Medicare HMO guidelines for patient status

In the past I was under the impression that Medicare HMOs had to go by all CMS Medicare guidelines for Patient status i.e., Place in Observation, Admit to IP orders, etc; however have noticed that the status must be authorized by the Medicare HMO.  I also can't find good guidelines to go by for these Medicare HMOs on what to do with order mismatches vs. authorizations, etc. I would like to know what others would do for the following situation:

If you have a Medicare HMO with an Admit to IP order but once clinicals and medical records  are sent in and the Medicare HMO decision states "based on clinicals and information from the medical record the services could have safely been rendered in an alternate setting such as Observation"  and by then the patient has been discharged as an IP.  Since there are only Admit to IP order on the encounter is the hospital  supposed to maintain that status as IP and bill out a 131/121 claim as if it was a Denial as Medicare states to do in their guidelines when you have a appeal loss?  Change it to Observation without an order including correcting Room and Board from the beginning of the encounter?  Attain a retrospective order from attending per the payer for Observation and correct r/b from beginning?  other?  


  • The Medicare Managed Care Manual states: Billing and Payment: MA plans need not follow original Medicare claims processing procedures. MA plans may create their own billing and payment procedures as long as providers – whether contracted or not – are paid accurately, timely and with an audit trail. 

    So it does not matter what CMS says as far as billing; the MA plans can do what they want if you let them do it. My philosophy is that if they tell you to go ahead and bill Observation, then do it. They want to pay you and they want an outpatient bill so make one up and send it. Don't worry about the order or the chart. 

    Then choose Claims Payment Policies to the right under educational presentations, 
    Scroll down to Inpatient to Outpatient Rebilling, then Save and Open to get the following PDF article to open. 
    Claims Payment Policy
    Subject: Inpatient to Outpatient Rebilling
    Application: Medicare Advantage and Commercial Products Published date: 09/2016
    Policy number: CP2015006 Revision date: 04/2017

    Then choose Medicare Advantage Payment Policy 

    I would love your feedback after reading it and my earlier question.  I have not been able to find anything like this on other MA sites.  PR
  • Well, that fits for Humana; they are following CMS guidelines here, sort of. Humana says "when a hospital determines" without specifying that process. For Medicare, it has to go through the UR Committee and you have to notify the attending  and the patient in writing. But Humana does not specify that. So a UR RN could decide rebilling is warranted and authorize it without the notifications. 

    And obviously you cannot add Obs hours to the claim unless it was ordered before admission. 

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