Regulatory Bulletins

Bulletin 14 – CMS updates to MCPM Ch. 30

CMS Issues Update to the Medicare Claims Processing Manual Chapter 30 Section 200: Financial Liability Protections


On January 21, 2022, CMS released a Medicare Learning Matters (MLN) announcing a change request (CR 12546), resulting in substantial edits to Chapter 30 of the Medicare Claims Processing Manual (MCPM). The purpose of the CR was to call attention to recent revisions made to section 200 of Chapter 30 to improve readability and understanding. The effective date for these edits is April 21, 2022.

What Has Changed

Chapter 30, section 200 of the MCPM, now entitled: “Expedited Determinations of Inpatient Hospital Discharges” addresses the statutory right of a Medicare beneficiary to an expedited appeal to a Beneficiary and Family-Centered Care Quality Improvement Organization (BFCC-QIO) when a hospital and attending physician determine that inpatient care is no longer necessary. This new iteration has been noticeably simplified and speaks more directly to the beneficiary.

One of the most significant changes made by CMS in this update is the limitation of appeal rights levied on patients whose status has been changed from inpatient to outpatient using Condition Code 44. Section 200.2.1 Exceptions is a new section of the Manual. Previously, this section (Section 200.2) was entitled Special Considerations and indicated there were certain circumstances when a provider might need to refer to other CMS guidance for additional direction. In the wake of a status change, the underlying issue of beneficiary appeal rights has been under review and debate for over a decade in litigation. In a very recent Federal Court case (Barrows v. Becerra 20-1642-cv), the Secretary of Health & Human Services (HHS) appealed a 2020 lower court decision ordering the creation of a process that would provide administrative appeal rights to beneficiaries who were admitted to a hospital as “inpatients” but whose status was later reclassified as “outpatient” so the hospital could bill for observation services. On January 25, 2022, only a few days after CMS posted this regulatory change, the United States Court of Appeals for the Second Circuit found no merit in the HHS challenges and affirmed the lower court order. The Court has found that Medicare beneficiaries hold a property interest in their benefits to the extent they should have an opportunity to appeal status changes even after discharge. It remains to be seen whether CMS will review their recent regulatory change that explicitly limits the appeal rights of these patients to agree with the decision of this recent litigation.

The new guidance also updates the timing of the delivery of the Important Medicare Message (IM) and the content of the notice. CMS had not addressed the timing of delivery of the IM up to this point. The Manual update has now explicitly noted the first IM must be delivered “At or near admission, but no later than 2 calendar days following the date of the beneficiary’s admission to the hospital.” (MCPM Ch. 30. The follow-up copy of the IM must be delivered “within 2 days of discharge. It may be given as late as 4-hours prior to discharge.” (MCPM Ch. 30. The receipt of the IM by a representative has also been defined and updated to ensure beneficiaries or their proxy (even if not present), receive clear and concise information regarding the discharge and subsequent appeal rights. Since several notices must be provided to the beneficiary or their representative in these instances, Versalus Health encourages hospitals to do their due diligence and ensure their processes align with the CMS regulations.

 What Has Stayed the Same

Providers should be aware that the appeals process has remained unchanged after the expedited review. The timing of the expedited appeal remains the same and must be requested from the BFCC-QIO by midnight on the day of discharge, regardless of whether the beneficiary stays or physically leaves the facility. Also, if the beneficiary receives an unfavorable determination from the BFCC-QIO, they continue to have the right to engage in the administrative appeals process as before.

Financial liability terms also remain unchanged. Although the updated Section 200.4.2 Beneficiary Liability During BFCC-QIO Review remains consistent, it has been wholly simplified for ease of understanding:

BFCC-QIO determination Liability begins
Unfavorable to the beneficiary Noon of the day after the BFCC-QIO notifies the beneficiary of the decision.
Favorable to the beneficiary Once the hospital determines that the beneficiary no longer requires inpatient care, determines a new last date of coverage, and notifies the beneficiary with a follow-up copy of the IM.

Finally, provider responsibilities also remain unchanged. Although Section 200.4.4 Hospital Responsibilities is markedly shorter, it succinctly lists four (4) primary actions the provider must perform when notified by the BFCC-QIO of a beneficiary request for an expedited determination:

    1. Provide the beneficiary with the Detailed Notice of Discharge (DND) as soon as possible;
    2. Provide the BFCC-QIO with copies of the IM and DND as soon as possible, after notification of beneficiary request from the BFCC-QIO;
    3. Provide all information requested by the BFCC-QIO relating to the beneficiary’s expedited request, including complete medical records, as soon as possible; and
    4. Upon request, provide the beneficiary with access to any documentation supplied to the BFCC-QIO.

What Should Providers Do Now

First and foremost, ensure your compliance staff, care teams, and social service teams are aware of the updates to this regulation. A careful review of your current discharge practices is strongly encouraged. Review protocols involving delivery of the DND, the IM, and any other information you may provide beneficiaries related to their discharge and their expedited appeal.

Since this Manual update is not effective until April 21, 2022, hospitals have some time to actively review (or develop anew) policies and protocols that may be impacted by the updates and circulate same to staff for their awareness, training, and compliance.

Although CMS has not yet issued any additional guidance of FAQs regarding this update, they have issued CMS Manual System Transmittal 11210 officially announcing the pending updates.

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