Centralized Post-Acute Authorization: Improving Efficiency, Reducing Administrative Burden

By Marie Stinebuck, MBA, MSN, ACM

As healthcare organizations face increasing pressure to improve efficiency and reduce administrative burden, many are reevaluating how post-acute care authorizations are managed. Traditionally, nurse case managers and social workers have spent significant time gathering clinical documentation, navigating payer websites, and communicating with insurance companies to secure authorization for skilled nursing facilities, inpatient rehabilitation facilities, long-term acute care hospitals, and home health services. While these tasks are essential to patient progression, they are highly administrative and often divert professional staff from more complex clinical and discharge planning responsibilities.

A centralized post-acute resource center (PARC) authorization process offers an effective solution. By consolidating post-acute authorization activities into a dedicated workflow supported by specialized staff, hospitals can streamline operations, reduce delays, and allow case managers and social workers to focus on patient-centered interventions. In this model, the PARC team may consist of authorization coordinators, case management assistants, or utilization review technicians who assume responsibility for obtaining post-acute authorizations.

These team members are trained to access payer portals, upload clinical documentation, complete required forms, and monitor authorization status. Because many payers now offer online portals with standardized submission tools, much of the work can be completed electronically without lengthy phone calls or fax transmissions. Use of these portals also decreases manual processes and helps prevent errors associated with manual workflows. In the case of a denial, the PARC team can support appeals and resubmission of clinical documentation for a lower level of care, as needed.

It is vital to create standardized work related to portal use for training and education. The PARC team will likely use multiple payer portals, each with unique guidelines and processes for managing authorization requests. Key elements to include in standardized work include the regional contact person for each portal, instructions for obtaining access for new users, and support line contacts for troubleshooting issues that may arise.

The centralized process begins when the case manager or social worker identifies the appropriate post-acute level of care and confirms the patient’s discharge plan. Once the receiving facility is selected and confirms its ability to accept the patient, the case management team provides the necessary clinical summary and anticipated discharge details to the authorization support team. From there, the support staff manage the end-to-end authorization process, including submission, follow-up, and communication of approval information to the care team and receiving provider.

Using payer portals significantly reduces manual work. Clinical documentation can be uploaded directly from the electronic medical record, templates can standardize submissions, and dashboards allow staff to track pending requests in real time. This approach minimizes duplicate data entry, decreases errors, and creates greater transparency into authorization turnaround times. Organizations can also develop work queues to prioritize urgent discharges and assign tasks based on workload.

Centralization delivers several important benefits. First, it improves efficiency by allowing a smaller group of trained staff to develop expertise in payer-specific requirements. Second, it reduces discharge delays caused by missed submissions or inconsistent follow-up. Third, it enhances staff satisfaction by removing administrative tasks from nurses and social workers, enabling them to devote more time to clinical assessments, family discussions, and care coordination.

Ultimately, a centralized PARC team can support both operational and clinical goals. By leveraging payer portals and assigning administrative tasks to support staff, healthcare organizations can reduce unnecessary manual work, accelerate discharges, and maximize the value of professional case management resources.

Case Management Corner: Use Your EMR To Revamp UR communication

By Kelly Bilodeau

Healthcare is rapidly evolving, but utilization management (UM) still often relies on outdated communication and documentation strategies, such as emails and faxes based on unit-based assignments and static patient lists. These outmoded exchanges struggle to keep pace with the demands of the modern revenue cycle.

It’s time for a change, and luckily, the needed transformation is not one that requires high-cost new technology, just smarter use of your facility’s existing electronic medical record (EMR).

“Most hospitals already possess the technology needed to transform their UM programs; they simply need to reimagine how those tools are used,” said Sara Williams, vice president of clinical strategy at Phoenix Medical Management.

Repurposing existing tools

It’s possible to transform UR by reapplying existing EMR tools, such as reporting systems and communication platforms, to make the necessary shift toward proactive, connected workflows, she said.

Improving communication with these tools will do more than just streamline processes. It can help build bridges between bedside care, hospital operations, and the billing department. Using the EMR can also help ensure that the physician advisor’s clinical judgment, correct payer terminology, and verification of medical-necessity criteria are captured in the patient’s medical record. This is not always possible using legacy tools such as spreadsheets or anecdotal documentation, Williams said.

“Physician Advisors and UR nurses must be equipped with tools that allow their work to be visible, measurable, and aligned with organizational outcomes,” she said.

EMR systems can ensure continuity and follow-through by formalizing the documentation process using EMR-integrated UR tools and interactive dashboards. This allows UR nurses and physician advisors to easily communicate to build a clinical record that will withstand payer scrutiny and draw a straight line from patient admission to final claim resolution.

Providing support for a new model

However, like any technological leap, this change requires human support. Organizations need to ensure that UR team members are still engaged and collaborating with one another, particularly as more work is done outside the hospital.

Collaborating closely with the analysts who support your EMR is a key first step in transitioning documentation and workflows from spreadsheets and external resources into integrated EMR tools. These analysts have access to the latest available system capabilities and can help incorporate those features into your existing workflows to optimize documentation, streamline communication within the system, and enhance both reporting and overall documentation efficiency.

Working remotely has advantages, but it also carries risks, Williams said. With this in mind, organizations should develop tools and training to ensure that physician advisors and UR nurses can carry out concurrent reviews, work together effectively, and understand and meet payer-specific requirements, Williams said.

“Done right, the digital tools provided by the EMR can help Physician Advisors and UR leaders to optimize performance and advance organizational excellence.”

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. 

Sub-specialization – Physician Advisory’s Next Big Move?

