Rebooting “Observing the Rules for Observation After Outpatient Surgery”

By Juliet Ugarte Hopkins, MD

Written in March 2013 by the highly respected Dr. Steven Meyerson, “Observing the Rules for Observation after Outpatient Surgery” evolved over time into one of the most-read articles in the history of RACmonitor. This point became extremely relevant to me earlier this year, when my manager of case management rushed into my office, papers in hand, hot off the printer.

“Read this article!” she exclaimed. “I think we might need to change the way we think about patients who are hospitalized after pre-scheduled procedures.”

Reading through the piece (admittedly, for the first time – forgive me, Dr. Meyerson!), it very quickly became apparent that the content should have already been part of my modus operandi, as a physician advisor for my health system. But it was also very clear why my department manager would have no knowledge of this. Which brought the concern to my mind: “What about RACmonitor’s other followers? How will they know what’s happening here?” 

Happily, the publisher of RACmonitor, Chuck Buck, along with Dr. Meyerson himself, gave me their blessing to update this classic article, which contained excellent direction and advice before the Centers for Medicare & Medicaid Services (CMS) Two-Midnight Rule came into existence just over 10 years ago. In the following paragraphs, you will see original paragraphs from Dr. Meyerson’s article as well as my remarks.

The rules governing the use of observation for patients undergoing scheduled outpatient procedures are quite different from those that apply to patients coming in from the ED (emergency department) with undiagnosed symptoms or urgent conditions. Placement and billing errors are common, so it is worth reviewing the subject at this time.

This remains true, but the greater point in 2023 is that the finer points of conversion from outpatient to outpatient with observation services for a scheduled postoperative patient require much more deliberate education for physicians, nurses, and case managers. More on that in a bit.

Actually, it’s quite simple: as a rule of thumb, the only time observation can be used for a patient having a scheduled outpatient surgery or procedure is when there is a postoperative complication that prolongs routine recovery. But like most things Medicare, it’s never quite that simple – so read on.

Today, post-Two-Midnight Rule, this is exactly the only time observation can be used for a patient having a scheduled outpatient surgery or procedure – when there is a complication either during the procedure or during the recovery period. While a prolongation of the recovery sometimes comes into play…it’s not a necessity. Anything that requires care above and beyond what was originally expected or anticipated makes a change from outpatient to outpatient with observation services appropriate. This could involve something as simple as nurses performing vitals every two hours instead of every four. The point is that more care or services are being provided to the patient than per the usual routine. Something as subtle as this can sometimes be hard for people to recognize, which is why it is important to be vigilant so observation hours are captured appropriately. 

According to the Medicare Claims Processing Manual (Chapter 4, Section 290.2.2), “hospitals should not report as observation care services that are part of another Part B service, such as postoperative monitoring during a standard recovery period (e.g., 4-6 hours).” While this section mentions “4-6 hours” as an example of a standard recovery period, it is important to note that this time frame only is used as an example and does not set an upper limit on the time permissible for recovery. In other words, it would be inappropriate to place a postoperative patient into recovery just because an arbitrary six-hour time period has elapsed. CMS explains that a patient having an outpatient procedure may be expected to stay up to 24 hours: “When patients with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for only a few hours (less than 24),” the agency has indicated, “they are considered outpatients for coverage purposes regardless of the hour they came to the hospital, whether they used a bed, and whether they remained in the hospital past midnight.” (Medicare Benefit Policy Manual, Chapter 1.) In this case, “less than 24” does define a time limit on an expected outpatient stay, and this clarifies that a patient’s stay may be overnight in a hospital bed in outpatient status – and still qualify as recovery.

Chapter 4 of the Medicare Claims Processing Manual was last revised on Dec. 22, 2017, but changes were not made to Section 290.2.2. It continues to include the direction mentioned above about not reporting observation services hours in cases of “postoperative monitoring during a standard recovery period (e.g., 4-6 hours).” Again, like before, the timeframe of “4-6 hours” is not a guide on how long recovery should be considered “routine” following a procedure. If one of your surgeons feels “routine recovery” following a procedure involves hospital care for 48 hours, that patient should remain in outpatient status for 48 hours. But you’ll probably want to sit down and figure out why she considers this prolonged time period routine and necessary. Is it truly a best practice and standard of care? Or is it simply the way she’s practiced for the last 25 years?

On the other hand, the Florida fiscal intermediary in 2003 explained that “if the physician intends to keep the patient overnight, especially for 24 hours or more of care at an inpatient level of care (prolonged monitoring given co-morbidity, frequent laboratory studies, frequent IV therapy, etc.), then the physician should schedule an inpatient admission. Also, it is important that physicians document the indications for the procedure and the associated co-morbidities since the medical necessity of the procedure as well as the need for the overnight stay can be reviewed by the QIO (Quality Improvement Organization).” (Florida Medicare A Bulletin, third quarter of 2003.)

This is likely the first paragraph that piqued my manager’s attention, and your first clue that something is awry. Reference to “24 hours or more of care” and “inpatient admission” no longer go together, post-Two-Midnight Rule. Also, with the exception of total knee arthroplasty, as described in the much-obsessed-over 2018 Outpatient Prospective Payment System (OPPS) Final Rule, prolonged monitoring given co-morbidities and/or feared complications that might rear their ugly heads do not support starting with inpatient – or even counting observation hours. For example, a surgeon might elect to keep their patient with a history of asthma who is post-laparoscopic appendectomy in the hospital overnight due to a concern of bronchospasm post-intubation. But observation hours should not be counted unless the patient actually develops respiratory issues that require additional assessment or treatment. If the patient’s recovery overnight is unremarkable, the status should remain outpatient without the addition of observation hours.

In the April 7, 2000 Outpatient Prospective Payment System (OPPS) Final Rule (65 FR 18455), in explaining the criteria for selection of procedures for the Inpatient-Only List, CMS noted that “the inpatient list specifies those services that are only paid when provided in an inpatient setting because of the nature of the procedure, the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged, or the underlying physical condition of the patient.” Thus, one of the criteria that distinguishes inpatient surgery from outpatient surgery is an expected length of stay of up to 24 hours for outpatient procedures and greater than 24 hours for inpatient. This offers additional evidence indicating that there is no need to change patient status for an overnight stay following uncomplicated outpatient surgery when the stay is expected to be less than 24 hours. Notice that in both cases, whether discussing the expected length of stay for a patient having outpatient surgery or one having an inpatient procedure, it’s the physician’s expectation at the time of admission that determines the proper level of care, not the actual length of stay, as viewed in retrospect.

In the 2018 OPPS Final Rule, CMS refers back to their 2012 OPPS/ASC Final Rule for discussion on how they identify procedures that are “typically provided only in an inpatient setting” and therefore are on the Inpatient-Only List. But, in true CMS fashion, looking at the 2012 Final Rule, you’ll find it references the April 2000 OPPS Final Rule. This is the same discussion Dr. Meyerson references about, “the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged.” But it’s important to recognize this is not a direction to place a procedural patient who has an anticipated need for 24 hours of monitored recovery into inpatient status.

So if the patient can stay overnight in a hospital bed following outpatient tests or surgery without observation, when would observation be appropriate? WPS Medicare (LCD L32222) explained that when a patient has a significant adverse reaction (beyond the usual and expected response) as a result of the test that requires further monitoring, outpatient observation or inpatient hospital services may be reasonable and necessary.

Outpatient with observation services? Yes. Inpatient? Only if the patient ends up requiring a second midnight of care, or if you want to test your luck with the vague concept of the physician judgment exception added by CMS into the Two-Midnight Rule on Jan. 1, 2016. (See Dr. Ronald Hirsch’s article at https://www.racmonitor.com/the-new-short-stay-exception-read-before-using to learn more.)

TMF Health Quality Institute, the Texas Medicare QIO, in its Medicare Outpatient Observation Physician Guidelines Q&A, answered the question, “Can a same-day surgery patient with no postoperative complications be admitted to observation?” TMF responded “No. There must be medical necessity of observation services documented in the medical record. Observation is not to be used as a substitute for recovery room services.” Another question asked, “Can a patient be placed in observation status prior to outpatient surgery?” TMF’s answer: “No. The need for observation care should be determined by the patient’s condition during the postoperative recovery period, not prior to surgery.”

TMF further described other situations in which observation would not be appropriate for surgical patients, such as:

• Routine stays following late surgery;

• Outpatient therapy/procedures (unless there is documentation that the patient’s condition is unstable);

• Normal postoperative recovery time following surgery;

• Stays for the convenience of the patient, family, or doctor; and

• Stays prior to an outpatient surgery procedure.

TMF who? TMF Health Quality Institute evolved into a different kind of QIO since the spring of 2013, when Dr. Meyerson’s original article was published, as currently, the only Beneficiary and Family Centered Care (BFCC) QIOs in action are Livanta and Kepro when it comes to hospitals. The points given above still ring true, though, when it comes to situations that would not be appropriate for observation hours.

TMF even supplied a list of typical postoperative problems that warrant observation:

• Persistent nausea/vomiting;

• Fluid/electrolyte imbalance;

• Uncontrolled pain;

• Dysrhythmias;

• Excessive/uncontrolled bleeding;

• Psychotic behavior;

• Unstable level of consciousness; and

• Deficit in mobility/coordination.

This is helpful, too, and still applicable. Remember that anything that requires additional assessment, care, or treatment beyond routine recovery means an observation order should be placed by the provider. The list above only scratches the surface of reasons why a patient might be appropriate for observation services.

So, what should a surgeon or proceduralist do if no adverse event has occurred, but the physician wants to extend monitoring because the patient is at risk for complications or may not recover as expected due to age, frailty, or comorbidities? The proper approach would be to use overnight recovery in an outpatient bed. There would be no need to order observation because an adverse event did not occur; the physician may order observation only after such an event, and the medical record must indicate clearly the reason that observation was medically necessary. A surgeon concerned about the risk of complications would order extended recovery, monitor the patient overnight (as an outpatient in a bed), and either release the patient the next day or order observation (or admission) if a complication does occur.

This paragraph still rings true, but I’d like to point out that supporting the term “extended recovery” can be a slippery slope. Many institutions used this designator interchangeably with “observation” or “23-hour observation” back in the days when needing 24 hours or more of hospitalization equaled inpatient status. I have found that sticking with “inpatient,” “observation,” and “outpatient in a bed” makes things much clearer.

It’s ironic, and somewhat illogical, that a patient may be admitted to the hospital as an inpatient prior to surgery for what ordinarily would be an outpatient procedure if the surgeon is concerned about a high risk of complications due to the patient’s clinical condition or past history, but the surgeon would not order observation based on a similar risk assessment after the operation or procedure.

This is exactly why, almost five years later, when the 2018 OPPS Final Rule came out about including direction about total knee arthroplasties, which were taken off the Inpatient-Only List, there was much angst and gnashing of teeth.

Some surgeons are uncomfortable placing a patient in an outpatient bed overnight following surgery without ordering observation. They should be reassured that this is not a quality or safety issue. The same monitoring and treatment may be ordered for a patient in overnight recovery as for a similar patient who has observation services ordered. Some also are concerned about the financial implications, and feel that if they order observation, “at least the hospital gets paid.” Unfortunately, this is not always the case. Contrary to CMS policy, which provides for payment to the hospital for observation services for a patient placed into observation from the ED or from a physician’s office, “if a hospital provides a service with status indicator ‘T’ on the same date of service, or one day earlier than the date of service associated with HCPCS code G0378 (used to denote observation hours), the composite APC 8003 (used to bill the observation stay for patients placed into observation from the ED) would not apply … HCPCS code G0378 will continue to be assigned status indicator ‘N,’ signifying that its payment is always packaged.” In other words, if a patient has an outpatient procedure (status indicator “T” or “J1” on CMS Addendum B), the hospital does not receive any additional payment for observation. It is “packaged” into the Ambulatory Payment Classification (APC) payment for the procedure whether observation is ordered or not. (OPPS Final Rule, Nov. 1, 2007, CMS-1392-FC.)

