Description of Service:

This guide helps you understand the determinations made for hospital care under a Blue Cross NC Medicare Advantage plan. It explains the difference between inpatient and observation services, and how decisions are made about the level of care your patients will receive during their hospital stay utilizing guidance provided by the Center for Medicare & Medicaid Services (CMS).

Guideline Statement:

Blue Cross NC Medicare Advantage Plans will approve level of care admission utilizing nationally accepted medical practice standards in addition to the defined Medicare criteria regarding inpatient admissions as described in the Medicare Benefit Policy and Medicare Program Integrity manuals. This hierarchical process and criteria maintain consistency in medical reviews of cases and identify complex medical factors that may reasonably warrant a member to be admitted as an inpatient.

Definitions:

• Concurrent Review: The process of reviewing a patient's medical care while they are actively receiving treatment, typically during a hospital stay or other ongoing course of treatment. For inpatient admissions, concurrent review is utilized to determine if the medical information provided in the medical record supports medical necessity of an inpatient admission.
• Diagnosis-Related Group (DRG): it is a system used by Medicare and some health insurance companies to categorize hospitalization costs. The DRG system is designed to standardize hospital reimbursement and improve efficiency for inpatient stays. CMS pays acute-care hospitals (with a few exceptions specified in the law) for inpatient stays under the Hospital Inpatient Prospective Payment System (IPPS) in the Medicare Part A program. CMS sets payment rates prospectively for inpatient stays based on the patient’s diagnoses, procedures, and severity of illness.
• Local Coverage Determination (LCD): As defined in Section 1869(f)(2)(B) of the Social Security Act (the Act): a decision made by a Medicare Administrative Contractor (MAC) regarding whether a particular service or item is considered reasonable and necessary, and therefore covered by Medicare, within their specific jurisdiction.
  
• Medical Necessity: Reasonable and necessary services are defined as “health care services or supplies that are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms, symptoms and that meet accepted standards of medicine."
• National Coverage Determination (NCD): A decision by the Centers for Medicare & Medicaid Services (CMS) that determines whether a specific medical item, service, or technology will be covered under the Medicare program nationally. A policy that outlines whether Medicare will cover (or not cover), and if so, under what conditions (criteria); NCDs are binding on all Medicare Administrative Contractors (MAC).
• Standards of Medical Practice: means standards that are based on credible scientific evidence published in peer-reviewed medical literature that is generally recognized by the relevant medical community, physician specialty society recommendations, and the views of physicians practicing in relevant clinical areas and any other relevant factors.

Levels of Care:

Ambulatory Care: All types of health services that do not require an overnight hospital stay (i.e., same day surgery).

Inpatient Hospital Services: Admission to the hospital for a stay overnight or longer. This is usually for more serious conditions that need close monitoring or treatment.

Inpatient Only: Procedures that are deemed to require inpatient care due to the complexity of the procedure, the patient's underlying health conditions, or the need for at least 24 hours of post-operative recovery or monitoring.

Observation Services: A defined set of outpatient hospital services where a patient receives treatment and monitoring to determine the need for further inpatient admission or discharge. Observation care includes well-established clinically appropriate services, including short-stay treatment, diagnostic assessment, and reevaluation.

How Decisions Are Made:

All hospital services must be reasonable and medically necessary to be considered and approved under inpatient criteria. The status and setting for delivering healthcare services should be based on nationally recognized, evidence-based medical standards supported by current literature.

The decision to admit a member to the hospital is a complex medical judgment. It should be made only after the provider has thoroughly evaluated several factors, including the member’s medical history, clinical presentation, and anticipated resource needs. These decisions must comply with the hospital’s bylaws and admissions policies, with careful consideration of the appropriateness of treatment in each care setting.

Inpatient admission decisions should take into account:

• The severity of the patient’s presenting clinical signs and symptoms
• The medical probability of an adverse event or deterioration in the current care setting
• The need for and availability of additional diagnostic work-up and therapeutic interventions, and whether these can be effectively provided in an outpatient setting
• Anticipated discharge planning and support needs

To meet the requirements for inpatient admission under Medicare guidelines, clinical documentation must clearly demonstrate the medical necessity of the admission. This includes evidence of both the severity of illness and the intensity of services required, justifying the need for inpatient care.

Hospital care that is not medically necessary, classified as custodial, provided for convenience, related to placement delays, not specific to or required for the diagnosis or treatment of the admission illness is not appropriate for coverage or payment. Any unnecessary delays in the delivery of medically necessary services are not counted towards the two-midnight benchmark timeline as defined in the Medicare Program Integrity Manual.