By Juliet Ugarte Hopkins, MD, ACPA-C

When many physician advisors began their careers 10, 20, or even 30 years ago, their focus involved communication. Communication between case and utilization managers and medical staff, first and foremost, but also between leaders of these departments and hospital executives. 

Physician advisors have persistently served as bridges between two admittedly broad categories of individuals within health systems: Those who have vast medical knowledge but little business or operational knowledge, and those whose breadth of expertise is the reverse. 

Trusted, timely, and reliable communication grew even more important with the enactment of the Medicare Two-Midnight Rule in late 2013 as hospitals were suddenly faced with audits, citations, and financial penalties from the Centers for Medicare and Medicaid Services (CMS).  Physician advisors’ skill as effective communicators quickly morphed them into outright educators related to the specifics of patient statusing, medical necessity, and hospital service utilization. 

Next came collaboration with clinical documentation integrity (CDI) teams to ensure queries were addressed by medical staff in a timely manner and also, again related to the role as educator, translating coding requirements for capture of specific diagnoses in the electronic health record in a way doctors can understand.

Most recently, as Medicare Advantage enrollment ballooned with more and more payors utilizing some form of automated algorithms or artificial intelligence to deny cases for Inpatient status, the world of addressing payor denials via peer-to-peers (P2Ps) and written appeals has grown exponentially within the last five years.  Once an occasional or strategic move to fight particularly egregious or high-dollar cases, the deluge of denials with associated P2P opportunities has led some hospitals to aggressively engage to fight off the onslaught.  Physician advisor participation in P2Ps has led to the most black-and-white representation of the role’s return on investment (ROI) for hospitals and health systems. 

Unlike ensuring compliance with CMS Conditions of Participation (CoPs), preventing avoidable days by heading off delays in discharge due to patient request, or steadily decreasing the number of Condition Code 44s and W2s by teaching admitting clinicians how to use the Two-Midnight Rule, there is a clear “A + B = C” breakdown of the financial benefit associated with P2Ps. Unsurprisingly, this has resulted in many physician advisors watching their day-to-day responsibilities shrink to an almost singular focus – fighting payor denials via engagement of the P2P process.

While this might prove to be the clearest demonstration of a physician advisor’s ROI, it absolutely can’t be their only responsibility. Shifting their spotlight to denials and P2Ps leaves a vast swath of the other important work physician advisors have historically led or at least been an integral part of. Unfortunately, many hospitals and health systems don’t recognize the compliance and operational risk associated with removing their physician advisors from this kind of work until it’s too late. This can result in escalating Observation rates and/or short stay Inpatient rates, declining collaboration between medical staff and utilization/case management teams, and increased presence of sub-standard documentation. Instead of allowing your physician advisor or physician advisory team’s prior successes to disintegrate into dust, consider modeling the clinical division of scope via sub-specialization.   

As identified for many years by the American College of Physician Advisors and other experts in the field, standard physician advisor coverage of case and utilization management needs – including CMS rule compliance, education tailored to clinicians, case managers, utilization managers, and bedside nurses to name a few, and close collaboration with case/utilization management teams as their clinical champion – is one physician advisor per 250 hospital census. It’s important to note this doesn’t include participation in P2Ps or comprehensive collaboration with and support of the CDI and coding teams. While in years past, solo or even system physician advisor programs could manage the bandwidth of participating in a few P2Ps a week and addressing a handful of unanswered CDI queries in addition to their case/utilization management duties, this is no longer possible due to the sheer volume of medical necessity and clinical validation denials seemingly sent by all payors, all day, every day.

Hospitals are finding that opportunities related to fighting these denials in addition to the ever-present need to ensure compliance with the CoPs require the evolution of specialized physician advisory roles. While the traditional 1:250 coverage for CM/UM responsibilities remains the same, additional bandwidth is required based on volume and modality of addressing denials and pursuing P2Ps. Depending on volume and method of assessment prior to reaching the physician advisor, this could easily support at least an additional 0.5 FTE for a P2P physician advisor serving a 250-bed hospital. Similarly, additional FTEs could be beneficial for dedicated support and collaboration with CDI teams related to targeted education to medical staff about Case Mix Index (CMI), creation of unified clinical definitions, and review of mortality and quality metrics.

Instead of attempting to maintain the traditional scope of physician advisory function and leadership while cramming in a half dozen or more P2Ps a day and squeezing in whatever spare time might be left in the week to optimize CDI initiatives, consider this alternative. It will allow your physician advisors the appropriate focus and attention to their work and specialization in each designated role will ultimately foster pointed expertise and mastery.

CMS Proposes Knee/Hip Replacement Episode-Based Accountability For All

By Tiffany Ferguson, LMSW, CMAC, ACM

The Inpatient Prospective Payment System (IPPS) Proposed Rule for the 2027 fiscal year (FY) signals another major acceleration in Medicare’s transition toward mandatory value-based care.

Among the most significant proposals is the Centers for Medicare & Medicaid Services (CMS) plan to expand the Comprehensive Care for Joint Replacement (CJR) Model nationwide through a redesigned version referred to as CJR-X. While many organizations may view this as a return of a familiar bundled payment program, such as those already in the Transforming Episode Accountability Model (TEAM), the Proposed Rule will force all hospitals into episode-based accountability.

CMS is proposing that CJR-X begin Oct. 1, 2027, aligning performance years with the federal fiscal year. CMS has indicated that this change is intended to better synchronize future policy updates with the annual IPPS rulemaking cycle, as they continue to make modifications. Hospitals already participating in TEAM, specifically those with lower extremity joint replacement (LEJR) episodes, would be exempt from CJR-X until TEAM concludes.