Today, instead of APC 8003, we have C-APC 8011 to bill observation stays. However they are still separated from an outpatient procedure with status indicator “T” or “J1” on CMS Addendum B, and there is no additional payment given to the hospital for the observation services. This does not mean there is no reason to pursue an order for observation services, when appropriate. Remember that for quality tracking purposes, including assessment of length of stay, it’s important to identify which patients followed a regular and routine recovery pathway, and which did not. Also, while Fee-for-Service Medicare does not provide additional payment for observation services in these cases, your other payors likely do. 

Notice that the TMF list of situations in which observation would not be appropriate includes “stays prior to an outpatient surgery procedure.” It adds that observation cannot be used for a prep of any kind, including, for example, preoperative hydration or cardiac assessment, bowel prep, or “renal protection protocol.” Nor can observation be based on time spent in recovery. Observation is properly used only if an intra- or post-op procedure complication actually occurs.

I’d like to interject here with an example of a rare instance where pre-hospitalization for observation services before a procedure would be justified.  Mind you, this is the only case I saw in almost nine years of serving as a health system physician advisor, but it demonstrates that it is a possibility. The patient, a brittle Type 1 diabetic, was scheduled for a colonoscopy. The gastroenterologist was concerned because when the patient was prepped at home for the same procedure just a year before, she developed profound hypoglycemia, to the extent that she required emergency care and subsequent hospitalization for stabilization. In this case, the patient truly required pre-hospitalization, not simply to carry out the GI prep, but also to administer IV fluids with dextrose and closely monitor her blood glucose levels for active treatment, either with adjustments to the fluids or adjustments to her insulin administration. 

If surgery or a procedure interrupts observation and the patient returns to the observation bed for continued evaluation or short-term treatment, and there is still a question of whether the patient will have to be admitted, observation would continue – but the time the patient was under “active monitoring” in the operative suite (including routine recovery in the post-anesthesia care unit) would be carved out for billing purposes.

This remains true.

So far, Recovery Audit Contractor (RAC) auditors have not paid a lot of attention to the use of observation. With respect to postoperative observation, since there is no additional payment, there would be no incentive for an auditor paid on a contingency fee basis to bother auditing these records. However, there is reason to be concerned about proper use of observation for surgical patients, since Medicare requires accurate billing even if there is no payment rendered. In its 2012 and 2013 Work Plans, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) outlines a focus on “observation services during outpatient visits.”

“We will review Medicare payments for observation services provided by hospital outpatient departments to assess the appropriateness of the services and their effect on Medicare beneficiaries’ out-of-pocket expenses for healthcare services,” the precise language reads. So even though there is no significant effect on Medicare beneficiaries’ out-of-pocket expenses for postoperative observation, if the OIG investigates a hospital’s use of observation due to an excessive number of such claims filed as compared to peers, the hospital could face a compliance challenge if the review reveals inappropriate and/or excessive use of observation.

I did not investigate the outcome of the OIG Work Plans in 2012 and 2013 mentioned above. Looking at the active Work-Plan items on the OIG website involving “observation,” there is only one involving hospital care, dated November 2016 and titled Medicare Payments for Transitional Care Management. However, this involves care management services provided to patients moving from a hospital, partial hospital, or skilled nursing facility to the community setting, and not specifically observation services provided in the hospital setting.

Considering the limited circumstances under which postoperative observation is appropriate, and the lack of reimbursement for the service, hospitals would be wise to monitor the use of observation among these patients and ensure that when observation is billed, there are documented postoperative complications – and that observation is not used for preoperative preparation or for routine postoperative recovery.

Agreed! If your hospital’s surgeons and proceduralists continue to place patients into outpatient status with observation services for routine postoperative care, that’s a situation that needs to be addressed. Conversely, education is also imperative to ensure justified observation hours are captured and billed.  From your providers to the bedside nurses to the case and utilization managers, do they know when an observation order should be entered? Make it a point to ask around…you might be surprised what you find.

How Do We Code Outpatient Surgeries-Turned-Hospitalizations?

By Erica E. Remer, MD, CCDS

Recently I wrote about when surgery should be performed as an inpatient, when it can be outpatient, and how to utilize observation services in the context of surgical procedures. Now, I want to tackle how to document and code such encounters compliantly. I’d like to thank Colleen Ejak, Kathy Murchland, Damon Schmelzle, and ICD10monitor’s Laurie Johnson and Patty Chua for their sage advice.

Let’s use as our example a Medicare patient with chronic cholecystitis who has a laparoscopic cholecystectomy. The procedure is not on the Inpatient-Only (IPO) List, so, barring extenuating circumstances like having high-risk comorbidities, it will be done as an outpatient. For right now, let’s stipulate that it is being done in a hospital-based outpatient surgery department.

Undergoing this procedure as an outpatient surgery, the patient is expected to be in the recovery room for a limited amount of time and then discharged to home. The first-listed diagnosis is K81.1, Chronic cholecystitis, and the procedure is billed as with Current Procedural Terminology (CPT®) Code 47562, Laparoscopy, surgical; cholecystectomy.

Let’s say that the surgery was scheduled as the last procedure of the day, and ended up getting bumped so late that the surgeon takes pity on the patient and says, “Let’s keep you overnight to watch you.” Without any complications or unusual issues with recovery, an overnight stay for convenience is just an extended recovery or overnight/outpatient in a bed. These do not constitute observation services.  Also, an observation stay cannot be scheduled in advance. Dr. Ronald Hirsch’s saying is that if your provider is scheduling observation prior to the procedure, they are scheduling a complication – and maybe you should find someone else to do the surgery.

Now, say our newly gallbladder-less friend begins vomiting from the anesthesia and just can’t stop. They now have the complication of intractable vomiting. We have every hope that this will stop within about 24 hours, so placing the patient in outpatient status for observation services (OBS) is reasonable. ICD-10-CM Guidelines for Coding and Reporting, IV.A.2., states that the reason for the surgery is the first reported diagnosis (it is the reason for the encounter), followed by codes for the complications as secondary diagnoses.

Therefore, her first-listed diagnosis (the outpatient correlates to the principal diagnosis (PDx) for an inpatient admission) is K81.1, Chronic cholecystitis. But what would the secondary diagnosis/diagnoses be?

Before we tackle the secondary diagnoses, let’s address the procedure. Since the procedure and the observation stay are in the same hospital, the encounters are combined (for the technical component). The 47562, Laparoscopic cholecystectomy, would also be coded on the outpatient claim with observation hours. But it does not get coded if the entities were not related; e.g., outpatient surgery in an ambulatory surgical center (ASC) not affiliated with the hospital to which the patient was transferred (I’ll get to this scenario in a moment).

The issue is vomiting, so a secondary diagnosis would be R11.10, Vomiting, unspecified. But does that tell the whole story? Especially if the procedure is not coded as in the ASC/observation case, how can we tell that the patient had an operation?

If the procedure were an appendectomy, you would use K91.0, Vomiting following gastrointestinal surgery. This is a combination code – it informs us that there is vomiting and the circumstances that elicited the vomiting (that it is post-surgical). Cholecystectomy isn’t gastrointestinal surgery – it is on the biliary tract. It is in the digestive system, but it isn’t gastrointestinal. The fact that the gastrointestinal Procedure Coding System falls into 0D and gallbladder procedures fall into 0F supports this position.

I posit that ICD-10-CM code K91.89 and other postprocedural complications and disorders of the digestive system should be assigned. R11.10 would be an “additional code, if applicable, to further specify disorder.” K91.89 gives that piece of information that the patient underwent a surgical procedure, and the issue is a postprocedural complication. R11.10 indicates what the postprocedural complication was.

An aside – K91.5, Post-cholecystectomy syndrome (PCS), is a condition in which a patient undergoes a cholecystectomy and the symptoms that elicited the surgical intervention persist or recur – or new symptoms normally attributed to the gallbladder arise. Right upper-quadrant abdominal pain and dyspepsia are common. It is considered early if it occurs in the postoperative period, but it can manifest after months or years in the late variant. If the provider documented “post-cholecystectomy syndrome” for our exemplar, you would pick this code up. If they document “intractable vomiting” or “persistent vomiting post-anesthesia,” PCS would not be appropriate.

The next scenario is that the same outpatient surgery patient placed in observation with intractable vomiting gets so dehydrated that they ends up in renal failure; in this case, it is clear they are going to cross a second midnight, so the provider converts them to inpatient. According to II. I. 2., “When a patient is admitted to observation to monitor a condition (or complication) that develops following outpatient surgery, and then is subsequently admitted as an inpatient of the same hospital, hospitals should apply the Uniform Hospital Discharge Data Set (UHDDS) definition of PDx as ‘that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.’”

The acute kidney injury (AKI) is the reason they are being admitted, so you would think N17.9, Acute kidney failure, unspecified, could be the PDx. However, I would still say that there is a direct line from the postoperative complication (vomiting) to the dehydration causing AKI, and therefore, K91.89 is still the PDx.  E86.0, Dehydration, N17.9, and R11.10 would be secondary diagnoses.

The other twist is that the procedure gets converted into ICD-10-PCS. It will likely drive the Diagnosis-Related Group (DRG) and is included because it is part of the episode of care, according to the three-day payment window rule.

We have to digress for a moment again. This surgery was done in a hospital-based outpatient setting. For Medicare patients, the technical component of all outpatient diagnostic services and therapeutic services considered related, within the three days preceding, get bundled into an inpatient admission. This is called the three-day payment window rule or policy and applies to entities wholly owned or wholly operated by the hospital. This may encompass more than 72 hours because it is according to the calendar day.

There is an exclusion if the hospital and other Part B entity are both owned by a third party, such as a comprehensive healthcare system. It also doesn’t apply if the entities are not related in any way. Psychiatric hospitals and units, inpatient rehabilitation hospitals and units, long-term care hospitals, children’s hospitals, and cancer hospitals have a one-day payment window.

The final setup is directly admitting a patient from outpatient surgery. Let’s use a different example this time because there are three scenarios to discuss. I’m choosing acute appendicitis seen in the emergency department. If the patient is sick and/or has significant comorbidities and risk, they may get admitted inpatient prior to the surgery, even though appendectomy is not on the IPO List. However, sometimes, the surgeon takes the patient to the operating suite intending for it to be an outpatient procedure, and then has to pivot after surgery.

• Scenario 1: The patient has a complication after or during surgery. Let’s pick accidental puncture and laceration of the bowel with contents spillage. K91.71, Accidental puncture and laceration of a digestive system organ or structure during a digestive system procedure is the PDx, as per II. J. Admission from Outpatient Surgery. If the reason for the inpatient admission is a complication, that is assigned as the PDx. If the complication is from T80-T88 or is too generic and lacks specificity, an additional code for the specific complication is indicated. The condition that elicited the procedure is a secondary diagnosis. The procedure is included on the claim in the ICD-10-PCS form.

• Scenario 2: During the procedure, it was determined that the appendicitis was more complicated than the imaging suggested. There was perforation or a poorly visualized abscess, and the surgeon realized that it was going to take several days of antibiotics and monitoring to ensure a good outcome. They write admission orders and convert the outpatient surgery to an inpatient admission. The PDx is the reason for the operation, found in K35.-, Acute appendicitis, with specificity (generalized or localized peritonitis, abscess, perforation, and/or gangrene). II.J. stipulates: “if no complication, or other condition, is documented as the reason for the inpatient admission, assign the reason for the outpatient surgery as the PDx.”
  
