This was a staff presentation for Rio Grande Hospital staff in 2012 regarding the correct admission status for patients, billing, and the impact that RACs auditors have on the hospital

1. Ann-Marie Peterson, RN
Nursing Management

2. Situation:
Medical and Nursing staff at Rio Grande Hospital
need increased recognition of a patient’s admit
disposition
Inpatient admission vs. outpatient observation
Background:
Commercial insurance payers, Medicaid, and
Medicare are demanding that hospitals bill
correctly for services rendered

3. Assessment
Private health insurance carriers deny payment for
services rendered if the patient is admitted to
wrong status
Insurance carrier is billed for inpatient services when the
patient’s criteria met an for an outpatient admission
Insurance carrier is billed for outpatient services when
the patient is admitted > 23 hours
Medicare Recovery Audit Contractors are working
to recover funds that are billed inappropriately
(American Hospital Association, 2012)

4. Recommendation
Initiate procedures to ensure correct admit
disposition of admitted patients to Rio Grande
Hospital
Goal
Correctly bill for services rendered while admitted
to Rio Grande Hospital with the initial billing
Reduce incorrect billings that are corrected and rebilled
to private insurance carriers
Decrease vulnerabilities in RACs charts audits.
Minimize refunds back to Medicare

5. Reimbursement for services provided at Rio
Grande Hospital are affected when the patient’s
admit disposition is incorrect

6. Cost Effectiveness for the billing staff
Get it right the first time
Saves man hours for reprocessing with the
correct disposition
Saves the private insurance companies
money and time in their claims processing
department and medical review staff
We receive our funds in a more timely
manner

7. Medicare Recovery Audit
Contractors
Tax Relief and Healthcare ACT of 2006,
Section 302: required a permanent and
nationwide RAC program to be in place
by 2010
Medicare Modernization Act, Section
306
Required RAC demonstration
Both of the above statues give authority
for RACs to be paid on a contingency
basis (CMS, 2008)

8. RACs began reviewing
Medicare payments to
providers in October, 2010.
According to CMS, RACs
“corrected” $1.45 Billion of
improper payments by
December, 2011
(American Hospital Association, 2012)

9. Observation may be appropriate for a patient with ALL
of the following. Observation care is appropriate as
indicated by care requirements that are ALL of the
following per Milliman’s Care Guidelines©
Beyond the scope of a usual outpatient care episode
Expected to be short term
Appropriate for observation care as indicated by 1 or more
of the following:
Diagnostic evaluation needed (eg, rule out MI)
Acute treatment and response evaluation needed (eg,
drug reaction)
Monitoring for event (eg, arrhythmia) or recovery (eg,
from drug ingestion)

10. Furnished by a hospital on premises use of a
bed
Periodic monitoring by nursing and/or other
staff
Any other services reasonable and necessary to
evaluate a patient’s condition or to determine
the need for a possible inpatient admission
Admission is usually based on a symptom
Chest pain
Abdominal pain
TIA symptoms (Milliman Care Guidelines)

11. Rule out = Remember Observation
Length of Observation Stay
Medicare patient < 48 hours
Private insurance < 24 hours

12. Quality of care and treatment remains
unchanged regardless if the patient is admitted
to inpatient status or placed into outpatient
observation
Severity of Illness These are the criteria for
Intensity of Service inpt vs. outpt observation

13. RACS look at “Severity of Illness” and “Intensity
of Service” to determine if a patient meets
criteria for an inpatient admission.
(AEGIS Compliance & Ethics Center, 2009
Severity of Illness
How sick is the patient
Symptoms
Lab values
Vital signs

14. Intensity of Service
Monitoring the patient
Serial CPK and troponins
Monitoring oxygen saturations for several hours
What are our interventions?
Prophylactic DVT prevention vs. treatment with
therapeutic goal
IV antibiotics for an infection
IV Lasix ≥ twice daily
Systemic steroid administration
IV or po administration

15. www.careguidelines.com

17. Works Cited
Americian Hospital Association. (2012). AHA Audit Education Series: Reducing Vulnerabilities to Payment
Denials.
Center for Medicare and Medicaid, Division of Recovery Audit Operations. (2008). Medicare Audit
Contractors (RACs) An Intorduction to the RAC Process. Center for Medicare and Medicaid.
Department of Health and Human Services. (2010). Recovery Audit Contractors' Fraud Referrals. Office
of the Inspector General. Retrieved September 24, 2012, from
https://oig.hhs.gov/oei/reports/oei-03-09-00130.pdf
Health Services Advisory Group. (n.d.). Guidelines - Medicare Decisions: Observation or Inpatient?
Arizona. Retrieved September 25, 2012, from
http://acute.hsag.com/HOW/041207/09_Medicare-INPvOBV-
DecisionsGUIDELINES_April2007.pdf
Milliman Care Guidelines. (2012). General Criteria: Observation Care (16 ed.).