According to CMS, the original CJR model generated $112.7 million in Medicare savings during performance years six and seven while maintaining quality outcomes, including stable emergency department utilization, readmissions, mortality, and complication rates. CMS now appears ready to operationalize these lessons nationally.

Under the Proposed Rule, eligible beneficiaries would include those enrolled in Medicare Parts A and B who have Medicare as the primary payer, thus not encompassing those enrolled in Medicare Advantage (MA) or other managed care arrangements. CMS also proposes excluding Medicare beneficiaries as a result of end-stage renal disease (ESRD).

This exclusion of MA beneficiaries is operationally important. While many hospitals are heavily focused on MA utilization management (UM) challenges today, CJR-X remains rooted in traditional Medicare Fee-for-Service (FFS) payment methodologies. Organizations will need to manage two parallel realities: dealing with increasingly restrictive MA authorization oversight while simultaneously assuming broader financial accountability for FFS joint replacement episodes.

Additional Beneficiary Notification Form Proposed

One of the more operationally impactful proposals involves beneficiary notification requirements. CMS is proposing that hospitals participating in CJR-X provide written notification to every eligible beneficiary prior to discharge from the anchor hospitalization or outpatient anchor procedure. The notification must explain the CJR-X model, reinforce beneficiary freedom of choice, describe data-sharing practices, explain access to claims data through Blue Button, and disclose any financial relationships between the hospital and CJR collaborators.

This requirement elevates the importance of discharge planning and patient education workflows. Hospitals will need standardized processes to ensure compliant delivery of this new notification, documentation of receipt, and alignment with broader patient choice obligations under the Conditions of Participation. Case management and patient registration departments will likely become central operational owners of this process.

The proposed episode design is expansive. CMS proposes including all Medicare Part A and Part B services furnished during the 90-day post-discharge period related to the LEJR episode. This includes physician services, inpatient and outpatient hospital care, skilled nursing facility (SNF) services, inpatient rehabilitation, home health, outpatient therapy, hospice, durable medical equipment (DME), laboratory services, and Part B drugs and biologics, unless specifically excluded. For case management and utilization review (UR) teams, this further reinforces the need to move beyond siloed discharge planning models, toward longitudinal episode management strategies. The traditional hospital-only mindset is increasingly incompatible with CMS’s value-based direction.

CMS proposes excluding certain readmissions and diagnosis categories, including oncology, trauma, organ transplant, ventricular shunt cases, and select Major Diagnostic Categories such as pregnancy, newborns, HIV, and ophthalmologic disorders. CMS also proposes excluding certain high-cost technologies, including IPPS new technology add-on payments and Outpatient Prospective Payment System (OPPS) pass-through device payments.

CMS has also proposed canceling bundled qualifying episodes if the beneficiary dies during the 90-day period, loses eligibility criteria (such as changes in coverage), experiences an extreme and uncontrollable circumstance event (natural disaster), or enters overlapping TEAM-related episode scenarios. While these provisions offer some financial protection, they also introduce additional documentation and tracking complexity for organizations managing episode reconciliation.

Thus, the post-discharge management plus the quality reporting requirements will also pull in new quality management team members.

SNF Three-Day Waiver

One of the benefits of this program is CMS’s proposal to utilize the three-day SNF waiver program for this patient population. Under CJR-X, hospitals could discharge eligible beneficiaries to SNFs without a qualifying three-day inpatient stay. However, the SNF must meet CMS quality requirements, including maintaining at least a three-star overall rating for seven of the previous twelve months. This proposal carries significant implications for discharge planning and post-acute network strategy.

Hospitals will need active oversight of SNF quality ratings, stronger preferred provider network management, and real-time visibility into qualifying facilities.

Failure to appropriately discharge patients to qualified SNFs could result in denied SNF payments – and financial liability shifting back to the hospital. It was very clear in the proposed ruling that hospitals, not patients, would “eat” this cost if a patient is sent to a SNF facility outside of the waiver guidelines prior to their three-day inpatient stay. CMS described in the ruling a potential patient notice for those going to a SNF under a CJR-X episode of care; however, it was unclear how this was going to be operationalized, or if this would come directly from CMS as an official form.

For many organizations, this further accelerates the evolution of case management from a reactive inpatient discharge function to a proactive population health and post-acute strategy role. Hospitals participating in CJR-X will likely need stronger integration between case management, quality, physician advisors, finance, analytics, and post-acute care navigation teams.

Physician advisor programs may also see expanded responsibilities under CJR-X. Historically focused on status determination and denial prevention, physician advisors could increasingly become involved in episode stewardship, post-acute utilization oversight, avoidable readmission reduction, and alignment of clinical documentation supporting episode complexity and resource utilization.

This proposal reinforces CMS’s broader strategic direction across value-based care initiatives. The operational alignment between CJR-X and TEAM demonstrate CMS’s intention to standardize episode-based methodologies across multiple mandatory models. Although still only under the “proposed” phase, with some minor adjustments or refinements likely pending, it will be important to anticipate that this program is coming. 

The Impacts of Starting the Admission Order with the ED Physician

By Tiffany Ferguson, LMSW, CMAC, ACM

Increasing pressure to improve emergency department (ED) throughput has led many hospitals to adopt workflows in which ED physicians initiate inpatient or outpatient observation orders prior to a full evaluation by the attending physician.

While this approach is often intended to start the clock for care progression, reduce ED congestion by organizing patients who require hospitalization, and align with Centers for Medicare & Medicaid Services (CMS)-related door-to-decision expectations, it introduces significant downstream risks that impact compliance, revenue integrity, and operational efficiency.