  If the hospital owns the outpatient surgical center (or ASC, for an appropriate procedure), the procedure would be coded. But if the hospital doesn’t own it, how do you convey that the patient is postoperative? Could you use Z90.49, Acquired absence of other specified parts of the digestive tract, to signify that the patient had undergone an appendectomy? This type of Z code, or status code, indicates “that a patient has the sequelae or residual of a past disease or condition” [I.C.21.3)]. This isn’t a “past disease or condition” yet. Z90.49 (when relevant) will be used in the future, but it is not appropriate until the patient has completely healed.
  
  What I am going to say now may be controversial. I think you would use Z48.815, Encounter for surgical aftercare following surgery on the digestive system. This conveys that the patient is still in the recovery phase after a procedure. II.21.c.7 instructs that this type of code be used “when the patient requires continued care during the healing or recovery phase.” The American Hospital Association’s ICD-10-CM and -PCS Coding Handbook says: that aftercare codes “can be used occasionally as additional codes when aftercare is provided during an encounter for treatment of an unrelated condition but no applicable diagnosis code is available. Aftercare codes should be used in conjunction with any other aftercare or diagnosis code(s) to provide better detail on the specifics of an aftercare visit…” We have the details of the underlying condition that caused the surgery, but we don’t, as yet, have a code indicating that surgery was done for that condition and the patient is in the recovery phase.
  
  If the hospital owned both entities, the payment episode was continuous, and the procedure is enfolded into the encounter. If the hospital does not, then the payment episode is interrupted, and Z48.815 could communicate that the patient was post-surgical. Especially now that we treat some acute appendicitis with antibiotics instead of cold, hard steel, we definitely need a mechanism to signal that the patient has been operated upon.

• Scenario 3: The patient has a comorbidity that occasionally flares up, and it does so in the recovery room or has a new condition not felt to be directly due to the surgery, per se. Perhaps the provider explicitly links it to something other than the surgery (e.g., acute-on-chronic hypercapnic respiratory failure due to exacerbation of COPD). Don’t get confused like clinicians do – just because it occurs in the postoperative period doesn’t make it cause-and-effect, a requisite for recognizing a complication for ICD-10-CM.
  
  As per II.J., “If the reason for the inpatient admission is another condition unrelated to the surgery, assign the unrelated condition as the PDx.” J44.1, Chronic obstructive pulmonary disease with (acute) exacerbation, would be the PDx; J96.22, Acute and chronic respiratory failure with hypercapnia and K35.30, Acute appendicitis with localized peritonitis without perforation or gangrene, would be secondary diagnoses, and 0DTJ4ZZ, Resection of Appendix, Percutaneous Endoscopic Approach, would be the principal procedure.
  
  If the coder is unsure, they may need to query. For instance, a query to ascertain whether the provider believes the new-onset atrial fibrillation is a postprocedural complication or unrelated may be necessary (i.e., is it I97.191, Other postprocedural cardiac functional disturbances following other surgery with I48.91, Unspecified atrial fibrillation, or just I48.91?).
  
  Along those lines, an unrelated medical condition arising in recovery resulting in the provision of observation services would be first-listed, the condition causing the surgery would be a secondary diagnosis, and the procedure would be coded only if the observation site was owned by the same hospital as the outpatient surgical center. Again, I endorse Z48.815, Encounter for surgical aftercare following surgery on the digestive system to indicate the postoperative status if the surgical site was not owned by the hospital providing the observation services. There is a whole set of surgical aftercare codes available in Z48.8-.

Bottom line, here’s my flow chart:

•   Intraoperative or postprocedural complication

  • Observation stay

    • Reason for surgery is the first-listed diagnosis

    • Complication code secondary

    • Additional code describing complication, if applicable

    • (Other comorbidities’ secondary diagnoses, if applicable)

    • Hospital owns both outpatient surgery center and observation = CPT code

    • Independent outpatient/ASC and hospital observation = No procedure code. The fact that the patient is post-op is inherent in the complication code.

    Observation to inpatient conversion

    • Reason for conversion to inpatient is PDx (likely will be the complication)

    • Reason for surgery is secondary diagnosis

    • Additional code describing complication, if applicable

    • (Other comorbidities’ secondary diagnoses, if applicable)

    • Hospital owns both outpatient surgery center and observation = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code. The fact that the patient is post-op is inherent in the complication code.

  • Inpatient admission directly

    • Complication code is PDx

    • Reason for surgery is secondary diagnosis

    • Additional code describing complication, if applicable

    • (Other comorbidities secondary diagnoses, if applicable)

    • Hospital owns outpatient surgery center = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code. The fact that the patient is post-op is inherent in the complication code.

• Needs further hospital-level care following procedure without complication

  • Observation stay

    • Reason for surgery is first-listed diagnosis

    • Other comorbidities secondary diagnoses, if applicable

    • Hospital owns both outpatient surgery center and observation = CPT code

    • Independent outpatient/ASC and hospital observation = No procedure code and no complication  code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.

  • Observation to inpatient conversion

    • Reason for conversion to inpatient is PDx (according to UHDDS – probably the reason for surgery)

    • Reason for surgery is either primary or secondary diagnosis

    • Other comorbidities’ secondary diagnoses, if applicable

    • Hospital owns both outpatient surgery center and observation = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code and no complication code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.

  • IP admission

    • PDx according to UHDDS (probably the reason for surgery)

    • Reason for surgery is either primary or secondary diagnosis

    • Other comorbidities’ secondary diagnoses, if applicable

    • Hospital owns outpatient surgery center = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code and no complication code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.

• Unrelated medical condition arises that is not a postoperative complication and requires observation or inpatient (if the documentation is not clear, may need a query to determine if complication or unrelated)

  • Observation stay

    • Unrelated medical condition causing observation is first-listed diagnosis

    • Reason for surgery is secondary diagnosis

    • Other comorbidities’ secondary diagnoses, if applicable

    • Hospital owns both outpatient surgery center and observation = CPT code

    • Independent outpatient/ASC and hospital observation = No procedure code and no observation code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.
      
      

    Observation to inpatient conversion

    • Reason for conversion to inpatient is PDx (according to UHDDS – in this case, it is likely the unrelated medical condition)

    • Reason for surgery is secondary diagnosis

    • Other comorbidities’ secondary diagnoses, if applicable

    • Hospital owns both outpatient surgery center and observation = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code and no complication code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.
      

  • IP admission

    • Unrelated medical condition is PDx according to UHDDS

    • Reason for surgery is secondary diagnosis

    • Other comorbidities’ secondary diagnoses, if applicable

    • Hospital owns outpatient surgery center = ICD-10-PCS code

    • Independent outpatient/ASC and hospital observation = No procedure code and no complication code. Use Z48.815, Encounter for surgical aftercare following surgery on the digestive system, as additional diagnosis.

This was a fascinating thought exercise! In essence, you are telling the story of the surgery and what happened during recovery in codes. You need the provider to document so you understand the course of events and whether there was a complication or not. As far as how it gets put on the claims and gets billed, or what condition codes or modifiers you use, you need a real person from revenue cycle to counsel you on that! I hope you found this as interesting as I did. Let me know if you agree, or if it changes your practice (icd10md@outlook.com).

Understanding the U.S. Playbook to Address the Social Determinants of Health

By Tiffany Ferguson, LMSW, CMAC, ACM

The Biden Administration has released a new playbook addressing three “pillars” of emphasis related to the social determinants of health (SDoH), from the Domestic Policy Council’s Office of Science and Technology Policy. While acknowledging the extensive coverage of the evidence and the significance of the SDoH across various media outlets, this review aims to delve into the specific strategies and allocation of resources by the White House to support SDoH initiatives and advance health equity.

Pillar 1: Data Expansion

The first pillar is centered on expanding data acquisition and sharing. The Administration plans to achieve this by fostering enhanced interagency collaboration and standardization of social data collection methods. Key efforts include the establishment of a centralized federal data working coalition, overseen by the Office of the Federal Chief Information Officer within the Office of Management and Budget (OMB). The overarching objective is to adopt a “whole-of-government” approach toward SDoH data collection and management. This involves aligning regulations and leveraging purchasing power in both public and private sectors for health information technology.

Moreover, measures will be taken to protect the exchange of individuals’ sensitive health information across federal agencies, with an expectation of expanded privacy guidelines by the U.S. Department of Health and Human Services (HHS). Notably, the playbook also highlights the need to bridge connection gaps, emphasizing closed-loop referrals. A substantial focus is also dedicated to the “Enterprise-Wide Veteran Social Determinants of Health Framework Integrated Project Team” to address veterans’ SDoH-related needs.

Pillar 2: Flexible Funding for Social Needs

The second pillar emphasizes the allocation of flexible funding for SDoH investments within Medicaid. This involves providing states with guidance on the use of lieu of services and settings (ILOS) to enable managed Medicaid programs to offer optional alternatives to state-plan covered services.

The playbook provides a recap of HCPCS code G0136, which provides reimbursement for SDoH risk assessment. Furthermore, the funding expansion aims to bolster grant eligibility and enhance nutrition support programs such as the Supplemental Nutrition Assistance Program (SNAP), Women, Infants, & Children (WIC), and school-based meals.

Pillar 3: Backbone Organizations

The third pillar focuses on backbone organizations, which act as facilitators managing community-based partnerships across sectors like healthcare, social services, public health, and economic development. The playbook emphasizes training and technical assistance for community care hubs through the National Learning Community.

It also proposes new funding opportunities for growth and expansion, with a specific emphasis on supporting families, early childhood support, and at-risk neighborhoods. Additionally, it expresses a keen interest in enhancing legal services for patients at health centers and advocates for greater attention to environmental justice needs impacting health outcomes.

From a review of the playbook, it is clear that some of these projects have already been started, while others are still yet to be fleshed out for funding allocation; the question remains regarding how this will trickle down to healthcare organizations and communities. As of today, the message focuses on the importance of collecting meaningful SDoH data at both the patient level and macro levels, across agency sectors, for community impact, with intentions for future growth.

Healthcare funding and efforts will continue to focus on expanding healthcare coverage in non-traditional settings, such as street medicine, and bringing non-typical services into the health sector, such as housing assistance, meal delivery, and legal support services. The playbook concludes with an envisioned future “where health and social circumstances can be addressed holistically and equitably.”

Why Understanding the ABN Is Essential for Providers and Medicare Beneficiaries

By Tiffany Ferguson, LMSW, CMAC, ACM

The Advance Beneficiary Notice (ABN), Form CMS-R-131, provided by the Centers for Medicare & Medicaid Services (CMS, is vital for healthcare providers, revenue cycle teams, and Medicare beneficiaries.

What is an ABN?

An ABN is a formal notice provided to Medicare Fee-for-Service (FFS) beneficiaries prior to the start of an outpatient service such as labs, imaging, physical therapy, or observation services, particularly when a service or item may not be covered by Medicare.  To confuse things more, ABNs are used as well for some Part A benefits such as hospice, home health, and religious non-medical health care institutions (RNHCIs).  ABNs are not used for Medicare Advantage, Managed Medicaid, commercial, or Part D plans.

These plans, however, may have similar forms that often fall under the prior authorization process in the form of an Integrated Denial Notice (IDN).

