100-10 Quality Improvement Organization Manual: Chapter 4 - Case Review

Quality Improvement Organization Manual
Chapter 4 - Case Review
Table Of Contents
(Rev. 18, 10-10-14)
Transmittals for Chapter 4
MANDATORY CASE REVIEW REQUIREMENTS
4000 - Introduction
4010 - Anti-dumping Violations
4020 - Assistants at Cataract Surgery
4030 - Beneficiary Complaints
4040 - Hospital and Medicare + Choice Organization (M+CO) Notices of Non-coverage
4050 - Hospital-requested Higher-weighted Diagnosis Related Groups (DRG)
Assignments
4060 - Potential Concerns Identified During Project Data Collection (PDC)
4070 - Referrals
BASIC CASE REVIEW ACTIVITIES
4100 - Introduction
4105 - Quality Review
4110 - Admission/Discharge Review
4115 - Invasive Procedure Review
4120 - Length-of-Stay Review
4125 - Coverage Review
4130 - DRG Validation Review
ADDITIONAL CASE REVIEW ACTIVITIES
4200 - Introduction
4210 - Outlier Review
4230 - Limitation on Liability Determinations
4240 - Readmission Review
4250 - Transfer Review
4255 - Circumvention of Prospective Payment System (PPS)
4260 - Onsite Review
INTEGRATED CASE REVIEW/PHYSICIAN REVIEWER ASSESSMENT FORMAT
(PRAF)
4300 - Introduction
4305 - Non-physician Review

4310 - First Level Physician Review
4312 - Action Following Opportunity for Discussion
4315 - Second Level Physician Review
4320 - Third Level Physician Review
4325 - Use of the Physician Reviewer Assessment Format (PRAF)
SCOPE OF CASE REVIEW
4400 - Introduction
4405 - Review of Medicare Services
4410 - Review Settings
CASE REVIEW PROCEDURES
4500 - Introduction
4510 - Using Screening Criteria
4520 - Requesting Medical Records/Reviewing Documentation
4530 - Providing Opportunity for Discussion
4540 - Adhering to Review Timeframes
4550 - Profiling Case Review Results
4560 - Maintaining Memoranda of Agreements (MOAs)
4570 - Prepayment Review System (PRS) Implementation
4580 - Monitoring Hospitals' Physician Acknowledgment Statements
4590 - Reporting Requirements for Review Activities
PERSONNEL
4600 - Introduction
4610 - Non-physician Reviewers
4620 - Physician Reviewers
4630 - Health Care Practitioners Other Than Physicians (HCPOTP)
4640 - Conflict of Interest
4650 - Training
FEEDBACK AND ACTION PLANS FOR INDIVIDUAL PROVIDERS/PHYSICIANS
4700 - Introduction
4705 - Feedback to the Provider and Involved Physicians
4710 - Request for an Action Plan
4715 - When an Action Plan Is Not Needed
4720 - Provider Implementation of an Action Plan
4725 - Additional Performance Improvement Actions
4730 - Monitoring Performance Improvement Actions
4735 - Timing Requirements for Performance Improvement Activities
EXHIBITS

Exhibit 4-1 - Standard Mandatory Case Review Process
Exhibit 4-1A - Standard Mandatory Case Review Process Timeframes

4000 - Introduction - (Rev. 2, 07-11-03)
You are required to perform individual case review to fulfill mandatory review
requirements (see §4100). Mandatory review categories include: alleged anti-dumping
violations, requests for assistants at cataract surgery for specific codes, beneficiary
complaints, hospital-issued notices of non-coverage (HINN), beneficiary's requests for
immediate review of notices of discharge and medicare appeal rights (NODMAR),
hospital-requested higher-weighted diagnosis related groups (DRG) adjustments,
potential gross and flagrant violations in one or more instances or substantial violations in
a substantial number of cases (see chapter 9), and hospital payment monitoring program
(HPMP) cases (see chapter 11). If in the course of conducting a mandatory review (e.g.,
beneficiary complaint) you determine that the case also involves another review category
(e.g., a readmission within 31 days), you are required to perform the review for that
category as well (in this case, the readmission) (see Exhibit 4-1A, for review categories
and timeframes).
As part of the HPMP (see chapter 11) review, you are also required to conduct analyses
of these mandatory review activities mentioned above to identify trends and patterns
suggestive or indicative of:
 	Inappropriate, unreasonable, or medically unnecessary care (including setting of
care issues);
 	Incorrect DRG assignment;
 	Inappropriate transfers;
 	Premature discharges; and
 	Insufficient, poor documentation, or patterns of failing to provide medical
records.
4010 - Anti-dumping Violations - (Rev. 2, 07-11-03)
Follow the instructions contained in chapter 9, §9100 when reviewing anti-dumping
violations.
4020 - Assistants at Cataract Surgery - (Rev. 2, 07-11-03)
A. Authority
Section 1862(a)(15) of the Social Security Act (the Act) prohibits payment for services of
an assistant at cataract surgery unless, prior to the surgery, you have approved the use of
an assistant based on the existence of a complicating medical condition. Although there
are very few requests for approval of assistants of cataract surgery, it remains a Quality
Improvement Organization (QIO) review requirement.