At its core, this practice raises concerns about whether admission determinations are being made with sufficient clinical context to support the medical necessity required for hospitalization.

Under guidance from CMS, inpatient admission decisions must be based on medical necessity and the reasonable expectation that a patient will require hospital care spanning at least two midnights, as outlined in the Two-Midnight Rule. CMS further expects that the admitting practitioner has adequate knowledge of the patient’s condition to support this determination, and that this expectation is clearly documented in the medical record.

While ED physicians are clinically capable of initiating care, they often do not yet have the full diagnostic workup, longitudinal history, or specialty-specific insight that the attending physician can provide once the patient has been more comprehensively evaluated. Initiating an inpatient order prematurely may therefore result in a status that is not fully supported by medical necessity at the time it is written.

Compounding this issue is the misalignment of internal performance metrics and regulatory intent. CMS-defined ED throughput measures focus on the entire patient journey, including the median time from ED arrival to ED departure for admitted patients, as well as the interval from the decision to admit to the patient’s physical departure from the ED.

These measures are designed to evaluate access, timeliness, and system flow; however, in practice, they may unintentionally incentivize premature admission orders to demonstrate efficiency, rather than ensuring accurate clinical decision-making. While ED throughput metrics may appear improved, patients may remain boarded in the ED for extended periods, hours or even days, waiting to be officially hospitalized, highlighting a disconnect between metric performance and actual care delivery.

One of the most prevalent consequences of ED-initiated admission orders is increased status conversions. By starting the process with the ED physician to capture the timing of the order, the clinical review for appropriate admission status becomes secondary, occurring after the fact by utilization management (UM), physician advisors, and the attending physician. This sequencing increases the likelihood of status conversions, as well as Condition Code 44s (CC44s).

While CC44 is an appropriate compliance mechanism, overutilization is often a signal of systemic issues in admission practices. Each occurrence requires additional physician involvement, administrative effort, and documentation, further contributing to operational burden.

These frequent status changes create confusion for bed placement teams, disrupt workflow, and ultimately reflect inefficiencies in front-end decision-making, rather than true improvements in throughput.

Another unintended consequence is the premature communication of patient status to payers. Many hospitals initiate authorization requests or send notices of admission shortly after an inpatient order is placed. When that order is entered by the ED physician and later changed following UM or physician advisor review, payers receive inconsistent information regarding the patient’s status.

This can result in rework, delays in authorization, and increased denial risk, particularly in an environment where payers are enforcing shorter timelines for clinical submission and concurrent review.

In conclusion, while ED physician-initiated admission orders may be intended to improve throughput, they often introduce unintended consequences that negatively impact compliance, revenue cycle performance, and care coordination. CMS guidance is clear that inpatient admissions must be supported by medical necessity and appropriate physician judgment.

Physician advisors and UM teams should consider the return on investment of moving further upstream to influence ED admission decision processes, ensuring that status determinations are accurate, timely, and supported from the outset.

Sepsis A Proposed Addition to the Hospital Readmission Program

By Tiffany Ferguson, LMSW, CMAC, ACM

The Centers for Medicare & Medicaid Services (CMS) continues to expand its focus on hospital readmissions in the FY 2027 IPPS (Inpatient Prospective Payment System) Proposed Rule, introducing sepsis as a new condition within the Hospital Readmissions Reduction Program (HRRP). This proposed addition demonstrates CMS’s continued emphasis on outcome metrics, by including one of the most common diagnoses for hospital readmission. According to sources listed in the ruling, such as AHRQ Report to Congress (September 2024) and Pub-Med meta-analysis by Shanker-Hari et. al (January 2020), sepsis remains one of the most frequent principal diagnoses among adult inpatients, with more than 2.2 million hospitalizations annually and an estimated 30-day readmission rate approaching 21 percent. These rates place sepsis alongside other HRRP conditions such as heart failure and chronic obstructive pulmonary disease (COPD), reinforcing CMS’s rationale to address both high-volume and high-cost conditions with targeted oversight.

If finalized, this measure would be implemented beginning with the 2029 HRRP program fiscal year (FY), using a performance period from July 1, 2025 through June 30, 2027. Notably, the measure will include both traditional Medicare and Medicare Advantage (MA) beneficiaries, continuing CMS’s effort to standardize quality measurement for all Medicare beneficiaries. As CMS advances its Meaningful Measures 2.0 Seamless Care Coordination, with a focus on patients receiving timely and coordinated care, there is also an emphasis on reducing the risk of errors and improving overall patient outcomes. The inclusion of sepsis in HRRP would further emphasize the importance of longitudinal care models that extend beyond the inpatient setting.

The addition of sepsis to HRRP also introduces several immediate implications for case management, utilization review, and physician advisor teams. Sepsis must now be approached not only as an acute clinical event, but as a condition requiring ongoing management across the care continuum. Discharge planning expectations will shift further upstream, requiring earlier identification of high-risk patients and more proactive coordination of post-acute services. Hospitals will need to ensure that follow-up care is not only arranged, but accessible and timely, particularly within the first week after discharge, where evidence suggests that meaningful reductions in readmissions can occur.

Additionally, CMS’s own analysis demonstrates variation in performance across hospital types, with higher readmission rates observed in teaching hospitals, safety-net hospitals, and those with higher Disproportionate Share Hospital (DSH) percentages. This variation highlights the influence of social complexity, resource availability, and care coordination infrastructure on outcomes. As a result, organizations will need to evaluate not only their clinical pathways, but also their ability to address the broader factors that influence recovery following sepsis.