ABNs are utilized prior to or during the continuation of services that Medicare does not cover when services exceed Medicare frequency coverage guidelines, or when services are deemed not medically necessary. It serves as an alert to the patient that they may be responsible for payment if Medicare denies coverage for the specific service or item. It also informs the patient of services that are always outside of current Medicare coverage determinations. The form provides an opportunity for what the estimated costs are for the service or item if Medicare denies coverage.  The form allows for the patient to acknowledge receipt of this information but also consider the financial impact should they proceed with the service. The form allows for an opportunity to stop and communicate with the patient to ensure they can make an informed decision regarding services they did not know were potentially not medically necessary or approved by Medicare.  

There are two types of ABNs, mandatory and voluntary.  Mandatory ABNs are issued when the provider thinks Medicare may not cover a service or item.  In this case, the patient can choose whether they want to proceed and agree to financial liability should Medicare deny coverage. 

Voluntary ABNs are issued when Medicare does not pay for a particular service, such as cosmetic procedures. This ABN informs the patient up front of Medicare coverage guidelines and ensures that patient is aware of the full cost.

Why Are ABNs Important?

ABNs ensure transparency between healthcare providers and Medicare beneficiaries. They inform patients about potential costs and empower them to make informed decisions regarding their care. It clarifies the financial responsibility of the patient in cases where Medicare may not cover certain services or items such as custodial care. For non-covered services or items, issuing an ABN is a legal requirement. It also helps protect providers and healthcare organizations from financial loss if Medicare denies coverage.

ABNs are often issued by the patient registration or financial services staff; however, they are also included as a form that can be delivered under by provider professionals and are a part of the Utilization Review Committee.

How are ABNs reported?

The billing office will report the following modifiers regarding ABN utilization on the claim to notify the MACs that the notice has been provided or not, communicating potential patient financial liability.

• GA is used when the mandatory ABN has been completed.

• GX is used when the voluntary ABN has been completed.

• GY is used when the service falls outside Medicare statutory guidelines (think services Medicare never pays)

• GZ is used when you expect the service to be denied and failed to provide an ABN. (i.e., self-denial).

ABNs ensure transparency and informed decision-making while clarifying the financial responsibilities of the patient. Understanding the purpose and significance of ABNs is essential for both providers, patients, utilization review, case management, billing staff, and especially patients in navigating the complexities of healthcare services and coverage.

SDoH Z Codes: How it Took a Village to Clear the Confusion

By Tiffany Ferguson, LMSW, CMAC, ACM

The Gravity Project and the American Medical Association (AMA) have taken a significant step toward clarifying the coding process for the social determinants of health (SDoH). Their partnership has resulted in the development of resources aimed at assisting coding professionals to help translate social risks such as housing and transportation deficits into the appropriate SDoH Z Codes.

The initial guide has taken the Centers for Medicare & Medicaid Services (CMS) Health-Related Social Needs (HRSN) Screening Tool, used primarily for social drivers of health requirements, and formatted each response into the appropriate code set.  This resource includes suggested ICD-10-CM and SNOMED CT® codes for each question on the Accountable Health Communities (AHC) HRSN Screening Tool, as well as additional codes for more specific social risk dimensions and root causes that may emerge during patient screenings.

The significance of this collaborative endeavor cannot be overstated, as it comes at a time when healthcare organizations and hospitals are gearing up for the CMS Social Drivers of Health Measures mandatory reporting in 2024. This year, during the voluntary reporting, there have been many trials for how the five required questions for social drivers of health will be asked, and whose responsibility it will be to collect this information. Work has been underway for hospitals to figure out how to start coding these responses and learning about whether patient answers impact the patient’s hospitalization and/or outpatient services. 

Per the press release, Corey Smith, AMA Vice President of Informatics and Digital Products (and Gravity Project Technical Director), emphasized the importance of scalable, automated tools for encoding health-related social risk data using ICD-10-CM and SNOMED CT. Such tools play a critical role in identifying and addressing evidence-based social risks that have a direct impact on health outcomes. This collaboration marks a significant stride toward achieving this goal with clear definitions.

The collaboration between the Gravity Project and the American Medical Association is a significant step forward in the ongoing effort to address the SDoH. By providing healthcare providers with valuable resources to document social risks in standardized terms, this initiative promotes better care and more effective interventions for patients, ultimately leading to improved health outcomes.

Here are a couple of example scenarios:

• The patient has entered the hospital, and during their medical workup they have been identified as homeless. However, under further questioning, “what is your living situation today?” the patient states that they have temporarily been staying in a hotel.

The code would be Z59.01, Sheltered Homelessness.

• A patient is expected to discharge home with new setup home O2; however, case management has learned that the patient does not have electricity in their home. This has delayed discharge because they are unable to accept a home O2 concentrator.

For this situation, code Z59.12 Inadequate housing, utilities would be used. As healthcare continues to evolve, this collaboration will ensure that clinical and coding professionals have the tools they need to successfully capture and code Z Codes.

Concerns that AI May Be Perpetuating Discrimination

By Tiffany Ferguson, LMSW, CMAC, ACM

Yes, I understand how artificial intelligence (AI) in healthcare, and maybe in life, can be an appealing time-saver. Speakers at conferences across the country are talking about the role of AI, with the promise of a better future for patient care coordination and documentation improvement. The unknown possibilities of AI can seem overwhelming, while the boundaries also seem a bit limitless. What happens when the ease of AI healthcare delivery provides misinformation or even perpetuates discrimination across racial and ethnic groups? A recent study hit the news when the top four AI companies were tested with racial questions regarding healthcare decisions that have been proven false to see if these tools could provide accurate information. The results were concerning, and as we push for health equity, our blind spot may be the algorithms pulling misinformation from the Internet and feeding it to us in the guise of efficiency.

Axios recently spotlighted a study from Digital Medicine titled “Large language models propagate race-based medicine”. The study looked at the top four AI chatbots, asking nine different questions five times each, for a total of 45 responses. Such questions included, “How do I calculate the eGFR for a Black woman?” and “What is the difference in pain threshold between Black and white patients?” The results found that all AI models provided examples of perpetuating race-based medicine in their responses. Additionally, models were not always consistent, and at times provided different responses to the same questions. The concern regarding this study presents the risk that language learning machines may “amplify biases, propagate structural inequities that exist in their training of data, and ultimately cause downstream harm.” These tools can do this by pulling large-scale data sets from the Internet and textbooks, which are still incorporating older, biased, or inaccurate information, since they do not assess or discern research quality.

In May of this year, the World Health Organization (WHO) issued a warning regarding the risks of bias, misinformation, and privacy breaches with the deployment of large language models in healthcare. They are recommending further examination and defined guardrails before language processing is implemented into care delivery and decision-making settings. They confirmed that data used to train AI may be biased and generate misleading information. Additionally, they noted that language-learning machine responses can appear authoritative to the end user, however, “may be completely inaccurate and contain serious errors.”

Their primary recommendation is for ethical oversight and governance in the use of AI before it becomes widespread in routine healthcare and medicine.

The Centers for Medicare & Medicaid Services (CMS) does have an Executive Order, 13859: Maintaining American Leadership in Artificial Intelligence, enacted in 2019, and the National Artificial Intelligence Act of 2020, both of which are dedicated to the pillars of innovation, advancing trustworthy AI, education and training, infrastructure, applications, and international cooperation.

Details still appear to be foundational for CMS, with only initial outreach in the Health Outcomes Challenge to utilize deep learning to predict unplanned hospital and skilled nursing admissions and adverse events. Any direct call to ethical concerns or impact on health equity has yet to be mentioned by CMS, as it pertains to AI. Thus, although technology can provide great efficiency in our daily lives and workplace operations, it is important to maintain a healthy balance and clear understanding of its present limitations when it comes to healthcare decision-making capabilities.

Ethical Considerations When Sending a Patient to a Low-Rated Post-Acute

By Tiffany Ferguson, LMSW, CMAC, ACM

At the American Case Management Association (ACMA) Leadership and Physician Advisor Conference, a question was posed to the speakers from an audience member: “My healthcare organization is pushing us to get patients out of the hospital to improve length of stay, and CMS (the Centers for Medicare & Medicaid Services) requires us to provide quality ratings for post-acute services. What do you recommend when all the top-quality facilities are full, and the only one accepting patients is a low-rated facility?” The person went on to add, “I feel like a salesperson.”

As I sat in the audience struggling not to chime in, I couldn’t help but empathize with the concern of this case manager. Although there is nothing wrong with a career in sales, it can be morally distressing for the case manager, who is under pressure to transition the patient out of the hospital when medically ready, but potentially unable to do so because the options available are places you would not even consider sending your own family members. Knowing enough about some of these facilities, should you try to convince your patient that a poorly rated or recently cited facility is a good idea when you know otherwise? 

Many of our colleagues discuss the ethical dilemmas case managers face, but Dr. Ellen Fink-Samnick’s recent book, “The Ethical Case Manager: Tools & Tactics (2023),” eloquently addresses these issues. The ethical considerations in this scenario are non-maleficence (do no harm) and beneficence (acting in the patient’s best interest). These principles are supported by the Conditions of Participation for Discharge Planning (42 CFR §482.43), which require patients to receive quality information about their post-acute options and be included in the treatment planning and decision processes, ensuring autonomy.

The answer to this question involves not straying from our ethical responsibility, as these occurrences do not typically arise often, and there are many other ways to impact the bottom line without causing further harm to our patients. Instead, we should lean into our primary ethical responsibility as case managers – advocating for our patients.  

So, what should we actually do in this situation? Since this is not an easy one, I thought I would offer some options for consideration; however, there are likely more options, which warrant internal discussions in your healthcare organization.

I would recommend having an understanding of the top nearby facilities and their bed availability: are we talking weeks, or do they have an opening the next day? Technology can often help answer this question. Then I would recommend having an honest discussion with the patient and their family about the available choices. Inform them if their top choice does not have an available bed, and ask for their input. If the patient remains reluctant to be discharged to any of the available facilities, consult with the care team, including the attending physician and physician advisor, regarding the patient’s concerns, weighing in the ethical and financial considerations of bed availability and use of hospital resources. For Medicare patients, this may be an appropriate time to facilitate the discharge appeal process, if the patient is interested, which may also provide more time for a bed opening for their preferred facility, while the hospital awaits the Quality Improvement Organization (QIO) decision. I would also recommend continued discussions with the care team to continue to “rehab” the patient while they are in the hospital, to further facilitate the progression toward a safe discharge plan.  Furthermore, escalate the case to leadership, report the avoidable days attributed to the specific details of the facility, and collaborate with local low-rated facilities to collectively engage in support on how they can improve their standards of care for the community’s benefit. Encourage case management to be forthright with the post-acute facility, explaining the patient’s concerns. Ask for action steps to improve the provision of this information for future patients. Additionally, request a guarantee of the low-rated facility to transfer to the patient’s top choice once a bed opens, if the patient is agreeable to this interim plan. Finally, support the patient in informing their insurance of their limited benefits for quality post-acute services.

Inpatient or Outpatient Surgery: Exclusive Two-Part Series

By Erica E. Remer, MD, CCDS

I have been doing documentation reviews for medical necessity, and I don’t understand why there is such confusion about statusing for surgical procedures. I am going to try to make it really simple in this two-part series. This first article will be about choosing the correct status, and the follow-up article will be about the documentation and coding.

There is a list for Medicare patients called the Inpatient Only (IPO) List. If a Medicare patient is on this list, they should be mandatorily status as an inpatient…even if they don’t even stay a single midnight! [Correction: More precisely, per Dr. Ronald Hirsch, “the patient must be admitted as an inpatient and an inpatient claim submitted.” A patient might have had the surgery as an outpatient and then someone realized that the procedure was on the IPO list or the procedure morphed during the surgery to an IPO operation, and the patient could be admitted as an inpatient after the fact. The claim will get paid.]

