S.2501 Eliminates Readmission Penalties Related to Patient Socioeconomic Status

On June 19, 2014, U.S. Senators Manchin, Wicker, Kirk and Nelson introduced Senate Bill 2501 entitled The Hospital Readmissions Program Accuracy and Accountability Act of 2014 ("S.2501") to ensure that hospitals experiencing excessive readmissions are not financially penalized for serving low-income patients.  S.2501 was referred to the Senate Committee on Finance.  It can be found here


The Hospital Readmissions Reduction Program ("HRRP") established under Section 3025 of the Patient Protection and Affordable Care Act requires the Centers for Medicare & Medicaid Services ("CMS") to reduce payments to inpatient prospective payment system ("IPPS") hospitals with excessive avoidable readmissions, effective for discharges beginning on October 1, 2012.  (The implementing regulations are at 42 CFR §412.150 through §412.154.)  The HRRP includes risk adjustment for clinical variables such as comorbidities (i.e., presence of other conditions) and severity of illness.  However, while socioeconomic factors such as poverty, poor literacy, poor living conditions and limited community resources are believed to influence readmissions at least to the same degree as clinical factors, socioeconomic factors are not currently considered in readmission risk adjustment under the HRRP.  According to the Medicare Payment Advisory Committee and the National Quality Forum, the HRRP's lack of risk adjustment for socioeconomic status may unfairly "penaliz[e] and stigmatiz[e]" hospitals serving low-income populations and may also negatively misrepresent the quality of care delivered by these safety net hospitals.

To address this flaw in the HRRP, S.2501 would require the Secretary of Health and Human Services to risk adjust IPPS hospital readmissions to account for the socioeconomic status of the patients served by the hospital for discharges occurring on or after October 1, 2016.  Further, Section 2 (Findings) of S.2501 endorses the adoption of socioeconomic adjustment methodologies for other quality reporting and pay-for-performance programs sponsored by Medicare.

Hall Render will track S.2501.

You Can Have Your Hospital System Unified Medical Staff, but You Must Follow New Rules

On May 12, 2014, CMS finalized a rule addressing efficiency and transparency in the Medicare program ("Rule").  As part of this Rule, CMS amended the much-discussed Medical Staff Conditions of Participation ("CoPs") at 42 CFR 482.22 and reinterpreted them to permit either a separate medical staff for each hospital or a unified and integrated medical staff shared by multiple hospitals within a hospital system.  The Rule resolves recent confusion as to whether CMS permits, or prohibits, a multi-hospital system integrated medical staff.  The revised CoPs became effective on July 11, 2014 and can be found here.


Historically, CMS has taken the position that each hospital, even a hospital part of a multi-hospital system, must have its own medical staff with the authority and responsibility for the quality of patient care provided in that hospital.  However, because of ambiguity in the 2011 proposed rule commentary1, and in the regulation text itself, some hospital systems interpreted the CoPs to allow, and indeed implemented, an integrated medical staff for hospitals part of the hospital system. Because of the confusion generated by CMS's 2001 commentary, CMS revisited the issue in the Rule.  It subsequently adopted an interpretation that allows a unified medical staff for large hospital systems, subject to specific new requirements summarized below.

CMS added new paragraph (b)(4) to 42 CFR 482.22 in order to "hold a hospital responsible for showing that it actively addresses its use of a system unified and integrated medical staff model."  The new provision at (b)(4) provides that each separately certified hospital part of a multi-hospital system with a unified/integrated medical staff must demonstrate that:

  1. The medical staff members of each separately certified hospital have voted by majority to accept a unified/integrated medical staff structure or to "opt out" and maintain a separate and distinct medical staff for their respective hospitals;
  2. The unified/integrated medical staff has bylaws and rules that describe its process for self-governance, appointment, credentialing, privileging and oversight, as well as peer review policies and due process rights guarantees. There also must be a process for medical staff members who hold specific privileges at a particular hospital in the system to be advised of their rights to opt out of the unified/integrated medical staff after a majority vote by the members to maintain a separate and distinct medical staff for their hospital;
  3. The unified/integrated medical staff structure takes into account each member hospital's unique circumstances, any significant differences in patient populations and services offered in each hospital; and
  4. The unified and integrated medical staff establishes and implements policies and procedures to ensure that the needs and concerns expressed by the medical staff at each of its separately certified hospitals, regardless of practice or location, are considered and addressed.

Hospital systems must implement these new requirements if they employ, or wish to employ, a single unified medical staff.  Compliant policies and procedures addressing "opt-out" processes and communication of physician concerns must be developed.  Operationally, there may be challenges.  For example, some physicians believe that a system medical staff structure will not be as responsive to their concerns as an individual hospital medical staff.

Hall Render can advise hospital systems on Medical Staff CoP compliance.

CMS Proposes to Require Physician Certifications Only for Long-Stay and Outlier Cases

On July 14, 2014, CMS published a proposed rule that addresses, among other topics, physician orders and physician certification requirements for inpatient hospital admissions.  CMS proposes to require inpatient admission orders as a condition of payment rather than as an element of a physician certification of medical necessity of the inpatient admission.  Further, and most significantly, CMS proposes to require a physician certification only for long-stay cases and outlier cases.  Currently, the regulations require physician certifications for all inpatient hospital services (other than inpatient psychiatric hospital services), regardless of length of stay.  The proposed change would decrease the administrative burden on physicians and hospitals.

The proposed rule can be found here.


Under the FY 2014 Hospital IPPS and LTCH PPS Final Rule ("Final Rule"), CMS codified the definition of an inpatient admission at 42 CFR §412.3 and required that all inpatient admissions be certified by a physician.  An individual is considered an inpatient of a hospital if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner.  The physician order constitutes a required component of the physician certification of the medical necessity of hospital inpatient services under 42 CFR §424.13.  The regulation further specifies that Medicare Part A pays for inpatient hospital servicesonly if a physician certifies and recertifies: (i) the services were provided in accordance with §412.3; (ii) the reasons for either the hospitalization for inpatient treatment or diagnostic testing, or the special services for cost-outlier cases; (iii) the estimated length of the hospitalization; and (iv) the plans for post-hospital care.  For more information on this topic, please refer to a Hall Render article posted here.

After the Final Rule, stakeholders opined that the relevant section of the Social Security Act ("the Act") should not have been interpreted to require a physician certification for shorter inpatient admissions because the Act specifies that the certification "shall be furnished no later than the 20th day" of the stay; the timing of the certification suggests it was meant to apply to longer inpatient admissions.  CMS defended its Final Rule interpretation as being reasonable because §1814(a)(3) of the Act expressly delegated the authority to CMS to determine the circumstances under which certifications are required.  Notwithstanding, after considering the public feedback and CMS's policy goals, CMS is proposing to change its interpretation to require a physician certification only for long-stay cases defined to be cases with stays 20 days or longer and cost-outlier cases.   Since certification must occur not later than the 20th day, CMS believes, at a minimum, Congress intended that physicians "should conduct a more thorough review of such cases to help ensure that all requirements of medical necessity continue to be met."  CMS is not proposing to change the current regulations that specify that physician certification for cost-outlier cases also occur no longer than 20 days into the hospital stay.

CMS invites comments on the Proposed Rule.  Comments must be received no later than 5 PM EST on September 2, 2014 and can be filed in accordance with the instructions set forth in the Proposed Rule.