Complete Healthcare Compliance Manual

What Are Hospital Discharge Appeal Notices?

Hospital discharge appeal notices serve to address initiation and termination of events. Two notices will be discussed in this chapter. The Centers for Medicare & Medicaid Services (CMS) requires that each hospitalized patient receive the Important Message from Medicare, which informs hospitalized beneficiaries of their hospital discharge appeal rights.^[2] The Detailed Notice of Discharge (DND) explains the reasons for discharge and is given to a beneficiary who requests an appeal.

Each organization needs to have an effective process for notifying patients of their rights. The challenge in doing so is meeting the required deadlines, especially when lengths of stay are relatively short, and ensuring that patients understands their rights. Failure to notify patients of their hospital discharge appeals could result in extended stays and patient dissatisfaction and identify faulty processes in the organization.

For decades, The Joint Commission has encouraged early planning and alerts to patients and their families about what lies beyond a hospital stay. Early planning places special importance on this information if the patient is expected to be transferred to another care facility. The Center for Medicare Advocacy asserts “good discharge planning for patients, their families, and their healthcare providers, paves the way to successful transitions from one care setting to another. Good discharge notices and good discharge planning should go hand in hand.”^[3]

Today, the push for discharge planning to start at the time of admission is also emerging from the C-suite and revenue cycle. Why? With many payers paying on a case rate similar to a diagnosis related group (DRG), an extra day on the tail of the stay continues to consume resources for which the organization will not be paid. Additionally, every day that a patient unnecessarily occupies an inpatient bed is a day when an emergency department patient with an admission order cannot. The costs of holding the patient in the emergency department are multiple, including the safety of the patient, the impact on the patient’s health outcome, and the staffing required to care for the patient as an inpatient in a holding bed. This article’s focus is hospital discharge appeal notices. These notices place yet another focus on discharge planning.

The hospital discharge appeal notice is just one of nine categories of notices generated from the Beneficiary Notices Initiative (BNI).^[4] The CMS website provides descriptions for the other eight notice categories (see Table 1 at the end of this article).^[5] The BNI obtains its authority to mandate the use of these forms from section 1879 of the Social Security Act, which “[r]equires a provider to notify a beneficiary in advance when s/he believes that items or services will likely be denied either as not reasonable and necessary or as constituting custodial care. If such notice…is not given, providers may not shift financial liability to beneficiaries for these items or services if Medicare denies the claim.” ^[6]

From a revenue cycle perspective, this authority is what drives a number of the denials for medical necessity. The use of the Advance Beneficiary Notice of Noncoverage (ABN), for example, is mandatory when the services are not reasonable and necessary, such as for certain medical equipment and/or supplies, custodial care, hospice care for a patient who is not terminally ill, and certain other services. (See the “Revenue Cycle: Advance Beneficiary Notice of Noncoverage” article in this chapter for more information.)

BNI notices are triggered by three main events:

1. Initiations:

   • Beginning of new patient encounter,

   • Start of plan of care, and

   • Beginning of treatment.

2. Reductions:

   • Decrease in a component of care.

3. Terminations:

   • Discontinuation of services or items.

Hospital discharge appeal notices serve to address initiation and termination events. Again, from a revenue cycle perspective, the process triggered by an appeal notice may result in an extended stay or possibly the conversion of a portion of the stay to self-pay (the responsibility of the patient), a situation that many revenue cycle leaders wish to avoid.

Risk Area Governance

Hospital discharge appeal notices are defined by the BNI. This initiative is overseen by CMS, specifically Medicare. Both Medicare beneficiaries and providers have certain rights and protections related to financial liability and appeals under the Fee-for-Service (FFS) Medicare and the Medicare Advantage (MA) programs. These rights are defined in the notices prescribed by BNI. These financial liability and appeal rights and protections are communicated to beneficiaries through notices given by providers.