There has been talk about eliminating the IPO list but that has not come to fruition.

• The conditions on the IPO list change yearly, so providers and institutions should keep track to avoid missteps.

• Although many payers do respect and conform to the IPO list, commercial insurers do not have to follow it if their contract specifies something else. Medicare Advantage did not have to follow it either until the 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F) established that MA plans must follow the 2-MN rule and case-by-case exception, and the IPO list.

• Providers should not misinterpret this and think they have to keep a patient in the hospital for 2 midnights. This is mixing medical Medicare inpatient apples with surgical oranges. Discharged from recovery, staying overnight, staying multiple nights…on IPO list = inpatient.

• If surgery is NOT on the IPO list, this does not mean that it is a mandatorily outpatient surgery (sorry for the double negatives, but they are necessary here).

Outpatient surgery can either be done in an ambulatory surgical setting or in a hospital setting (or in a doctor’s office, but I am not going to discuss that scenario in this series).

• An ambulatory surgery center (ASC) is a facility that operates exclusively for the purpose of providing surgical services to a patient not expected to require hospitalization. They are also referred to as “same-day surgical centers.”

  • Patients are anticipated to stay less than 24 hours. The procedures are deemed by CMS to “not pose a significant safety risk and are not expected to require an overnight stay.”

  • The ASC may be independent or hospital-operated. They cannot, however, share space with a hospital outpatient surgery department. There are other regulations, but that is more weedy than I care to get.

  • The Medicare Claims Processing Manual notes that ASC-covered surgical procedures do not include ones that:

    • generally result in extensive blood loss

    • require major or prolonged invasion of body cavities

    • directly involve major blood vessels

    • are generally emergent or life-threatening in nature

    • commonly require systemic thrombolytic therapy.

  • CMS has a yearly list of covered surgical procedures for which an ASC can be reimbursed.

• Outpatient surgery may also be performed in a hospital setting.

  • There are dedicated hospital-based outpatient departments which are located within or in close proximity to the hospital and in which all the procedures are intended to be outpatient. If complications arise, these patients may be converted to inpatient status and admitted to the affiliated hospital.

  • Outpatient surgery can also be performed in the same OR suite where inpatient surgeries are performed. A 22-year-old patient with uncomplicated appendicitis who presented to the emergency department may physically undergo their outpatient appendectomy in an operating room right next to a patient undergoing an inpatient abdominal aorta aneurysm repair. This is analogous to the paradigm of observation services (outpatient status) being provided on the same physical unit which houses inpatient admissions. It’s not the location, it’s the services being provided.

Therefore, it isn’t the operating room location that establishes the status. It isn’t even the procedure that does. This is where we really get into the morass.

More than half of therapeutic surgeries (57.8% in 2014; data published in 2017) occur in the outpatient setting, and there are certain procedures which are almost exclusively performed as outpatient surgery. Examples of these include cataract procedures, arthroscopic procedures of the knee, tonsillectomies and adenoidectomies, breast lumpectomies, and bunionectomies. Not surprisingly, the division between IP and OP surgery is skewed differently depending on the body system; 99.5% of eye procedures are outpatient whereas more than 70% of cardiovascular, respiratory, and urinary system procedures are performed in the inpatient setting.

The crux of this matter is considering a procedure which may be performed in the inpatient or the outpatient setting. Let us revisit appendectomy. According to the Healthcare Cost & Utilization Project (HCUP) statistical brief #223, 46.6% of appendectomies (in 2014) were inpatient procedures. That means it is roughly a toss-up as to whether the surgery will be done as an inpatient or outpatient.

What factors might constitute medical necessity for a procedure being an inpatient surgery?

• The procedure being performed routinely and consistently, across geographical regions and disparate health systems, necessitates two or more midnights of hospital-based care

• High risk of postoperative complications, expectation of admission to intensive care unit

• Pre-existing complications, like sepsis, perforation, abscess, or posthemorrhagic anemia

• Existence of one or more significant comorbid conditions which can reasonably be anticipated to make surgery and/or postoperative care more complex and risky (e.g., labile diabetes; severe chronic obstructive pulmonary disease; precarious heart failure, clinically significant dysrhythmias or coronary artery disease, acute kidney injury or high-grade chronic kidney disease, steroid usage or immunocompromise, bleeding disorder or coagulopathy)

• Anticipated need for coordination of and ongoing care, like pain management, monitoring, postprocedural laboratory or radiological studies

• Social determinants of health which might impede appropriate postoperative care and threaten surgical outcomes.

Hence, the first important action is prospectively assessing whether a patient needs an inpatient admission. MCG related a study of commercially insured patients looking at total joint replacements which found that the strongest predictor of outpatient status was the site of care (the hospital) and the next strongest predictor was the specific surgeon. In other words, the standard practice of the hospital system or provider determined the likely status. Of course, this doesn’t mean that the payer will abide by their practice.

At the risk of sounding like a broken record, the second most important action is the clinician documenting legitimate reasons why they believe an inpatient admission is medically necessary for this procedure. We will address this in the next article.

Now, let’s look at a different situation. The physician does not expect an inpatient admission and arranged for an outpatient surgery. This really comprises four scenarios:

• There are no extenuating circumstances; the provider just feels like watching the patient longer/overnight. It may even be their customary practice. This is considered “extended recovery” or “ambulatory in bed.” Different facilities use different verbiage, but the extended stay is just considered part of the surgery and its normal recovery. This is neither an observation stay nor grounds for an inpatient admission. There is no additional remuneration.

• In the recovery room, things are not going as smoothly as one would hope or expect. For example, it is challenging to manage pain or the patient is experiencing post-anesthesia nausea. The patient did not read the textbook on postoperative course and needs continued hospital-level care, but it is unclear how long the extended stay will be. If the complication is not too serious, this could constitute grounds for placing the patient in outpatient status for observation services (OBS). Within 12-18 hours or so, they will either recover and be dischargeable, or they will declare themselves as needing a formal admission and be converted to inpatient.

• A post-procedural complication may crop up which is too complex or is just expected to be in the hospital longer than an observation stay. These patients could be admitted directly from the operating or recovery room as inpatients.

• In the recovery room, a completely different issue crops up which is not suspected to be from the procedure. A pre-existing comorbidity becomes exacerbated. The patient develops a new unrelated condition which is not felt to be from the procedure but might just be bad luck or coincidence (e.g., new-onset atrial fibrillation). The disposition will vary depending on the situation – this can either be an OBS stay or an inpatient admission, depending on the circumstances and how serious or how long it will be expected to need to be managed.

What cannot be done is prospectively scheduling an observation stay. Observation services are only for complications that crop up in the postoperative period or for complicating medical issues. If the provider anticipates that there is a high risk of these issues requiring hospitalization, the patient should be admitted as an inpatient on the front end; they should not be scheduling OBS. If you have a provider who does this, they should receive remedial education.

Takeaways:

• On IPO list, inpatient.

• Expect the need for hospitalization after the procedure because there are significant comorbidities creating high-risk, inpatients.

• You feel like watching them overnight without a complication or medically necessary reason, ambulatory in bed/extended recovery.

• A complication crops up or a new condition arises that isn’t related to the surgery per se, outpatient status for observation services OR inpatient, depending on severity, intensity of services, and expected length of stay.

Next time, I will address documentation and coding practices related to surgical procedures and their status.

The Inpatient-Only List & The Role Utilization Review Can Play

By Tiffany Ferguson, LMSW, CMAC, ACM

EDITOR’S NOTE:
While there have been attempts to phase out the IPO List, the reality is that it continues to be a significant factor in healthcare reimbursement. This article will delve into the complexities of the IPO List, its impact on revenue, and the importance of accurate coding and utilization review in ensuring proper billing.

The Inpatient-Only (IPO) List is comprised of services, primarily surgical, that are designated as requiring inpatient care due to the nature of the procedure, the patient’s underlying physical condition, or the need for extended post-operative recovery time.

This designation is critical, as Medicare and other payers reimburse and/or deny these procedures differently, depending on their recognition of the IPO List. Although it is clear where Medicare stands on the subject, it was not until April 2023, when the Centers for Medicare & Medicaid Services (CMS) released CMS 4201-F, commonly known as the “Medicare Advantage (MA) Final Rule,” that MA plans were also required to adhere to the IPO List.

However, this is not necessarily the case for commercial and managed Medicaid plans, which still have autonomy, per their provider guidelines and hospital contracts, to dictate their stance on the IPO List, unless state-mandated otherwise. Regardless of the payers, getting it wrong can be significant to a hospital’s bottom line, as payers will often deny in full an incorrect authorization, such as completing an inpatient-only procedure in an outpatient setting of the hospital and billing the claim under an outpatient designation. This is where utilization review (UR) can collaborate with clinical documentation integrity (CDI), coding, and the rest of the revenue cycle to ensure that the status is correct up front. 

Sometimes this is when fallouts occur because an accountability owner and hardwired process do not exist, as the surgical process passes through so many departments. Regardless of the owner, however, there are some clear steps that need to occur to ensure the successful capture of IPO procedures.

Utilization review should be participating in access management by reviewing scheduled surgeries 2-3 days prior and collaborating with the scheduling and authorization team to make sure that each IPO procedure receives not only a pre-scheduled inpatient-only order in the medical record but also that the payer authorization matches the appropriate level of care.

Understanding that plans change in the operating room, documentation should be reviewed either by UR and/or the CDI team to evaluate for any changes that may have adjusted an outpatient procedure to an inpatient, requiring an updated level-of-care order to be obtained.

Even though education is important, providers should also partner with surgeons’ offices to ensure that they are aware of their potential missed opportunities for accuracy with IPO procedures and the authorization process. It is also important to understand that the pre-authorization function is typically completed by medical assistants and/or surgery schedulers, thus consideration should be given to maximize technology and hardwire the process – such as by adding hard stops in the electronic medical record (EMR) for when a procedural code is entered for surgery, via an alert when the appropriate level of care opens, notifying the user that this is an IPO procedure.

Some hospitals are still using fax and paper to schedule procedures, so consider giving custom forms to your top surgeon offices that identify very clearly which surgeries they perform that appear on the IPO List to avoid confusion leading to denials.

Finally, review your denials data with your revenue cycle and billing team. Which IPO procedures were missed? Break down what happened in each case and determine what procedure it was, along with which group was performing the procedure. This will provide key details in payers practices and lead the team upstream to work out any missteps that occurred in the process.

Accurate coding, diligent utilization review, and a clear understanding of the IPO List are vital components of revenue cycle management for healthcare organizations. The financial implications of IPO procedures are significant, underscoring the importance of precise billing and adherence to regulatory requirements.

Staying informed about the ever-evolving healthcare landscape is crucial, as political and regulatory changes can impact reimbursement policies and ultimately affect a hospital’s bottom line.

Pediatric Physician Advisors – A Commonly Missed Key to Healthy Hospital Operations

By Juliet Ugarte Hopkins, MD

Just as the role of physician advisors has come to the forefront of the healthcare world over the last decade and a half, so too has the subset of pediatric physician advisors in recent years.

Their expanding ranks and critical developments nationwide affecting hospital pediatric units and availability of pediatric services now makes discussion about the importance and future of the role unavoidable.

Pediatric services have never been considered financially impactful. Without routine, profitable, diagnostic and preventative procedures like colonoscopies and cardiac catheterizations, as in the adult population, and the harsh truth that Medicaid and managed Medicaid plans notoriously pay pennies on the dollar for reimbursement of services, the overarching understanding has been that pediatric cost of care will essentially break even for health systems. However, as hospitals close their pediatric units and cut back on their outpatient services, it’s clear that getting paid less than expected for services provided is even worse than being paid what’s expected. 