A critical component of this proposed rule, which carries significant implications for clinical documentation integrity (CDI) and coding teams, is the methodology for risk adjustment. CMS proposes adjusting for a broad set of patient-level factors, including age, comorbid conditions, frailty indicators, transplant status, and clinical markers of severe sepsis, as well as the aggressiveness of infectious organisms. These variables are derived not only from the index hospitalization, but from claims spanning up to 12 months prior, including inpatient, outpatient, and physician encounters, as well as diagnoses documented as present-on-admission. CMS also called out that they will be excluding complications that arise during hospitalization from risk adjustment, as CMS considers these to reflect the quality of care delivered, rather than the patient’s underlying risk profile. This distinction places increased scrutiny on hospital performance and reinforces the importance of accurate, complete, and timely documentation at the point of admission.

The accuracy of risk adjustment, and ultimately the hospital’s performance under HRRP, will depend heavily on the capture of comorbidities, severity indicators, and present-on-admission conditions. Incomplete documentation or missed secondary diagnoses in the proposed ruling would not only impact case mix index or reimbursement; they may directly influence readmission performance metrics and associated financial penalties. This is particularly relevant given the use of hierarchical logistic regression modeling, which compares a hospital’s predicted readmissions based on its case mix to the expected readmissions at a national average. Hospitals with higher-than-expected readmissions will generate an excess readmission ratio greater than one, resulting in potential payment reductions.

Operationally, this means that CDI programs must expand beyond DRG optimization, if they have not already done so, as CMS doubles down with a focus on quality. This will require accurate representation of severity, organ dysfunction, and underlying risk factors. Coding teams must also ensure alignment with clinical definitions and documentation, particularly as sepsis continues to be an area of scrutiny across payers.

In conclusion, the proposed change reinforces the need for hospitals to shift from reactive, inpatient-focused workflows to proactive, coordinated care models that integrate clinical decision-making, quality documentation, discharge planning, and post-discharge follow-up. Organizations that continue to rely on fragmented, inpatient-focused processes will likely struggle to meet performance expectations, while those that invest in comprehensive, data-driven care coordination strategies will be better-positioned to succeed under CMS’s current objectives.

Denied in Real Time: Rethinking Patient Advocacy in Medicare Advantage

By Tiffany Ferguson, LMSW, CMAC, ACM

As we move deeper into analysis of the upcoming proposed rule changes by the Centers for Medicare & Medicaid Services (CMS), many hospitals are still grappling with the unintended consequences of what initially appeared to be strengthened patient protections under CMS-4208-F (MA 2026 Final Rule). While CMS reinforced transparency, standardized notice delivery, and beneficiary appeal rights, the downstream response from Medicare Advantage (MA) plans has shifted utilization management pressures back onto providers, tightening clinical, operational, and financial controls.

A prominent example is the policy implemented by Aetna, which reflects a significant departure from traditional inpatient denial workflows. More broadly, MA plans have introduced several notable operational changes, including the elimination or restructuring of denial-triggered peer-to-peer (P2P) pathways, compressed clinical submission timelines, and a shift toward modified payment methodologies on typical Diagnosis-Related Group (DRG) contracts.  

It remains unclear whether this shift is primarily a response to provider behavior following CMS-4201-F implementation, wherein hospitals increasingly escalated concurrent denials to P2P when the Two-Midnight Rule was perceived to be met. Or it may have been driven by CMS-4208-F’s expectations regarding real-time beneficiary notification through the Integrated Denial Notice (IDN). Most likely, it is a combination of both forces that has prompted MA plans to recalculate their strategies.

The IDN is designed to consolidate multiple denial communications into a single, standardized notice that clearly outlines both coverage and payment determinations, along with associated appeal rights. CMS requires MA plans to issue the IDN whenever an adverse organization determination occurs, including during concurrent review. The intent is to reduce confusion and ensure that beneficiaries receive consistent, actionable information when services are denied, reduced, or terminated.

This requirement has significant implications for hospitals. When an MA plan denies an inpatient level of care while the patient is still hospitalized, that determination must be treated as an adverse decision, with full notice and appeal rights. CMS guidance reinforces that patients must be informed in a timely and meaningful way, even while still receiving care, so they have the opportunity to act on those rights during the hospitalization.

However, this creates a practical challenge. If the patient is already admitted and receiving care, how is the IDN effectively delivered in real time? MA plans are unlikely to hand-deliver notices, and reliance on mailed communication introduces a high likelihood that the patient will be discharged before receiving notification. This gap creates a disconnect between regulatory intent and operational reality.

This is where hospitals may need to consider a more proactive role.

While the responsibility for issuing the IDN remains with the payer, hospitals are often the only party physically present with the patient at the time of the determination. As such, it may be reasonable and operationally necessary for hospitals to notify the patient that their MA plan has issued a denial of an inpatient level of care – and to reinforce their right to appeal.

At that point, an important question emerges: should hospitals also provide the Appointment of Representative (AOR) form (CMS-1696)?

Providing the AOR form at the time of a concurrent denial would allow the patient to designate a representative, such as a family member (or, where appropriate, hospital staff) to assist with the appeals process. While CMS does not require hospitals to distribute the AOR in this context, integrating it into the denial workflow represents a practical strategy to support patient transparency and access to the member appeals process.

Embedding the AOR alongside awareness of the IDN could offer several advantages. It ensures that patients and families are not only informed of the denial, but equipped to act. It creates a pathway to pursue appeals through the member process, which necessitates continued accessibility, given the increasingly constrained provider appeal channels. Most importantly, it aligns with CMS’s broader intent: that beneficiaries are not only notified of their rights, but meaningfully supported in exercising them.