NOTE: The assistant may be a physician or a physician's assistant where authorized by
State law.
B. Notification of Review Requirement
Notify ophthalmologists in the State of the requirements under §§1862(a)(15) and
1842(k)(l) and (2) of the Act that they must obtain approval for an assistant before
surgery, except in emergency situations, in order for them to bill beneficiaries for any
amounts for which beneficiaries are liable by law.
Instruct physicians to notify you within a reasonable timeframe (e.g., 48 hours) of rare
instances when an assistant was used because an emergency arose with the patient during
the surgical procedure. To obtain post-surgery approval, the physician must comply with
your procedure(s).
After the effective date of your contract, notify physicians at least 30 calendar days prior
to implementation of this review activity. Include the following information:
 	The statutory requirement at §1862(a)(15) that precludes payment for services of
an assistant unless prior approval is obtained from you;
 	Criteria you use in determining when an assistant is needed;
 	Information you need to perform the review (including the name of the proposed
assistant), and requirements for notifying you when another assistant is
substituted;
 	How to request approval (e.g., what records/forms are needed);
 	Timeframes for submitting a request;
 	The process for obtaining an approval number on a post-procedure/prepayment
basis (including the requirement to document the emergency);
 	Procedures for submitting records when you subsequently validate cases that you
approved by phone, including the timeframe for submittal and penalties for not
submitting the required records (see 42 CFR 1004.10); and
 	The sanctions that may be applied if prior approval is not obtained, or if
inaccurate information is given.
C. Review Procedures
Conduct a review to determine if the use of an assistant is medically necessary based on a
complicating medical condition. Review for medical necessity in all settings.

NOTE: Assistant at cataract surgery review is not performed for Medicare + Choice
Organization (M+CO) cases.
The only Current Procedural Terminology (CPT)-6 codes that can be reviewed for
medical necessity of an assistant are:
 	66852; 66920; 66930; 66940; 66986
Whenever you propose to deny the necessity of an assistant, provide the physician (and
the assistant, if known) an opportunity to discuss the case and provide additional
information as specified in §4530. If you determine that the assistant was not medically
necessary, deny the services and send initial denial notices as specified in chapter 7,
§7100.
 	Pre-procedure Review -- Review all requests for use of an assistant in a timely
manner (e.g., before the surgery is performed). A request may be made by the
surgeon, assistant, or designated staff. Therefore, prior to surgery, notify the
surgeon and assistant of your determination. Establish validation procedures to
ensure that the information provided at the time of your initial review is accurate
(see §§4020.F and 4100).
 	Post-procedure Review -- Review cases on a prepayment, post-procedure basis
when physicians notify you that an assistant was used because an emergency
arose with the patient during the surgical procedure. The carrier cannot pay for
services of an assistant without your approval. Review the medical record and
make a determination whether the medical situation constituted an emergency. If
you determine during post-procedure review that the patient's circumstances
constituted an emergency, provide the physician with an approval number. If you
determine that an emergency did not exist, whether or not an assistant was
needed, deny payment. On an exception basis, you may approve the necessity for
an assistant at non-emergency cataract surgery on a post-procedure/prepayment
basis if you determine that circumstances unavoidably prevented the physician
from obtaining approval. Evaluate the individual circumstances of each exception
using your past review experience (i.e., your knowledge and past experience with
that physician). Notify beneficiaries when you deny services of an assistant at
cataract surgery. Inform beneficiaries that they are not responsible for the
payment of the denied services and should notify the carrier if they are billed.
D. Role of the Carrier
The carrier does not pay claims for an assistant for the codes listed in §4020.D unless it
receives notice that you approved such use, either prior to the procedure or after the
procedure (in cases of a medical emergency).