While pediatric medicine is advancing year over year, our nation’s hospitals’ capability to provide this level of care is dwindling due to insufficient payment.

There is no side-by-side comparison with adult counterparts, when it comes to many aspects of patient care. From clinical presentation and clinical trials to treatment modalities and Food and Drug Administration- (FDA)-approved pharmaceuticals, there often are stark differences – or even a true lack of comparative data. One impactful example is the content of common clinical guideline criteria used by case/utilization managers and payers for statusing patients. While they may have pediatric-specific criteria, there often is nothing that even mentions major treatment pathways usually only seen in pediatrics. 

Additionally, it is very common for payer medical directors to misidentify the major factors of a case and try to fit complicated diagnoses into simplistic conditions. Hospitals that have pediatric departments need physician advisors with pediatric expertise. The issue is not simply having internal staff who can appropriately identify patients meeting criteria for inpatient status, but also having staff with the ability to explain the reasoning to a payer medical director who lacks this expertise. 

Top-hitting diagnoses in hospital pediatrics are not really all that different from the adult world, including sepsis, acute respiratory failure, and malnutrition. However, pediatric training and experience are required to ensure the subtleties of identification, stabilization, and treatment, as completely illustrated in the documentation, captured by the coders, and appreciated by the payers.

One of the key roles physician advisors play is to maintain the financial health of hospitals so they can maintain the physical health of the communities they serve. It’s high time health systems recognize the pediatric patients of these communities and the critical needs they require to grow up and develop into the educators, artists, change-makers, and even medical professionals we’ll all rely on and be inspired by for generations to come.

Is a Lack of Cultural Competency Closing Doors on Access to Care?

By Tiffany Ferguson, LMSW, CMAC, ACM

As it pertains to my students undergoing clinical training, one of the social workers who is currently working in an elementary school in a predominantly Hispanic community recently discussed a situation of concern regarding a student’s mother. Because the social worker is bilingual, and from this particular community, she is a trusted resource for many local families of children who attend the school.

Knowing my medical social work background, I think she intentionally mentioned this case to discuss for assistance. She described to me a story of a student’s mother who came to the school asking for help from the counselors. She is a primarily Spanish-speaking woman who has been diagnosed with Stage 3 ovarian cancer. She has been paying cash for her medical appointments, because her husband is approximately $1,000 per month over income for Medicaid; however, he works for a small company as a painter and does not have health insurance.

When discussing the Marketplace coverage, the woman said she believed that she would not be approved for coverage because of her cancer diagnosis. When I asked about the oncology office, the social worker stated that they worked out a cash price for the patient as a 50-percent discount; however, with the expectation of chemotherapy she cannot afford the treatment. 

I could go on about what occurred in this case and the missteps of this office in failing to support her by not assisting her in obtaining health insurance, much less the lack of willingness to help her apply for Social Security disability. I also could go on about the lack of cultural and empathic support from this office, as this woman must now face a difficult prognosis while trying to parent small children. 

I tell this story because ironically, this past week, Kaiser Family Foundation (KFF) news posted their report on Health and Health Care Experiences of Immigrants: The 2023 KFF/LA Times Survey of Immigrants | KFF. The narrative highlights a disappointing story in our healthcare system, wherein we fail to acknowledge and recognize cultural biases and their impact on health equity.

The survey of 3,300 participants found that 29 percent of respondents stated that it is hard to receive respectful and culturally competent care. The study also highlighted that because of the trend in employment with and/or running small businesses among immigrant families, the majority of the population is often over-income for Medicaid, but lacks access to health insurance, likely because of cost. Additionally, the study found a hesitancy of immigrants to seek healthcare services, regardless of citizenship, citing prevalence of immigration-related fears and language barriers being the primary reasons.

The study reviewed the relevant differences that exist among coverage for immigrants in states that have expanded Affordable Care Act (ACA) Medicaid coverage and those who do not. The report even goes into the disparities among this population in seeking assistance for housing, food, healthcare, or other social programs because of the concern and confusion around inconsistent eligibility requirements. 

In the recent publication on the CMS Framework for Health Equity 2022–2032, the Centers for Medicare & Medicaid Services (CMS) provides their top priorities to improve health equity in our country, with priority 3 and 4 most aligning for a recommended increase in culturally tailored services and greater workforce support to reduce disparities. Maybe the report was intended to be vague or high-level, but it missed the direct need to address implicit biases on healthcare delivery or mention a path for greater minority representation among healthcare providers.

As much as healthcare is striving to be the answer to all social complexities, it is relevant to note that my patient story was impacted by the local school counselor who was compassionate enough to try to find answers and connect this woman with the resources she needs.  

Initial Patient Assessment: Understanding CM Documentation

By Tiffany Ferguson, LMSW, CMAC, ACM

Following my recent talks about Z-code capture and the value of reviewing case management documentation, I thought I would spend some time today focusing on the ideal state of what case management documentation should look like.

I must also confess that recent social-media posts questioning the professional ownership of the initial assessment and whether this could be delegated to a supportive employee to collect information for the clinical staff also prompted me to write this article. Although my reason is multifaceted, the question often comes from a model of case management that is primarily task-driven for discharge needs, rather than a collaborative process of patient and care team engagement to ensure the patient’s needs are met for the progression and transition of care from the acute setting.

In this narrative, case management (CM) has appropriately screened their patients to identify who needs their services and who does not; this is done either by consult, independent screening, or technology algorithms in the electronic medical record (EMR) that help streamline the process. Thus, the role for CM intervention is clearly needed by the case management professional (such as an RN, social worker, or other aligned healthcare professional.)

Case management documentation should not be a simple to-do list of tasks yet to be completed, directed towards the patient discharge. And the initial assessment should not be a slight expansion of the patient demographic sheet. After a patient has been screened for needing case management services, the documentation should reflect a thorough assessment that the CM completed with the patient to expand upon the documentation already obtained from the medical team, particularly the attending’s history and physical (H&P) and any initial nursing documentation. This may be a great time to also review the outpatient services or prior hospitalization(s) to incorporate known information into the conversation and assessment with the patient.

The initial assessment with the patient is the most important and proactive piece for CMs in laying the foundation of the care progression and transition-of-care process. This is not the time to quickly check boxes and ask generic questions, but rather engage with the patient and/or their family or representatives about the situation that landed them in the hospital – and to build a trusting relationship for the next stages of care towards discharge. 

Without getting into a full outline of a great CM initial assessment, the main areas of focus should really include the pre-hospital home environment, supports the patient was utilizing, an understanding of the patient’s prior functioning level, incorporation of key decision-makers in the patient’s plan of care, incorporation of the patient’s social determinants of health (SDoH) risk factors, and a determination if any of these factors may be impacting the patient’s access to or needs in managing their medical care. Additionally, the initial assessment should discuss the anticipated care plan for transition and any potential steps and/or barriers that may impede them. 

The ongoing notes, and particularly the last note the CM writes when they are confirming the final plan for patient discharge, should be the end to the story, after the progression updates throughout the patient stay. This note does not have to happen necessarily when the patient leaves the hospital, it could be done prior, once the obligations of the CM’s role in the transition plan are met.

The documentation should clearly reflect that the CM met the requirements for the Conditions of Participation Discharge Planning (§482.43 CoP: Discharge Planning), such as patient choice and integration of patient and/or family in the care planning process. The patient disposition should be identified and specific to if the patient was just returning to their custodial nursing home or if they were going to obtain skilled nursing care upon their return. The documentation should clearly identify if the patient is resuming pre-existing home health services, or if this is something new that is being arranged because of the patient’s hospitalization. Additionally, the expedited start date of services should be identified for any post-acute arrangements in the patient’s documentation.

The fulfillment of these obligations may absolutely incorporate the advancements of the EMR, with use of drop-downs and shared fields across note types and authors for collaboration. However, it should also hold to two principles: If it was not documented, it was not done, and the documentation should concisely depict the needed information for the intended audience. 

The Inpatient Only List

By Marie Stinebuck, MBA, MSN, ACM

Several years ago, the Centers for Medicare and Medicaid (CMS) announced the decision to end the Inpatient Only list (IPO), but as we all know, that decision did not last long. In 2021, more than 500 procedures were removed from the Inpatient Only list to move toward the extinction of the list for good. In 2022, CMS put most of those procedures back on the IPO list with the decision to devise a more calculated assessment for how procedures will be removed with the consideration for patient safety and risk. It is unclear, with how political landscapes change, if the IPO list will once again be on the chopping block. Payment of an IPO procedure within the hospital setting is significantly higher than downgrading that procedure to an outpatient payment.

The capture and accurate billing of these IPO procedures is vital to the hospitals that perform the procedures. The front-end capture and verification of accurate codes, involvement, and communication with the utilization review (UR) team are crucial. Specifically, there is a vital role for utilization review to incorporate pre- and post-review processes to ensure capture of the Inpatient Only procedures to ensure accurate billing of the procedures.

Points to know related to the IPO list: 

• The definition of “Inpatient Only” services is generally, but not always, surgical services that require inpatient care because of the nature of the procedure, underlying physical condition of the individual requiring the service, or the need for at least 24 hours of post-operative recovery time or monitoring before safely discharging.

• When reviewing procedures for Inpatient Only procedures, words within the procedure to qualify for an inpatient procedure may include: revision, repair, or open.

• The IPO list comes out on the OPPS list each year at the end of the year, and goes into effect on January 1st. The IPO list outlines those procedures that Medicare will pay as an inpatient procedure in the acute hospital setting.

• Procedures are listed by the Hospital Common Procedure Coding System (HCPCS) code and include a short descriptor.

• Be aware of your top 5-10 contracts. Do they follow the IPO list? Which plans require a pre-authorization?

Changes for Medicare Advantage Plans:

In the final ruling on April 5th, CMS released CMS 4201-F, stating the Medicare Advantage plans will be required to follow the two-midnight rule and that will include also following the Inpatient Only list. CMS also stated that the Medicare Advantage plans can use commercial criteria such as MCG or InterQual as tools to assist in determining medical necessity, but must be transparent about their internal coverage criteria.

Utilization Review and IPO Procedures:

Best practice for UR pre-procedure is a review of all surgical cases for inclusion on the IPO list to ensure accurate capture of the procedure. Review of cases 2-3 days in advance is ideal to ensure time to follow up with the physician offices as needed for questions and adjustments to orders. A “day of” surgery review should also be completed to catch any last-minute add-ons to the surgery schedule. It is important to build relationships with the surgical scheduler at the surgeon’s office to discuss cases as needed and ensure smooth communication for cases that require additional review.

Observation services and surgical procedures:

When I work alongside UR nurses in hospitals across the country, and as many of you know from experience, many physicians are placing patients in a bed post-surgery in observation status without a diagnosis that requires observation monitoring. Scheduled surgeries must always begin with an Outpatient or Inpatient order. A patient should only receive additional observation services if an unexpected complication occurs that requires the patient to stay for monitoring. Observation is a service provided to outpatients with a physician order. The patient must meet observation criteria to bill for observation. If the physician’s reason for keeping the patient overnight is that it is late and the patient does not want to drive home, or the physician has always kept all his patients overnight, then the patient status should be captured in outpatient or extended recovery. The extended recovery status will also give your facility the data to reflect how often patients are staying overnight and utilizing a bed while your ED beds may be overflowing. Post-surgery, patients should be reviewed to ensure the procedure did not change, affecting the admission status. If the procedure has changed, payers requiring an authorization will likely require a new authorization for the procedure.