BlueCross NC utilizes additional and nationally accepted medical practice standards in addition to the defined Medicare criteria regarding inpatient admissions as described in the Medicare Benefit Policy and Medicare Program Integrity manuals. BlueCross NC uses these criteria to maintain consistency in medical reviews of cases and identify complex medical factors that may reasonably warrant a member to be admitted as an inpatient. BlueCross NC utilizes MCG (also known as Milliman Care Guidelines) in addition to the consideration of additional factors such as member severity of presentation and clinical status, history and associated comorbidities, ongoing and anticipated diagnostic and therapeutic needs and the risk of an adverse event. Use of these clinical standards and accepted care guidelines help in preventing inappropriate denial of inpatient admissions when medically indicated. The comprehensive criteria utilized helps ensure consideration of all factors on which a physician may have reasonably based their decision to admit the member as an inpatient. Utilization of consistent and nationally accepted standards also limit inappropriate admissions which may prevent prolonged length of stays and potential development of adverse events such as clinical deconditioning, hospital acquired infections, pressure ulcers, falls, and venous thromboembolism.

CMS Guidelines and Requirements:

As defined in the CMS 2024 Final Rule-CMS 4201-F, a series of regulations released by the Centers for Medicare & Medicaid Services (CMS) aim to improve healthcare access, interoperability, and efficiency. CMS is clarifying that Medicare Advantage (MA) plans must follow the same coverage rules as Traditional Medicare for certain services—even if those rules were originally created for payment purposes in Traditional Medicare.

Blue Cross North Carolina complies with coverage and benefits guidelines as described in Original Medicare regulations, unless supplanted by laws specifically applicable to Medicare Advantage plans. This includes payment criteria for inpatient admissions related to the “two-midnight benchmark.”

CMS guidance states that Traditional Medicare contractors will presume hospital stays spanning two or more midnights after the beneficiary is formally admitted as an inpatient are reasonable and necessary for Part A payment. Under this presumption, Traditional Medicare contractors will generally not focus their medical review efforts on stays spanning two or more midnights after formal inpatient admission.

The Two-Midnight Rule Applies—But Not the Presumption for Medicare Advantage (MA) plans: MA plans must use the two-midnight benchmark and case-by-case exception to determine if an inpatient admission is medically necessary.

However, the “two-midnight presumption” (which protects hospitals from audits in Traditional Medicare) does not apply to MA plans.

CMS Final Rule:

Per the CMS final rule and clarification FAQs (February 6, 2024)

The two-midnight presumption is a medical review instruction given to Medicare post-payment audit and compliance contractors (for example, Recovery Audit Contractors, or Quality Improvement Organizations) to help them in the selection of claims for post-payment medical necessity reviews in Traditional Medicare, which are conducted to ensure that claims have been appropriately paid under Medicare rules. Any sub-regulatory guidance issued by these contractors does not directly apply to MA plans but likely contains useful explanations and interpretations of Traditional Medicare policies. As clarified in the CY 2024 final rule, MA organizations are not required to use the two-midnight presumption to decide which claims to review, but may instead decide which claims are subject to review in accordance with procedures for making determinations as provided by Section 1852(g)(1)(A) of the Act. MA plans may still use prior authorization or concurrent case management review of inpatient admissions to determine whether the complex medical factors documented in the medical record support medical necessity of the inpatient admission under 42 C.F.R. 412.3.

In the CY 2024 Final Rule, CMS clarifies the hierarchy that all Medicare Advantage (MA) organizations must follow when making medical necessity determinations. CMS mandates that MA organizations must first apply Medicare statutes to establish coverage criteria, including National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs). These resources are publicly available through the Medicare Coverage Database (MCD) Search (MCD Search).

When coverage criteria are not fully established in applicable Medicare statutes, regulations, NCDs, or LCDs, MA organizations may develop internal coverage criteria. These internal policies must be publicly accessible and based on current evidence from widely accepted treatment guidelines or clinical literature.

BlueCross NC internal medical policies are available at: Medical Policies and Guidelines | Providers | Blue Cross NC

References:

1. Code of Federal Regulations, Part 422 Medicare Advantage
   
2. Federal Register; Vol. 88, No. 72, Department of Health and Human Services; Center for Medicare and Medicaid Services/ Rules and Regulations – Final Rule; April 12, 2023
3. CMS.gov: Newsroom Article; Fact Sheet: Two-Midnight Rule
4. Code of Federal Regulations, Title 42, Chapter IV, Part 412, § 412.3 Admissions