Becker’s: Aetna to adopt new Medicare inpatient payment change: 6 things to know

Aetna is rolling out a new inpatient reimbursement policy for its Medicare Advantage and Special Needs Plans, effective Nov. 15.

“Our goal is simple: We want to help you get reimbursed faster for inpatient admissions that are initially denied. You’ll receive faster payment and still be allowed to appeal for a higher payment,” the insurer wrote in an August update to providers.

Six things to know:

1. The policy applies to urgent or emergent hospital admissions for Medicare Advantage and SNP members that span at least one midnight. It does not apply to stays under one midnight, which remain subject to standard CMS medical necessity reviews.

2. For eligible stays, Aetna will automatically approve the inpatient admission without requiring a medical necessity review up front. 

3. While an admission itself will be approved, payment will vary based on clinical severity. If the case meets MCG for inpatient care, it will be reimbursed at the full inpatient contracted rate. If not, the claim will be paid at a lower observation-level rate, even if the patient stayed overnight.

4. Aetna will not issue a denial if an admission does not meet inpatient criteria. Instead, the stay will be reimbursed at the lower severity rate. Because the stay will be approved and paid at a lower rate rather than denied, hospitals will not be able to use the traditional medical necessity appeal or peer-to-peer review process. Any challenges would need to follow the payment dispute process outlined in their contract.

5. Aetna said the goal of the new policy is to streamline reimbursement and reduce delays, particularly in cases where hospitals previously had to rebill claims as observation or go through formal appeals to secure payment.

6. In January 2024, CMS finalized a rule requiring Medicare Advantage plans to follow the two-midnight rule, which helps determine whether a hospital admission should be billed as inpatient or outpatient. Under the rule, a stay is considered inpatient, and reimbursed at a higher rate, if the admitting physician expects the patient to need care spanning at least two midnights. If the stay is expected to last less than two midnights, it is typically considered outpatient or observation, which is reimbursed at a lower rate.

This article was originally published on Becker’s.