Admittedly, this approach introduces additional operational considerations. Incorporating another form into case management and utilization review workflows requires training, standardization, and clear role delineation. However, as payer pressures intensify through reduced reimbursement, limited concurrent resolution opportunities, and evolving denial methodologies, engaging patients and families as active participants in the appeal process may represent a necessary shift.

CMS Proposes Removal of Homelessness as a CC

By Tiffany Ferguson, LMSW, CMAC, ACM

In the FY 2027 Inpatient Prospective Payment System (IPPS) Proposed Rule, the Centers for Medicare and Medicaid Services (CMS) has introduced a notable and potentially controversial change: the removal of homelessness and related housing instability ICD-10-CM Z codes (Z59 series) from the Complication or Comorbidity (CC) list.

If finalized, this policy would reclassify these codes from CC back to non-CCs, effectively eliminating their impact on MS-DRG assignment and reimbursement. This proposal is described in the proposed ruling as a broader recalibration by CMS, one that re-centers the inpatient prospective payment system (IPPS) on clinical severity rather than social complexity.

Historically, CMS has used CC and MCC designations to capture the relative resource utilization associated with secondary diagnoses. In reviewing the Z59 codes, CMS acknowledged that internal data analysis showed values approaching a CC-level resource impact.

However, the agency ultimately concluded that these codes represent social circumstances rather than medical conditions and therefore should not drive severity classification.

CMS described a parallel in the ruling to its FY 2008 IPPS reforms, when chronic conditions without acute exacerbation were removed from the CC list.

The underlying rationale used was that CC/MCC designation should reflect the expected resource consumption required to treat an underlying medical condition, not the presence of social risk factors alone.

Operational and Financial Implications

For hospitals, this change is far from symbolic. The Z59 codes, particularly homelessness, have increasingly been leveraged to capture the complexity of discharge planning, prolonged length of stay, and increased care coordination efforts to manage patients’ medical conditions. The removal as CCs will have several downstream effects such as a decrease in reimbursement, an impact to CMI, and a loss of coded recognition for social complexity.

While CMS acknowledges that patients experiencing homelessness require increased resources, it stops short of allowing that complexity to influence payment. Instead, the agency emphasizes that resource use should be captured through documentation of acute medical conditions.

Frankly, this creates a practical tension. Hospitals are still expected to manage the very real throughput, discharge, and care coordination barriers associated with homelessness and housing insecurity, but now this will be without the corresponding reimbursement recognition.

Not unlike the prior trends we have seen with this current administration, CMS is continuing to draw a clear boundary between medical care and social determinants of health.  

The comment period is open now through June 9, 2026.

Giving the Advanced Beneficiary Notice (ABN)

By Tiffany Ferguson, LMSW, CMAC, ACM

The Centers for Medicare & Medicaid Services (CMS) has released updated instructions for the Advance Beneficiary Notice of Noncoverage (ABN) Form CMS-R-131, extending the form’s expiration date to March 31, 2029 while making only minor clarifications to the accompanying instructions.

While the update does not introduce significant policy changes, it serves as an important reminder about the role the ABN plays when Medicare coverage is uncertain.

The ABN is issued to Medicare fee-for-service beneficiaries when a provider believes that Medicare may deny payment for a particular service. The notice must be presented before the service is provided, allowing the beneficiary to make an informed decision about whether to proceed with care and accept potential financial responsibility if Medicare does not cover the service.

The newly released instructions primarily focus on clarifying existing guidance, rather than introducing new requirements. CMS has reinforced several longstanding expectations, including:

• The ABN must be issued before the item or service is provided;

• The notice must clearly identify the specific service or service category that may not be covered;

• Providers must include a reasonable estimate of the cost the patient could be responsible for; and

• The beneficiary must be given adequate time to review the notice and choose an option.

The updated instructions also improve formatting and readability, making it easier for staff to understand how each section of the form should be completed.

One area where the ABN may become particularly relevant is when hospitals are dealing with patients who have been cleared medically from the emergency room, but may not have an ideal discharge plan due to social reasons. This can involve tugging on provider heartstrings and internal alarms, along with a misguided sense that bedding the patient will solve a housing or caretaker issue. Examples may include patients who lack a safe discharge environment, need temporary supervision, or require placement assistance, but do not meet Medicare’s inpatient or observation medical necessity criteria.

In situations where a traditional Medicare beneficiary is being bedded for social reasons, such as an outpatient in a bed, an ABN may be used to notify the patient that Medicare is expected to deny payment – and that they may be responsible for the cost if they choose to proceed.

For case managers and utilization review teams, these situations often arise during discussions about discharge barriers such as homelessness, caregiver absence, or placement delays, either after treatment, in the ED, or after observation services have been completed. While the patient’s social needs may be significant, Medicare coverage decisions still remain tied to medical necessity requirements.

Issuing an ABN in these circumstances helps ensure transparency with the beneficiary while protecting the hospital from financial liability, when services are known to be outside Medicare coverage parameters.

Although the updated ABN instructions involve only minor revisions, they highlight the importance of maintaining strong frontline workflows. Registration staff, case managers, utilization review nurses, and financial counselors should all understand when ABNs are appropriate and how they must be completed.

According to CMS guidelines, common audit findings for noncompliance continue to include:

• Issuing ABNs after services have already begun;

• Using vague or blanket descriptions of services; and

• Failing to include a reasonable cost estimate.

