The Role of Third-Party Clinical Appropriateness Criteria in Admission Status Decisions

On March 24, a judge for the U.S. District Court for the District of Connecticut released a memorandum of decision in the class action law suit of Alexander v. Azar.¹ This case gives Medicare beneficiaries the right to appeal when a hospital utilization management (UM) committee changes a patient’s admission status from inpatient to observation using Medicare Condition Code 44. The decision applies only to those Medicare fee-for-service patients whose stay was changed to observation after inpatient admission.

One of the conversation points emerging from the decision is the role of third-party, evidence-based clinical appropriateness criteria, such as those provided by InterQual(r) solutions, in utilization management decisions. Fundamentally, these kinds of criteria are meant to support and enable objectivity. Providers, payers, and government agencies use these standards to ensure utilization decisions are sourced to the published literature to help ensure clinically appropriate care. Not only do the criteria help organizations deliver the right care, in the right setting, at the right time, they also foster optimal resource utilization and streamline the medical review process.  

Evidence-based clinical appropriateness criteria should be considered one tool in the toolkit

Medicare patients, by the nature of their contract with the Centers for Medicare & Medicaid Services (CMS), are guaranteed to receive certain services as well as a high level of care quality. A Medicare provider agrees to uphold these quality guarantees via its contract with the Department of Health and Human Services. High-quality care does not merely depend on one factor. It requires information gathering from a variety of inputs, including but not limited to provider judgment, clinical care criteria, hospital policy, and so on.

This concept applies when determining the safest, most efficient care level for patients entering the hospital. Providers need to use their clinical judgment to assess the patient’s symptoms, the severity of illness, and any comorbidities. They also must determine what diagnostic tests are necessary to assure that a patient receives care in the right setting, and whether inpatient or outpatient care would best meet the patient's needs.

Many of these decisions are subjective and often need to be made quickly. Having evidence-based criteria that can point the provider in the right direction or support their initial inclination is helpful. Not only does this take some of the pressure off the clinician, it enables more consistent and defensible care across the organization and throughout the field.  

Third-party criteria can lessen subjectivit

Many of the medical record review policies put in place by CMS to ensure care quality are necessary given the wide variability in provider practice patterns. Not all providers practice medicine the same way, which can lead to inappropriate and unnecessary care. A JAMA article estimates that the annual cost of waste due to overtreatment or low-value care ranges from $75.7 billion to $101.2 billion.² Further, research appearing in The New England Journal of Medicine states that “the effectiveness of payment reforms in reducing overutilization while maintaining access to high-quality care depends on the effectiveness of targeting [provider practices in the provision of care].”³

The need to decrease provider practice variability further speaks to the value of third-party, evidence-based criteria. By offering objective, research-driven recommendations, national standards help to ensure that patients with similar conditions receive the same level and quality of care. They can help lessen the subjectivity implied in the Medicare provider manual while reducing the amount of waste in the system.

Clear standards also minimize bias. When evidence-based criteria are applied uniformly throughout healthcare organizations, there is greater consistency across diverse geographic areas and socioeconomic groups. This supports healthcare equity, allowing the field to define best practice for care based on verified research and data and then scale clinical excellence across settings, geographic areas, and throughout the United States.

Third-party criteria should be created using a rigorous, evidence-based methodology

Given the important role of third-party criteria, objective, valid, critically appraised evidence should be used to establish national standards of care that supports clinical excellence. The criteria first and foremost are based on the published literature. They should be subjected to external peer review by experts in the field. Standards should be reviewed and updated frequently to reflect any changes in the evidence base.

No provider should make decisions based only on national standards

No matter how well vetted a set of criteria is, it should never be used as a substitute for clinical judgment. Providers should be aware of federal and state regulatory requirements and local factors such as hospital policies. Decision-making criteria can never be written to cover every nuance in every case. These standards should, instead, serve as robust screening mechanisms, highlighting scenarios that meet certain conditions and suggesting valid, evidence-based action. They will also identify situations that fall outside the norm, where provider and payer discussions based on clinical judgment should be brought to bear.

A key element in a multifaceted approach

Whether ordering an outpatient test or procedure or determining the need to admit a patient or keep them in the hospital for observation, all clinical care decisions should be made thoughtfully. Using objective, evidence-based criteria can help organizations determine what care is medically necessary. When hospitals and health systems use such criteria in combination with clinical judgment, they can help ensure care quality as well as optimal care intensity, bringing them one step closer to meeting the Triple Aim.

_{^1. Christina Alexander, et al. v. Alex M. Azar II, 3:11-cv-1703 (MPS) (U.S. District Court, District of Conn, 2020).}  

_{^2. William H. Shrank, Teresa L. Rogstad, Natasha Parekh. “Waste in the US Health Care System: Estimated Costs and Potential for Savings,” JAMA, October 7, 2019, https://jamanetwork.com/journals/jama/article-abstract/2752664.}

_{^3. Yuting Zhang, Seo Hyon Baik, A. Mark Fendrick, Katherine Baicker. “Comparing Local and Regional Variation  in Health Care Spending,” The New England Journal of Medicine, November 1, 2012, https://www.nejm.org/doi/pdf/10.1056/NEJMsa1203980?articleTools=true.}