact will fall on low-income adults, older pre-Medicare adults, and individuals with disabilities who cannot meet new verification requirements.

Hospitals, particularly rural and safety-net facilities, are anticipated to have an increase in self-pay encounters, charity care cases, and extended inpatient stays. For care management teams, this translates to higher discharge complexity and expanded coordination with community agencies and free clinics who continue to deal with anemic operating margins.

In parallel, revisions to the Affordable Care Act will be tightening enrollment and verification procedures:

• Beginning in 2026, individuals must verify income, citizenship, and household composition before premium subsidies apply.

• Automatic Marketplace plan renewals will end by 2028, requiring manual re-enrollment each year.

• Changes have been made to special enrollment periods and the open enrollment period.

• Advance payments during pending verification will cease; applicants must pay full premiums until eligibility is confirmed.

• Of much political red/blue debate is the temporary subsidies and expanded tax credits set to expire December 31, 2025.

These changes will also increase the uninsured rate, particularly among lower-income workers cycling between Medicaid and Marketplace eligibility.

Why Discharge Planning Eval is the Cornerstone of Case Management

By Tiffany Ferguson, LMSW, CMAC, ACM

Among the many responsibilities of hospital case managers, none is more critical or more impactful than the initial discharge planning evaluation. Often referred to as the case management “initial assessment,” this evaluation sets the foundation for safe, effective, and patient-centered care transitions. It is not merely a regulatory requirement under the Conditions of Participation (CoP); it is the linchpin of the entire case management process.

The initial assessment offers case managers their first opportunity to connect with patients and families at a time when they are often medically fragile, emotionally drained, and overwhelmed by the circumstances of hospitalization. By approaching this encounter with empathy and active listening, case managers can begin to build a trusting, collaborative relationship that becomes the basis for all subsequent planning.

Patients are more likely to share honest concerns, disclose barriers, and participate in their care when they feel heard and supported. This rapport is particularly important when discharge needs change unexpectedly, such as when a patient whose anticipated skilled nursing facility (SNF) is full, and must then decide to go to their second choice, or when the care team elects that a patient would benefit from home health services, but the patient is worried about letting any strangers into their home. A trusting relationship ensures that case managers can navigate these changes with patient and caregiver cooperation, reducing friction at a stressful juncture.

The discharge planning evaluation is designed to capture the clinical, functional, and social factors that influence a safe transition of care. Early identification of risks such as unsafe housing, limited caregiver support, or financial barriers allows the care team to intervene before they become discharge delays or readmission triggers.

For example, a patient may expect to resume independence after surgery, only to discover mobility challenges that mean home discharge may no longer be an immediate option. By uncovering these risks during the initial assessment, the case manager can arrange services, prepare the family, and prevent last-minute crises that compromise both patient safety and hospital throughput.

The initial assessment also serves as the blueprint for the entire hospitalization, from a case management perspective. It outlines anticipated discharge needs, potential barriers, and the resources required to overcome them. This roadmap guides daily progression-of-care discussions, interdisciplinary rounds, and ongoing communication with the patient and family.

Importantly, the assessment is not static. It evolves as the patient’s condition changes, but its early foundation ensures that case managers are not starting from scratch at the point of discharge. Instead, they are continuously refining a plan that reflects the patient’s goals, treatment trajectory, and changing needs.

From a documentation perspective, a strong initial assessment builds the clinical and contextual narrative that supports both patient safety and revenue integrity. The evaluation is where case management identifies anticipated post-discharge needs, potential barriers, and likely service requirements. This documentation is important to the coding team with respect to Centers for Medicare & Medicaid Services (CMS) discharge dispositions and capture of Social Determinants of Health (SDoH) Z-codes.

When discharge needs are identified late, last-minute changes often go undocumented. A patient initially expected to go home may suddenly be discharged to a SNF, but without early evidence of risk factors, demonstrated documentation of choice, or inclusion of the patient and family in the decision-making process, the record can present a compliance and coding risk, creating not only audit vulnerabilities with the CoP, but potentially, reimbursement mismatches related to disposition coding errors.