Ensuring proper ABN use supports clear communication with patients about coverage limitations and allows them to make informed decisions about their care.

Connecting Medical Necessity and Clinical Documentation

By Tiffany Ferguson, LMSW, CMAC, ACM

Hospitals often approach clinical documentation integrity (CDI) and utilization review (UR) as separate operational functions. CDI teams focus on ensuring that documentation accurately reflects patient acuity and supports coded diagnoses, while UR teams evaluate medical necessity and appropriate admission status.

Both groups spend a significant amount of time demonstrating their return on investment to their healthcare organizations, often through competing metrics such as increasing case mix index (CMI), decreasing observation rates, or improving physician-to-physician (P2P) overturn rates.

While UR, CDI, and physician advisors all face an uphill battle to define their value, these labels often place them in a reactive framework that unintentionally silos their work. The measure that should align all three functions is much simpler: ensuring that hospitals are appropriately reimbursed for services rendered and care delivered.

So, how do organizations move toward that vision?

While there may not be a single solution, there are opportunities to leverage the data generated by both CDI and UR teams to create a more unified operational story. One of the most valuable opportunities lies in analyzing cases where indicators from both CDI and UR appear simultaneously.

For example, hospitals can review cases with both a CDI query and a UR screening when clinical guideline criteria were not met. These cases often signal documentation gaps that affect both admission justification and diagnosis support. While the patient may have been clinically appropriate for hospitalization, the documentation’s clinical picture may not have been strong enough to clearly support inpatient status, weakening the hospital’s ability to defend the case during payor review. Regardless of the outcome, both teams often expend additional effort through queries, secondary reviews, or appeals.

Similarly, cases that include both payor denials and unresolved CDI queries can provide valuable insight into documentation patterns that increase denial risk. Reviewing these cases collaboratively allows organizations to determine whether the issue stemmed from unclear physician documentation, insufficient clinical evidence in the record, or misalignment between the documented diagnosis and the patient’s clinical presentation.

P2P discussions also represent an underutilized learning opportunity. When cases requiring P2P review also include CDI queries related to diagnosis clarification, it often signals that both medical necessity and documentation clarity were challenged by the payor. Capturing these cases and analyzing trends across CDI and UR teams can help identify recurring documentation gaps that can be closed by targeted provider education.

Another area worth examining is short length-of-stay cases that receive clinical validation denials. When payers question whether a coded diagnosis is supported by the clinical record, the broader issue may also include whether the inpatient admission was clearly justified. Reviewing these cases through a joint CDI and UR lens can help identify opportunities for shared learning and process improvement.

The real value of this collaboration lies in the feedback loop created for physicians. Rather than CDI and UR teams delivering separate or fragmented messaging, hospitals can develop unified dashboards that highlight correlational trends between medical necessity determinations, CDI queries, denials, and appeals. This approach allows organizations to provide clearer, more consistent provider education that addresses both medical necessity and documentation clarity.

Practical strategies may include physician tip sheets, focused case reviews, or brief educational sessions highlighting denial trends and documentation best practices. When providers understand how documentation supports both accurate diagnosis capture and medical necessity justification, the medical record becomes a stronger and more defensible representation of each patient’s clinical story.

How AI Is Reshaping Case Management

By Marie Stinebuck, MBA, MSN, ACM

One of the greatest challenges facing case management today is not a lack of clinical expertise; it is a lack of time. Case managers are navigating increasingly complex patients, payer requirements, post-acute placement barriers, and social determinants of health (SDoH), all while being expected to move patients safely and efficiently through the continuum of care.

At the same time, hospitals are operating under tighter margins and heightened regulatory scrutiny. In this environment, one of the most underutilized tools available to case management departments is artificial intelligence (AI) and advanced analytics. When implemented thoughtfully, AI does not replace the heart of case management: advocacy, clinical judgment, and interdisciplinary coordination. What changes is when we intervene, where we focus our attention, and how we scale our impact.

Historically, case management workflows have relied on retrospective metrics such as monthly length-of-stay (LOS) reports or post-discharge readmission data. While valuable, these measures tell us what has already happened. AI-enabled tools shift the focus to what is likely to happen. Daily LOS risk alerts, real-time readmission probability scores, and predicted patient complexity allow teams to identify risk earlier in the hospitalization.

This shift moves case management from reactive problem-solving to proactive risk mitigation. Instead of discovering discharge barriers on day four or five, predictive models can flag potential delays within the first 24–48 hours. Whether the risk involves post-acute placement challenges, prior authorization requirements, transportation limitations, or limited caregiver support, early identification enables early intervention and thus prevents avoidable days.

Predictive risk stratification models can analyze large volumes of clinical, demographic, and utilization data to identify patients at higher risk for readmission, complications, or extended LOS. Rather than completing a full initial assessment on every patient at admission, technology can help screen low-risk individuals and prioritize early interventions for high-risk patients.  

This approach is especially relevant when considering that a small percentage of Medicare beneficiaries account for a disproportionate share of healthcare spending. Aligning case management resources with this high-risk population improves efficiency while supporting compliance with Centers for Medicare & Medicaid Services (CMS) discharge planning requirements under the Conditions of Participation, 42 CFR §482.43.

Rule-based analytics also support case management in the emergency department. Advanced tracking tools can identify high utilizers or “boomerang” patients who return shortly after discharge. Early visibility allows for timely utilization review, accurate admission status decisions, and discharge planning conversations that begin at the point of entry, rather than at the point of exit.