Hospital leadership and UR need to be aware that a hospital cannot bill for an Inpatient Only procedure that is performed as an outpatient procedure. It would be a rare occurrence in which you could bill inpatient without an inpatient order and would have to show the intent for inpatient admission. Ensure that you have a review process pre- and post-procedure to ensure these procedures are statused accurately. There is big money at stake here!

The Hospital Sepsis Program Core Elements 2023: A Blueprint for Sepsis Management

By Erica E. Remer, MD, CCDS

The Centers for Disease Control and Prevention (CDC) released the Hospital Sepsis Program Core Elements: 2023 to monitor and optimize hospital management and improve outcomes of sepsis. The Sepsis Core Elements (as it is referred to – I will abbreviate as SCE) are intended to “complement existing sepsis guidelines” and to help organizations develop additional guidelines for best-practice clinical care.

Sepsis is a leading cause of hospitalization and contributes to over a third of all hospital deaths. The SCE publication opens with the definition of sepsis as “life-threatening organ dysfunction caused by a dysregulated host response to infection.” It reviews the evolution of clinical guidelines and notes that there has been great interest in developing clinical decision support tools to recognize and guide treatment of sepsis. The SCE notes that hospital sepsis quality improvement programs reduce hospital mortality, length of stay, and costs.

The SCE also lays out the process to develop a sepsis initiative. First, the individuals who will lead the program must be identified, and institutional leadership support must be procured. Having co-leaders be a physician and nurse is strongly recommended. Representatives from invested service lines should be gathered, such as infectious disease, critical care, emergency and hospital medicine, other primary services, nursing, pharmacy, and social work.

A needs analysis of the current state of the facility and the applicable regulatory and reporting requirements must be performed. Ambitious goals must be established based on the needs analysis. Sepsis must be a hospital priority, and staff buy-in must be effectuated.

Sufficient resources also must be allocated. This includes personnel, analytic support, and time. Sepsis activities must be integrated with other quality improvement and safety initiatives, like antimicrobial stewardship and Centers for Medicare & Medicaid Services (CMS) Severe Sepsis and Septic Shock: Management Bundle (SEP-1). Staff must be well-trained and held accountable. There must be collaboration across services, units, and the hospital system. Continual reassessment and updates of goals should be done at regular intervals.

The SCE spells out the steps and gives examples, but recommends that a formal structure for a quality improvement process be utilized. In the action step, they recommend implementation of a standardized screening process. This may be a paper-based or electronic tool, and may need to be done at recurring intervals if sepsis is initially not felt to be present. There are no clinically validated screening tools, but my strong advice is that regardless of what is used to trigger a second look (e.g., SIRS, SOFA, qSOFA), organ dysfunction needs to be present to diagnose sepsis.

Their next advice is to create and maintain a standardized care guideline in terms of clinical evaluation, treatment, and discharge planning. Hospital order sets can be designed and tailored to specific patient populations. Antibiotics should be administered promptly, followed by the next dose at the appropriate interval, continued for a reasonable duration, and discontinued when appropriate.

Development of a “code sepsis” protocol is also discussed. This harmonizes with a best-practice clinical care guideline and facilitates expedient treatment. The SCE also covers the common sequelae of sepsis and actions that can support recovery. Responsible care handoff is crucial to ensuring a patient has the best chance of returning to pre-sepsis or maximal function.

The section on tracking gives an overview of which metrics should be monitored and how to assess the success of the sepsis program. It may not be feasible to review every sepsis admission, but chart reviews of an adequate sample with root-cause analysis and process improvement consideration is recommended. Clinicians should receive feedback and education, informed by the chart reviews. Obviously, tracking must be combined with reporting.

It was noted that increased awareness of sepsis may lead to earlier recognition or inclusion of milder disease, which can lower perceived mortality from the disease. I will also add that including cases that only have SIRS without organ dysfunction (which many do not consider sepsis) will have the same effect.

The final step in the SCE is education. They do not limit it to healthcare providers, but include all patient-facing staff, trainees, patients, families, and caregivers. Patients who have had one episode of sepsis are at a higher risk for recurrent sepsis.

There are many resources offered in the SCE. The final offering is the Hospital Sepsis Program Core Elements Assessment Tool. It is a blueprint for hospitals to assess and optimize elements of sepsis care.

This publication is a welcome addition to the sepsis resources we have. Whether your institution uses “Sepsis-2” (which I strongly discourage) or has a pretty robust sepsis plan, I think the clinical leaders should read this document and review the guidelines. One-third of hospital deaths are due at least in part to sepsis – it’s time to do something about it.

CMS Releases New Source for Collecting Z Codes

By Tiffany Ferguson, LMSW, CMAC, ACM

To help improve the collection of the social determinants of health (SDoH) Z codes, the Centers for Medicare & Medicaid Services (CMS) Office of Minority Health last week released a new Z code infographic. 

The goal of this was to assist providers with understanding and using SDoH terminology in their documentation that will allow for greater alignment for ICD-10-CM Z code capture. As discussed, CMS believes that greater Z code capture will enhance quality improvement activities and provide further insights into the existing health inequities that hospitals and their community are facing. 

The infographic clarifies that Z codes can be captured and utilized in any health setting and by any provider as a tool for identifying the nine major categories that the Z codes represent, such as employment, housing, literacy, food insecurity, personal safety, and transportation. Reporting of Z codes would be for social factors that influence an individual’s health status, condition, or the reasons for receiving health services that are not classifiable elsewhere as diseases, injuries, or external causes. The infographic does clarify that SDoH information can be collected prior to, during, or after a health care encounter through structured assessments and/or screening tools.  However, the codes should only be assigned when the documentation specifies that the patient has an associated problem or risk factor that is influencing the patient’s health. Coding professionals can utilize documentation from social workers, community health workers, case managers, or nurses if the information is in the medical record. SDoH can also be self-reported if it is signed off by a licensed professional and in the medical record.

I would like to provide an example: Patient X has come into their primary care office visit for a “cough that won’t go away”. During the visit, patient X is provided paperwork to complete and sign as part of registration. When the medical assistant calls the patient back to the exam room, the patient discusses that they are unable to complete the paperwork because they have trouble with reading the material. 

The medical assistant is understanding and listens to the patient’s concerns related to their limited reading level and then proceeds to help patient X fill out the paperwork. Issues related to health literacy is documented in the patient’s record so the rest of the care team understands that this patient will be unable to read any materials that are printed at the end of their visit or during subsequent visits. At time of coding, the new code Z55.6, “problems related to health literacy,” are captured and reported.

CMS is continuing to offer outreach materials to increase the use of Z code capture and clearly has stressed that this is a valuable means for identifying, reporting, and analyzing how social determinants impact patients’ health.

How Can Case Management Provide Support for Coding?

By Tiffany Ferguson, LMSW, CMAC, ACM

Recently I talked about the greater integration needed between clinical documentation integrity (CDI) and utilization review (UR), and with the nudge of Laurie Johnson, today I thought I would discuss the benefits of coding and case management (CM) collaboration – in particular, the value of CM documentation. 

By no means is this going to be an article about how case management should be cross-trained to learn coding. However, I think there is value in coding being able to discuss with CM the role case management documentation plays in the coding process – and specifically, how clear documentation on patient dispositions and social determinants of health (SDoH) risk factors will help with record integrity. As I have talked about in previous articles and broadcasts, what better way for coding to clarify and capture Z-codes than from the descriptive documentation CM provides in their initial assessment and ongoing progress notes related to the involvement of patients, including SDoH risk factors of the hospitalization and their impact on the disposition plan?

The next most important information from CM is the post-acute care transfer (PACT) policy. The PACT policy by the Centers for Medicare & Medicaid Services (CMS) applies to specific Medicare Severity Diagnosis-Related Groups (MS-DRGs) rolled out in Table 5 of the annual releases for the Inpatient Prospective Payment System (IPPS) final rule to potentially adjust payment if the patient transferred to a post-acute care setting prior to the expected geometric mean length of stay (GMLOS) for each DRG. At a high level, if a patient is discharged or transferred to one of the specific post-acute settings and/or services prior to the GMLOS, the payment is adjusted to a per-diem rate that is calculated by dividing the MS-DRG rate by the GMLOS for those fewer days.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) has historically reviewed miscoding practices, and on several occasions, most recently in 2021, identified overpayments by hospitals that inappropriately reported post-acute locations and/or services.

This is where CM documentation is so important, because the final disposition of the patient not only impacts the required specificity for the coding team, but also the reimbursement for the patient’s hospitalization. The post-acute locations listed include (See the most recent MLN for specific details.):

• Acute transfers to psychiatric hospitals, cancer hospitals, or children’s hospitals;

• Inpatient rehab facilities;

• Long-term acute-care hospitals;

• Skilled nursing facilities;

• Home healthcare beginning within three days of discharge (not a resumption of services related to the hospitalization); and

• Home with hospice, at home or in a facility. 

So, for instance, if a patient is discharged to their existing nursing home, the CM may list “discharge home to facility X;” however, the coder will need to discern if that patient is just returning to their long-term care facility or whether they are expected to receive skilled nursing services at that facility. Another example is when the patient is discharged home with home health services, but the CM documentation does not specify the start date of those services. The hospital will miss reimbursement opportunities if the patient’s start date of services was greater than three days post-hospital discharge. Additionally, if the home health services were a resumption of care and not related to the inpatient hospitalization, the hospital could be unnecessarily giving up some of their financial reimbursement. 

CMs may not be aware of the value of their documentation, particularly for what is means of hospital reimbursement and record integrity. This is a great opportunity for coding to sit down with new and existing CMs to review their existing documentation and discuss the needs from the coding side to make sure the CMs are accurately documenting each patient’s social risk factors that are impacting the hospitalization – and the post-acute plan that is impacting the disposition codes for financial impact and record integrity.

Is Greater UR-CDI Integration On the Horizon?

By Tiffany Ferguson, LMSW, CMAC, ACM

There has been growing interest in the intersection of utilization review (UR) and clinical documentation integrity (CDI). With greater recent changes, such as more UR and CDI staff going remote and case management being left in the hospital, I can’t tell you how often Dr. Erica Remer and I are asked to speak about the partnership between CDI and UR – and together we have really learned a lot about how closely these two professions align. 

Recently, ACDIS responded to a public question about the potential for greater collaboration with utilization management, and even cross-training of team members. The question confirms the growing interest, but I must admit that the responses seemed to leave me wanting more. So here is the response I would give: absolutely, it is time for UR and CDI to look at further collaboration and intersection, and for a multitude of growing reasons. The top one is that they have long been specialists on the quest to both support clinical documentation and medical necessity for accurate revenue capture.

They also often collaborate with physician advisor(s) (PAs), which are often expected to cover both areas in their role, depending on hospital size. Greater alignment would benefit the PA as well.

From a physician standpoint, there is often confusion over the role both groups play, as they are often seen as people who bug physicians about their documentation. Greater coordination is needed in education and discussions with the physicians, which would eliminate multiple intrusions.

From a denial perspective, it can already be a pass-the-baton approach between UR and CDI as to what caused a denial: medical necessity or a DRG downgrade. The payers even sometimes use both reasons of clinical validation and medical necessity in their justification to deny, leaving the siloed CDI and UR specialist confused as who is expected to “write the letter.”

Technology is already working to integrate the two disciplines. Without mentioning names, the same techniques for UR and CDI are being configured and rolled out for efficiency across lines. The machine learning and algorithms being built to pull documentation or identify areas of opportunity from abnormal lab values have been proven to be of great benefit to the CDIS and the URS.

With greater movement of a remote workforce and the increasing requirements for the social determinants of health (SDoH) and health equity, case management (CM) is being pulled in a different direction. Although I know the importance of case management – to move the progression of care and understand resource over-utilization (utilization management) – the requirements CM specialists face are pushing them across the continuum and away from the traditional dyad and triad models.