NOTE: The carrier is responsible for notifying the Regional Office (RO) or the Office
of Inspector General (OIG) of any billing violations.
Sections 1842(k)(l) and (2) of the Act provide that a physician may not knowingly and
willfully present a claim or bill to a beneficiary for the services of an assistant without
obtaining prior approval from the appropriate QIO. The physician may be sanctioned
under §1842(j)(2) of the Act if he or she does so. If you identify a pattern of physician
claims for an assistant filed without prior approval, notify the carrier that is responsible
for instituting the sanctions.
E. Validation Activities
Request records retrospectively in order to validate the accuracy of the information
received on a pre-procedure basis. You must perform a validation review on all (if small
number of cases are reviewed) or at least a sample of the cases you reviewed. Your
determination that services of an assistant are warranted by a complicating medical
condition is not a guarantee of payment if subsequent validation review establishes that
inaccurate information was provided at the time of the initial determination and that the
services of the assistant were actually unwarranted. The surgeon, provider, and/or
anesthesiologist (if used) will not be denied payment because of the inaccurate
information.
When you identify a physician who provided inaccurate information to obtain approval
for use of an assistant, issue him/her a written notice (in addition to issuing an initial
denial notice) containing the following information:
 	An explanation of the physician's obligation to provide accurate information when
requesting approval for use of an assistant at cataract surgery;
 	The situation or circumstances that led you to believe that the physician is not
fulfilling his/her obligation;
 	Your authority and responsibility to report violations of obligations;
 	A suggested method for correcting the situation and a time period for corrective
action;
 	The sanction that would be recommended if a violation occurred again; and
 	An invitation to discuss the situation with you.
When physicians display a pattern of providing inaccurate information, consider
educational intervention or possible sanction action as specified in chapter 9, §9000.
4030 - Beneficiary Complaints - (Rev. 2, 07-11-03)

Follow the instructions contained in chapter 5, §5000 when reviewing beneficiary
complaints.
4040 - Hospital and Medicare + Choice Organization (M+CO) Notices
of Non-coverage - (Rev. 2, 07-11-03)
Follow the instructions contained in chapter 7, §7000 when reviewing hospital and
M+CO notices of non-coverage.
4050 - Hospital-requested Higher-weighted DRG Assignments -
(Rev. 2, 07-11-03)
A. Authority
The QIOs are required to review hospital requests for higher-weighted DRG assignments
as addressed in 42 CFR 412.60(d)(2) and 476.71(c)(2).
NOTE: These procedures do not apply to hospitals in Prospective Payment System
(PPS)-waived/excluded areas, PPS-excluded hospitals, or M+COs.
B. Review Process
Hospitals submit requests for higher-weighted DRG assignment directly to the
intermediary for processing and payment. All such requests granted by the intermediary
are subsequently selected by CMS for QIO review on a post-payment basis. When
reviewing hospital-requested higher-weighted DRG assignments, perform a medical
necessity review and DRG validation (see §4130) (You are also required to perform a
quality review if you believe that there may be a potential quality of care concern). The
purpose of DRG validation is to ensure that diagnostic and procedural information and
the discharge status of the patient, as coded and reported by the hospital on its claim,
match both the attending physician's description and the information contained in the
patient's medical record. Refer the case for a physician review if medical judgment is
needed when changing the narrative diagnosis that the codes were based upon. Send
notification to all affected parties when your review confirms a higher-weighted DRG
(see §4130). When your DRG validation results in lower payment, take appropriate
action when you identify a coding error that results in increased payment while
performing hospital-requested higher-weighted DRG assignments (see §4130.D). Notify
the hospital, practitioner, intermediary, and carrier as specified in §7100.
C. Re-reviews
As specified in 42 CFR 478.15(a)(1), the hospital may request a re-review of your
decision to change a DRG assignment when the change results in a lower payment to the
hospital (see §7300). As specified in 42 CFR 478.15(c), no additional review or appeal is
available to the hospital.