The discharge planning evaluation is far more than another superfluous task; it is the cornerstone of safe, compliant, and financially sound case management practice. By engaging patients and families early, the case manager not only fosters trust and collaboration during a vulnerable period, but also establishes the clinical and psychosocial framework that drives every subsequent care decision.

A thorough initial assessment ensures that the record accurately reflects the patient’s story, from goals and barriers to available support, which is vital to care team decisions.

When executed well, it aligns the art of compassionate, person-centered care. In short, the discharge planning evaluation is where quality outcomes, patient experience, and case management documentation integrity all begin.

Best Practices for Handling AMA Discharges and Coding Accuracy

By Tiffany Ferguson, LMSW, CMAC, ACM

When a patient leaves the hospital against medical advice (AMA), the discharge is not only a clinical concern, but it can also create coding and compliance challenges. Ensuring the process is clear, consistent, and patient-centered helps protect both patients and providers while supporting accurate coding and revenue cycle integrity.

It should be very clear, as discussed in a Dr. Ronald Hirsch 2021 article on “Leaving Against Medical Advice” that an AMA discharge does not mean that the patient is non-compliant or that the discharge now becomes adversarial. In fact, the care team should still support the patient in their discharge needs with needed prescriptions, any follow up arrangements, and coordination of care needs to balance the patient’s wishes with the physician’s concerns.

In reviewing existing AMA processes, many organizations utilize a process in which the physician and patient identify that the patient’s requested discharging location or desire to leave the hospital is not clinically safe, nursing will provide the patient with an AMA form to be signed. This vital form provides some protection for the hospital and the attending should the patient have an adverse outcome after they decide to leave the hospital, while still preserving the patient’s right to self-determination.

There are other methods to this process, such as incorporating the AMA designation directly into the discharge order. Regardless of the method, however, it must be very clear from a coding and billing standpoint that to ensure the correct discharge, that the status code to be applied. The Patient Discharge Status Code is “07” (Left against medical advice or discontinued care).

The language used in AMA forms is just as important as the documentation itself. Forms should strike a balance between acknowledging patient autonomy and reflecting the care team’s professional recommendations.

For example, rather than presenting the form in a punitive tone, hospitals should consider patient-centered language:

“Your care team only wants the best for you; however, we respect your right to self-determination. This form acknowledges that while your care team recommended discharge to [facility/plan], you have chosen to discharge to [alternative plan].”

This tone emphasizes respect for patient rights while making it clear that the team has offered appropriate guidance. Hospital Patient Advocates and Risk Management teams can be valuable partners in revising these forms.

What Happens if the Patient Returns?

A common concern is whether anything additional is required if a patient who left AMA returns through the emergency department. In short, no new documentation is needed beyond the usual admission process. Coding does not require a unique flag or code for these accounts on readmission. From a readmission penalty perspective these cases are excluded.  However, from a medical necessity and utilization standpoint, acknowledgement of these patients for internal review is still meaningful.

That said, some electronic health record (EHR) systems provide valuable tools. For example, in Epic, the ED tracking board’s “Boomerang” rule identifies all readmissions within a certain time frame. This initiative allows ED UM and CM/SWs to review repeat visits and determine whether the patient truly requires hospital level services for admission or if a different intervention could better address their needs.

From a utilization management perspective, the key question is whether the patient’s return visit meets medical necessity criteria for observation services or inpatient status, regardless of their prior AMA. While the AMA history may inform the clinical discussion, it should not alter the application of CMS guidelines.

Hospitals may find it particularly useful to monitor these cases when AMA discharges involve recommendations for post-acute settings (such as inpatient rehab, SNF, or LTC).