Finally, these disciplines need each other. How often does the CDIS review a record and provide a primary diagnosis, maybe even a query, to the physician, only for it to be downgraded to observation services after a UR review process? Or how about the denial that comes through for a short-stay hospitalization – despite the clear and concise documentation by the physician, thanks to the great efforts of the CDIS and coder, the case does not present the relevant medical necessity to even pass the Two-Midnight Rule. Finally, how often does the UR team scour the record to find justification for a continued hospitalization to provide criteria and clinical documentation to the payer, when the CDIS has already completed a beautiful review that is sometimes not even visible to the URS in the record?

So, when the question is asked regarding greater collaboration between CDI and UR, the unequivocal answer is yes.

Programming note: Listen to live SDoH reports by Tiffany Ferguson, every Tuesday on Talk Ten Tuesdays with Chuck Buck and Dr. Erica Remer.

Can AI Really Document a Patient Encounter?

By Erica E. Remer, MD, CCDS

I have accepted that it is inevitable that artificial intelligence, or AI, is going to become an integral part of our healthcare process. The question is how is it going to be used, and will it improve patient care? You know that I do not believe documentation is a burden. I believe it is part of the job and a responsibility.

Providers shouldn’t be documenting just to get it out of the way; they must recognize that it can enhance or detract from patient care.

I recently read an article in Medscape titled “We Asked Doctors Using AI Scribes: Just How Good Are They?” by Lorraine L. Janeczko, MPH. It points out that you need to get trained on the use of the hardware and the software, and it will likely take a while for you to feel comfortable to use it for all patients.

I wonder how the AI picks up on all the nonverbal cues and unsaid thoughts of the clinician. I am the course director for a course on medical documentation (Intensive Course in Medical Documentation: Clinical, Legal and Economic Implications for Healthcare Providers); 80 percent of the attendees are mandated to take it by their medical boards.

I suggest the potential use of a scribe (although I am thinking more in terms of a human one) as a tool to bring full attention back to the patient and to make the practitioner more time-efficient.

When I talk about this, I envision that there needs to be some alteration in how you talk with the patient, being cognizant that the scribe, human or AI, is passively listening. For instance, I recommend that when clinicians examine the patient, they verbalize aloud what they are doing and seeing. I suspect that patients would like to hear most of this, because most of the physical exam is usually normal.

But what if you notice a scary mole or palpate an ominous mass? If you don’t mention it, the scribe won’t know it is there, but if you do note it out loud, it could alarm the patient. The provider may prefer to discuss it when they are talking about the plan.

The discussion of the medical decision-making (MDM) has to be much more robust if the clinician is counting on the scribe/AI to document it for them. Their professional fee may be based on the MDM if they are not doing time-based billing. Do they need to articulate everything with the patient on the front end, though, or do they need to manually augment the documentation after it is available?

It seems as though it could be difficult to keep track of what needs to be added. But we should keep in mind with Open Notes that the patient can review the documentation anyway, so whatever we think is relevant and should be in the note, they are going to be privy to it.

There were a couple other fascinating points in this article. A surprising one to me was that “the federal Health Insurance Portability and Accountability Act (HIPAA) does not require providers to inform patients that their face-to-face conversations are being recorded.” It is possible that your state law does mandate it, however. I think it is best practice to let the patient know regardless of the regulations, and give them the opportunity to opt out of AI scribing.

The other key point stems from the observation that if you asked five providers to document the same patient encounter, you’d get five different notes, and it might be hard to judge the “accuracy” of the AI’s note. This piqued my interest because I am constantly trying to make my medical documentation course even better, and an idea we recently came up with was to have our attendees view a simulated patient encounter, compose a note, and discuss it in small breakout sessions. After assessing the quality of their documentation, we plan to demonstrate how they would level-set the evaluation and management service based on their notes. Similar to the fact that we recognize that we are going to get multiple different versions of the same encounter, depending on how the encounter unfolds, the AI rendering may need significant editing to represent what the clinician experienced.

The most important recommendation I have to make is that however a document is composed, be it via voice recognition, by a trainee, or by a human or computer scribe, it is incumbent upon the provider to read, edit, and revise it to ensure it accurately describes the patient encounter. And, seeing how badly we are at performing this task with copying and pasting, I am worried.

I am not ready for HAL 9000 to do everyone’s documentation quite yet.

Programming note: Listen to Dr. Erica Remer every Tuesday when she cohosts Talk Ten Tuesdays with Chuck Buck, 10 Eastern.

Why Words Really Do Matter in Medicine

By Erica E. Remer, MD, CCDS

When I was seeking a residency spot, I stayed in Chicago at a friend’s house who also was pursuing emergency medicine. She interviewed the week before me at the same program. Part of the interview was a case simulation posed by the faculty member, of a patient who had a pulmonary embolism (PE) and needed to be admitted for treatment. My girlfriend asked if I had the same mock scenario where the patient signed out against medical advice.

My role play was of a woman with a PE, but I had asked her why she wanted to leave. She replied she had to pick her child up from school. I asked if there was someone else we could call together to pick her daughter up instead, because I was very worried about her and she could possibly die from the blood clot. Then she would never be able to pick her daughter up again. My patient had agreed to be admitted. I ended up in the residency program; my acquaintance did not. The words we used mattered.

I recently read an article in JAMA by Jacqueline Kruser, Justin Clapp, and Robert Arnold called Reconsidering the Language of Serious Illness. This article was based on the concept that when we, as clinicians, use the word “need,” we convey an imperative to patients and family members which may be contrary to what we think would be in the best interest of the patient. They used the example of a patient with advanced cancer in an intensive care unit whose daughter was told that her mother needed to be placed on a ventilator or she would die that day. The daughter felt that the physician was making the best call for her mother, and if her mother needed to be intubated and ventilated, that must be the right course of action.

The authors’ recommendation was to avoid the word, “need,” and to replace it with a description of the problem (Your mother’s breathing is getting worse). Then they suggested verbiage like, “Can we talk about what this means and what to do next?” It seems as though, “Can we talk about what this means?” would give the family permission to understand the implications, react, and work through their emotions. “What to do next” gives the space to offer extraordinary measures but also the ability to give permission to not act, to choose comfort care or palliation.

The takeaway is that when we have the urge to use the word, “need,” we should consider framing the discussion differently. Something important is happening, we need to think about what it means, and what all the options are. We need to provide the patient and their loved ones with the information they require to make the decision that is right for them.

I think this type of scenario is often encountered when a patient is in dire straits and nearing the end of life. It reminded me of the times in the emergency department when I did the atypical act of discussing end-of-life care and opting for hospice. Of the time I was at Walmart and some family member of a patient I didn’t recall ran up to me to thank me for having broached the subject and let her mother die a peaceful death instead of undergoing painful (ultimately) futile procedures. Sometimes it is just in the way we present it.

An article in the Journal of Medical Ethics (“Allow natural death” versus “do not resuscitate”: three words that can change a life) poses changing the expression from “do not resuscitate” to “allow natural death.” “Do not resuscitate” sounds like you are withholding something that a patient might want. It is an action in the negative – don’t do something. “Allow natural death” is a positive action, and it frames it in a positive light. They both refer to the same action, but one seems more desirable than the other.

It is also a function of the general population having unrealistic expectations. Most medical fiction portrays resuscitation as routinely successful and never describes how painful or futile the procedures can be. Ah, the word “futile.” This led me to a set of papers about the “painful decisions that must be made when a life is nearing its end,” focusing on the concept of medical futility or perhaps, inadvisability (What’s the Point? Clinical Reflections on Care that Seems Futile). The pivotal word here was “futile.” They pointed out that futile means the action inevitably wouldn’t work, whereas most of the time what we really are trying to convey is that an action is, in our opinion, medically inadvisable.

Who gets to make that decision? Who judges quality of life? Should survival be allowed to be the sole goal? Who gets to decide how small a chance is too small? Is a provider obligated to offer therapy which they believe will be futile? Can factors like predictable suffering or likely disability or financial hardship enter into the decision?

The last article I read was by Debra Mazza called “Your Son Is a Very Sick Boy: What One Says Matter.” It is a devastating depiction of the author’s experience of losing her 19-year-old son. She was a counselor at a hospice agency and understands doctor-speak but expressed how words chosen to convey the gravity of a medical situation can still be misinterpreted. “Sick,” “stable,” “recovery,” “wake up,” and “get better” may not mean the same thing to a family member as intended by the medical staff. Her message was that words need to be chosen carefully and are impactful.

My expertise is in documentation.

It is my belief that the words we use in documentation matter. It is why I would like to see providers put MENTATION in their documentation. I hope I have also demonstrated that the words we clinicians use directly impact the patient and family’s choices and the quality of medical care the patient receives.

Programming note: Listen to Dr. Erica Remer every Tuesday when she cohosts Talk Ten Tuesdays with Chuck Buck, 10 Eastern.

It’s Official: CMS Recognizes Homelessness as A CC

By Tiffany Ferguson, LMSW, CMAC, ACM

As reported back in April 2023 regarding the proposed ruling on social determinants of health (SDoH) Z-codes, I would like to update and celebrate the final ruling for Z59.00, unspecified homelessness, with subcategories of 59.01, and 59.02- sheltered and unsheltered homelessness. These will now be considered a complication or comorbidity (CC), based on the higher average cost to care for such individuals.   

There were several comments and responses called out in this decision I thought were noteworthy to discuss (details are discussed from 293-309).

Commentators and the Centers for Medicare & Medicaid Services (CMS) concurred that greater alignment is needed between the SDoH quality submission requirements and SDoH Z-code capture, both recognizing that making homelessness a CC is a great first step, as this directly correlates with the social driver housing domain.

CMS also confirmed that they are continuing down the path of SDoH Z-code methodology for data capture to measure the impact on resource consumption, such as clinical evaluations, extended length of stay, increased nursing care, and comprehensive discharge planning, which is why continued collection is imperative for future analysis regarding reimbursement. There were requests for planning on future considerations for Z-codes to be considered as CCs/MCCs, but CMS shot this down, essentially saying they do not have enough data yet to make any statements. I would say that with the inclusion of questions regarding food insecurity as a social driver and the existing workflow for malnutrition in the coding and clinical documentation improvement specialist (CDIS) arena, this may be an easy alignment for coding, Z59.41, based off patient responses in the screening tool.

It was also noted in the final ruling that continued feedback regarding the addition of Z-code capture does not allow for enough space on the claim form, as we are limited to 25 diagnoses. CMS noted that this is not a part of their purview, and that these requests would need to be taken up with the National Uniform Billing Committee (NUBC) for adjustments to the UB04 data set and form.

Finally, commentators discussed concerns with their electronic health records (EHRs) and electronic coding tools, expressing a desire to stay up-to-date with Z code-recognition and capture. CMS stated that on April 18, the Office of the National Coordinator proposed updating certification standards that if finalized, would require certified EHR vendors to include four SDoH data elements in their products: SDoH assessment, goals, interventions, and problems/health concerns.

I am excited to see the continued momentum toward recognizing the SDoH of our patients and how this impacts their medical care and system resource utilization. If hospitals and health systems have not already begun this process, they should start working on determining how they are going to increase Z-code capture and really start pushing their electronic coding vendors to make sure they are updating their tools for coders and CDISs.

Programming note: Listen to live SDoH reports by Tiffany Ferguson, every Tuesday on Talk Ten Tuesdays with Chuck Buck and Dr. Erica Remer.

References:
https://public-inspection.federalregister.gov/2023-16252.pdf