Looking ahead, the importance of predictive analytics will only increase. As Medicare Advantage (MA) populations become integrated into broader quality and readmission accountability structures, hospitals will face greater financial exposure related to avoidable utilization. Proactively identifying risk and closing care gaps in real time will be critical to both quality performance and fiscal stewardship.

Ultimately, success is not defined by simply adopting new technology. It is defined by transforming workflows to support earlier intervention, reducing administrative burden, streamlining authorization processes, and ensuring safe, supported transitions across the continuum of care.

When paired with clinical expertise and ethical advocacy, AI can enable case managers to operate at the top of licensure and at the pace modern healthcare demands.

Driving Reliable IM Compliance Through Standardized Processes

By Marie Stinebuck, MBA, MSN, ACM

The delivery of the Important Message from Medicare (IM) is a longstanding regulatory requirement intended to inform Medicare beneficiaries of their inpatient status and their right to appeal a hospital discharge. While most case management and utilization review teams understand the basic timing requirements for delivery, confusion often arises around the operational details that follow issuance of the second IM, particularly when a patient elects to request an expedited discharge appeal through the Quality Improvement Organization (QIO).

IM delivery is a process ingrained into every case management program. In this article, we will address some of the most common areas of confusion related to IM delivery requirements and the process for delivering the IM letter. IM delivery does not require a professional license. This is a logistical task that should be performed by support roles such as the case management assistant. The RN and social worker roles should be reserved for assessing and developing the plan of care for the most complex patients requiring case management services.

National benchmarking indicates that hospitals achieve an average 80–85% delivery compliance rate for the second IM, which is generally considered an acceptable threshold for demonstrating a reliable and sustainable process for notifying Medicare beneficiaries of their discharge appeal rights. While organizations should always strive for continuous improvement, maintaining compliance within this national range reflects a standardized workflow that accounts for real-time discharge variability and patient availability.

If your organization is still struggling with a low compliance rate, consider creating achievable goals for your team and celebrating incremental improvements. For example, a 10% improvement over a six-month period with outlined process enhancements will steadily increase your compliance percentage. Accrediting organizations are looking for a consistent, compliant process that demonstrates continued improvement, not perfection.

Confusion still exists regarding whether the second IM requires a patient signature at the time of delivery. If the follow-up paper notice is a copy of the originally signed IM provided at admission, an additional signature is not required. However, if a blank or unsigned IM is issued as the follow-up copy, a signature must be obtained from the patient or their authorized representative. CMS encourages hospitals to document delivery through initials or staff verification within the patient record to demonstrate compliance with notification requirements. Delivery also requires documentation in the patient’s medical record.

Questions also arise regarding the timing of delivery on the day of discharge. CMS outlines in Section 200.3.4.2 of the Medicare Claims Processing Manual the requirement for delivery of the second IMM within two days of discharge. Guidelines allow delivery of the letter no sooner than two days before discharge and allow delivery of the follow-up IM on the day of discharge. However, this practice cannot occur routinely. When the IM is delivered on the day of discharge, the hospital must allow the patient to remain inpatient for at least four hours following delivery to provide adequate time to consider or initiate a QIO appeal request. Patients who agree with the discharge plan are not required to remain hospitalized during this period.

Hospitals are also prohibited from pre-scheduling delivery of follow-up IMs on certain days of the week, such as issuing all notices on Mondays, Wednesdays, and Fridays. This practice violates CMS Section 200.3.4.2 instructions requiring delivery no more than two calendar days prior to the anticipated date of discharge and may conflict with Conditions of Participation related to patient rights. If a patient receives a follow-up IM but remains hospitalized two days after delivery, an additional follow-up IM must be issued prior to the next proposed discharge date.

The IM letter outlines the patient’s ability to appeal their discharge if they feel they are being discharged too early or do not feel they have a safe discharge plan in place. A Medicare beneficiary must submit a timely request for QIO review of their discharge. When this occurs, the patient cannot be held financially responsible for any portion of their inpatient stay while the QIO is conducting its review. Financial liability may only shift to the patient after the QIO issues its determination regarding the appropriateness of discharge. The patient must be made aware that their discharge has been upheld and that they will be held financially responsible for their continued stay the following day beginning at noon. If the patient elects to remain in the hospital after the QIO denial, the hospital must notify the patient that Medicare coverage has ended and inform them of their potential financial responsibility, typically through issuance of a Hospital-Issued Notice of Noncoverage (HINN 12).

Patients do have the option to pursue a second appeal related to their discharge. Medicare coverage does not automatically continue during the second-level appeal, known as reconsideration through the Qualified Independent Contractor (QIC). Once the QIO upholds the hospital’s discharge decision in the first-level appeal, Medicare coverage for the inpatient stay ends as of the effective date determined by the QIO. The patient becomes financially responsible for the stay, as discussed above, beginning at noon the following day after their discharge appeal has been denied. Although the patient may choose to remain hospitalized while pursuing a second-level appeal, the hospital may begin holding the patient financially liable for inpatient services received after that effective date. This represents a key distinction from the first-level QIO appeal, during which Medicare continues to cover the inpatient stay and the patient cannot be held financially responsible while the review is in progress.

Understanding the regulatory requirements surrounding IM delivery is essential to ensure both patient rights and organizational compliance are maintained. While the process itself is operational in nature, failure to adhere to timing, documentation, and appeal notification requirements can result in compliance risk and financial liability for the organization. Establishing standardized workflows, delegating delivery responsibilities to appropriate support roles, and maintaining consistent documentation practices will support sustainable compliance with CMS requirements while allowing licensed case management professionals to focus on complex discharge planning and care coordination activities.

Reference: Medicare Claims Processing Manual

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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!