Patients who decline such care and return within 24–48 hours may highlight both quality-of-care and readmission risk issues. This may support the balance for internal quality audits to examine, the question- ‘why are patients not following the care team’s advice?” is it really rugged individualism or is something missing in the transitional process with either over recommendations to post-acute placement or recommendations to poorly rated post-acute placements leaving patients fearful to go and electing home instead.  

AMA discharges will always carry clinical, ethical, and operational complexity. However, with clear documentation processes, and patient-centered language, that supports coding visibility and subsequent use of Discharge Code 07, hospitals can reduce risk of erroneous readmissions as well as penalties from CMS and payers.  

This process will alleviate hospital risk if the patient requests to discharge to an ‘unsafe’ location or prior to care being complete.

Case Management Corner: How AI and Technology are Transforming Discharge Planning

By Kelly Bilodeau

In an era where case managers often need to do more with less, new technologies are providing a helping hand with discharge planning. Most EMR systems now have integrated artificial intelligence (AI) and machine learning that flag patients at high risk for complications, hospital readmissions, and extended lengths of stay. However, many case management programs are not fully integrating these tools into their daily practice.

“The technology gives us the ability to identify and manage the most complex patients but we have to utilize the tools and put standard processes in place to allow case managers to focus their time where it’s needed most,” said Marie Stinebuck, COO of Phoenix Medical Management.

While technology is a valuable assistant that can identify care gaps, recommend evidence-based interventions, and guide discharge planning, it is designed to augment, not replace, people. Patients still need case managers to apply judgment and critical thinking skills to guide their progression of care, Stinebuck said.

New tools save time

When applied correctly, AI and other digital tools can reduce the administrative burden for case managers. EMR-integrated risk stratification programs such as the LACE Index or Project BOOST use criteria such as polypharmacy, comorbidities, chronic diagnoses, or a recent readmission within 30 days of discharge to identify high-risk patients. These tools allow case managers to intervene earlier and potentially prevent avoidable readmissions. This is crucial because hospitals with high readmission rates among Medicare patients with certain conditions may face penalties under the Hospital Readmissions Reduction Program. Organizations should note that CMS recently expanded this program to include Medicare Advantage patients starting in 2026.

While automated systems are helpful, case managers shouldn’t rely exclusively on these tools. Medicare conditions of participation require a licensed professional, such as a nurse or social worker, to conduct the assessment and develop the patient’s care plan. This requires clinical reasoning and human insight that AI can’t replace. “Our role is as an advocate for our patients and to identify those patients with high-risk needs,” Stinebuck said.

AI working against case managers

Although AI tools can be helpful, they’re also adding new layers of complexity for hospitals and case managers. Payers have fully joined the tech revolution, leveraging advanced AI and machine learning algorithms to review patients in near real time. These algorithms scan thousands of clinical data points to predict level-of-care recommendations. This provides an efficient means to deny post-acute placements, creating multifaceted challenges. AI tools are not always able to capture nuanced patient needs, such as social determinants of health or a lack of caregiver capacity, factors that may affect their ability to recover safely at home without additional support.

Patients often have little choice but to challenge these determinations, triggering a series of appeals and denials that can lead to excess and avoidable days. Case managers need to spend time managing these appeals, as well as coordinating post-acute placement and repeatedly adjusting discharge plans. This represents a significant, often immeasurable loss in productivity.

Looking to the Future

Technology will likely continue to play a pivotal role in discharge planning in the coming years. However, as case managers gain access to new tools, the core skills they bring to the job are still vital. Technology can’t replace clinical expertise, empathy, or the ability to determine what’s best for each patient.

Case Management Corner is your go-to source for insightful discussions on relevant topics in case management. Through an engaging interview-style format, our team members share their expertise, experiences, and best practices to keep you informed and empowered. Whether you're looking for industry updates, practical strategies, or real-world perspectives, we bring you valuable conversations designed to enhance your knowledge and support your professional growth. Stay tuned for expert insights straight from the field! Kelly Bilodeau has been a longtime writer for HCPro’s Case Management Monthly.