4060 - Potential Concerns Identified During Project Data Collection
(PDC) - (Rev. 2, 07-11-03)
Follow the instructions contained in §4105 when reviewing potential concerns identified
during Project Data Collection (PDC).
4070 - Referrals - (Rev. 2, 07-11-03)
Review all cases referred by CMS and clinical data abstractions centers (CDACs).
Review cases referred by intermediaries, carriers, the M+CO appeals contractor, and
State Medicaid survey and certification agencies (and other sources) when the referrals
are within your review authority. The scope of review depends on the reason for the
referral. Referrals may involve Fee-For-Service (FFS) or M+C review.
NOTE: For anonymous complaints/referrals that you receive directly, analyze the nature
and scope of the issues involved and take any necessary action(s) (including referral to
the appropriate organizations) to ensure that the issues are appropriately
addressed/resolved.
A. Referrals from the Regional Office (RO)
The RO will refer cases to you in the following circumstances:
 	During the course of review of Skilled Nursing Facility (SNF) cases,
intermediaries may identify cases where the patient entered the SNF from a
hospital but required a higher level of care. The intermediary should then refer
these cases to the RO, which screens the cases to determine if there is agreement
with the intermediary that the case might involve a premature discharge. If the
RO concurs, it will request that you review the hospital stay in question. Review
the medical records for quality of care and appropriateness of setting. If a case is
questioned for quality of care or appropriateness of setting, follow the timing and
process requirements specified under case review. Submit a written report to the
RO on your findings;
 	If the intermediary or carrier identifies a problem or potential problem with a
provider or practitioner in an area subject to QIO review, it will be referred to the
RO, which will refer it to you, if appropriate. With RO approval, you may accept
certain categories of cases directly from another Medicare contractor (e.g., quality
of care referrals from the carrier in your State); and
 	Complaints/referrals that are anonymous, from outside agencies (e.g., an alleged
anti-dumping violation case, see chapter 9) or sources other than the usual ones
(beneficiary, beneficiary's representative, intermediary, or carrier), may be
referred to you if the RO determines the complaint/referral is credible and within
your review authority.

B. Referrals to the RO
Throughout your review activities be alert to the identification of cases that may require
additional development. Forward these cases to the RO for analysis or additional
development after your review. The ROs will refer policy issues identified by you to
CMS Central Office (CO) for consideration. The types of cases may include:
 	Cases that may require additional policy clarification; and
 	Cases that suggest deviant practice patterns or other potential abuse situations.
C. Referrals from the Intermediary
The intermediary is required to screen claims to determine whether specific services,
items, or procedures are covered or excluded from coverage. In some cases, coverage
depends upon meeting specific conditions of medical necessity and reasonableness such
as type and severity of illness. When a medical necessity determination is needed, the
intermediary will refer the case to you for review without making a coverage
determination. Conduct a medical record review following chapter 4 procedures and
make a medical necessity initial determination. Perform a quality review if you believe
that there may be potential quality of care concern(s) (see §4125). The intermediary will
also refer cases it receives via its OIG hotline regarding quality of care complaints.
Review these cases using the procedures specified in chapter 5. For fraud and abuse
referrals, see chapter 9.
D. Referrals to the Intermediary
During the course of review, be alert for potential Medicare Secondary Payer (MSP)
cases (e.g., automobile accidents). When you identify a potential secondary payer, notify
the intermediary so that it can investigate, develop the case, and take appropriate
recovery action. For example, if during review you find that an admission for a broken
hip was the result of an auto accident, notify the intermediary of potential MSP (e.g.,
automobile insurance) and complete your review independent of the intermediary
referral. The intermediary remains solely responsible for developing the MSP aspects of
the case.
If you identify any relevant outpatient services related to an admission that may not have
been included in the DRG, notify the intermediary (see Medicare Intermediary Manual
(MIM), chapter 3, §3600). You may also refer cases to the intermediary related to
billing issues.
E. Referrals From the Carrier
If a carrier identifies a problem or potential problem with a provider or practitioner in
your area, it will direct the case to the RO for referral to you, if appropriate. The carrier
should be specific about the type of review and report format needed from you. The

