Potential revenue implications of the CMS utilization review waiver

Tuesday, June 2, 2020

by Steven A. Greenspan, J.D., LL.M.

On March 30, CMS issued a blanket waiver of the requirement that hospitals maintain a utilization review (UR) committee and the process to review the medical necessity of Medicare and Medicaid admissions.  This waiver extends for the duration of the novel coronavirus (COVID-19) crisis and is intended to allow hospitals to use UR staff for patient care. Seema Verma, administrator of CMS, explained, “In a time of crisis, regulations shouldn’t stand in the way of patient care.”

This waiver is a potential relief for hospitals since it temporarily alleviates some of the regulatory requirements they face, but taking advantage of it isn’t mandatory. Verma explains, “Many healthcare systems won’t need these waivers and they shouldn’t use them if they don’t need them, but the flexibilities are there.” It also does not apply to commercial insurers and their patients.

UR involves much more than simply fulfilling the Medicare Conditions of Participation. COVID-19 can be very complicated and often involves many more facets other than respiratory distress or failure. Determining the correct status for non-critically ill patients requires a high-functioning UR process backed by evidence-based medicine. UR, when consistently applied to all cases, is a powerful tool to defend revenue integrity against denials, audits, and potential under-coding. Inpatient or outpatient status affects not only a hospital’s reimbursement, but also patient financial responsibilities and quality reporting. To the extent that hospitals are not repurposing their UR staff for patient care, they should consider maintaining the current UR process.

While patient care remains the primary concern during COVID-19, the financial effects of the crisis will linger for many months afterward. Because of canceled elective procedures and reserving beds for COVID-19 patients, many hospitals are facing significant revenue decline, and some are even furloughing staff. The next few months will be difficult both clinically and administratively. Maintaining good UR discipline may help hospitals emerge from this emergency in better financial condition and able to better serve their populations.

Some organizations might consider the UR waiver as a means to reduce personnel expenditure, even if there is no need to repurpose UR personnel for patient care. But waiving their standard UR process may affect hospitals’ long-term institutional knowledge. High-functioning UR processes take significant time and expense to build and maintain. Hospitals that continue with a functioning process will not have to rebuild at the end of the declared emergency, preserving revenue integrity.

It is critical to remember that the waiver does not eliminate the requirement that hospitals submit accurate claims for reimbursement. Nor has the Federal False Claims Act been waived. There is a specific focus by the Department of Justice and Office of Inspector General related to COVID-19 claims. Medicare requires prompt identification via self-auditing and repayment of overpayments due to medical necessity errors. A high-functioning UR process helps a hospital correctly submit Medicare claims. Hospitals taking the UR waiver, by eliminating the concurrent review safeguards against placing a patient in the incorrect status, may have to budget for, plan, and put into place enhanced post-discharge reviews and refunds of Medicare payments to ensure compliance.

CMS also specified that it is not waiving the requirement that hospitals maintain an effective, ongoing, hospital-wide, data-driven quality assessment and performance improvement program. The metrics driven by hospital inpatient admissions remain important, such as mortality, length of stay, and readmissions. As most quality metrics are related to a correct underlying patient status, the UR process can ensure the continued accuracy of these measurements.

Hospitals should make use of this waiver if they need to repurpose UR personnel into clinical roles. However, there are many potential consequences of using this wavier, as discussed above. This is a complicated situation that requires thorough analysis, and hospitals should carefully consider it before abandoning their existing UR process through this crisis.

Author bio

Greenspan serves as vice president of regulatory affairs at Optum360 (Newtown Square, PA) and is responsible for overseeing the company’s regulatory research and hospital advocacy efforts, and collaborates closely with the Optum appeals management teams to offer support on complex Medicare, Medicaid, and commercial appeals matters. Prior to his time with Optum360, Mr. Greenspan led the day-to-day operations of the Part A East Qualified Independent Contractor (QIC) program with MAXIMUS. He also serves as a NAHRI Advisory Board member.