carrier will also refer cases to you when Ambulatory Surgical/Surgery Center (ASC)
procedures are terminated due to medical complications that increase the surgical risk to
the patient. Perform quality review when these types of cases are referred to you. You
may also refer cases to the carrier related to Part B physicians’ services.
F. Referrals From CDACs
Review all cases referred to you by CDACs under the Hospital Payment Monitoring
Program (see chapter 11).
G. Referrals From Outside Agencies
All requests for your review from outside agencies, including OIG and the Department of
Justice (DOJ), must be approved by CMS CO. Every request must be in writing, must
offer clear and cogent rationale, and must be submitted through your Project Officer in
the CMS RO. For fraud and abuse referrals, follow the instructions in §9200.
H. Anonymous Referrals
You are required to review any anonymous referrals that you believe are serious or urgent
in nature. When review findings warrant, take corrective action and follow the
instructions and timeframes applicable to the type of case under review.
EXCEPTION: For cases that involve anti-dumping issues referred by OIG, follow the
instructions in §9100.
4100 - Introduction - (Rev. 2, 07-11-03)
When you receive a mandatory review case (see §§4000 - 4070), perform the appropriate
review for admission/discharge, quality, invasive procedure, length-of-stay, coverage,
DRG validation, and other post review activities (see chapter 7). If you review a case
(e.g., notice of non-coverage) and it is necessary to review the case again for other
requirements (e.g., beneficiary complaint), it is not necessary to repeat the portion of the
review you have already completed, except in the case of assistants at cataract surgery
(For type of settings and review, see §§4410 and 5005.B) (see Exhibit 4-1 for the case
review process).
Currently, the following QIO areas are paid under a different methodology than the one
applicable under the Medicare Prospective Payment System (PPS): Maryland, the Finger
Lakes area of New York, the Virgin Islands, and Guam. The contracts for these QIO
areas are designed to consider the special review needs for their areas. If you conduct
review in one of these areas, follow the instructions in your contract.
4105 - Quality Review - (Rev. 2, 07-11-03)
A. Authority and Scope

This review includes potential circumvention of PPS (see §4255) and beneficiary
complaints about quality of care (see chapter 5, §5000). Conduct Fee-For-Service (FFS)
quality review to determine whether the quality of services met professionally recognized
standards of health care as addressed under §§1154(a)(1)(B) and 1862(g) of the Act and
42 CFR 476.71(a)(2). Conduct Medicare + Choice (M+C) quality review to determine
whether the quality of services met professionally recognized standards of health care,
including whether appropriate health care services were not provided or were provided in
inappropriate settings, and whether enrollees had adequate access to health care services
as addressed under §1154(a)(4)(B) of the Act and 42 CFR 476.72(a)(1). You must
always be alert for potential quality concerns regardless of the reason for review. For
example, although you are not required to perform a quality review in all cases subject to
Hospital Payment Monitoring Program (HPMP) review, conduct a quality review if such
concerns are raised by your reviewers.
B. Objectives
Quality review objectives include:
 	Determining if care provided is of adequate quality;
 	Identifying the source(s) of quality concerns; and
 	Determining the extent of systemic problems in the delivery of care that warrant
an improvement plan.
C. Strategies to Employ
Your quality review activities should employ the following strategies:
 	Developing/updating quality screening criteria (see §4510);
 	Using the Physician Reviewer Assessment Format (PRAF) (see §§4300-4325) to
obtain more consistent medical case review decisions and more reliable data
collection;
 	Providing educational feedback to practitioners and providers to improve the
quality of care process and patient outcomes;
 	Identifying system-wide concerns (e.g., communications errors between a
diagnostic laboratory and an inpatient unit) uncovered during project data
collection; and
 	Engaging in collaborative development of performance improvement projects
designed to improve the process and outcomes of patient care.
D. Quality Review Process

Use the PRAF as a tool to determine if care furnished to Medicare beneficiaries meets
professionally recognized standards. Quality of care concerns is categorized in C.1
through C.99 of the PRAF (see the electronic PRAF screen of the Case Review
Information System). The non-physician reviewer raises a quality concern when care
provided results in a significant or potentially significant adverse effect on the patient. A
significant adverse effect may be one or more of the following:
 	Unnecessary prolonged treatment causes an extended hospital or SNF stay,
readmission soon after discharge, or additional treatment(s);
 	Serious medical complications;
 	Serious physiological or anatomical impairment;
 	Significant disability; and/or
 	Avoidable death.
E. Notification of Quality Concerns to Affected Parties
See §§7200-7250 and 7310 for instructions concerning the issuance of potential, final,
and re-review of quality concern notices.
F. Quality Improvement Activities
You may consider, as one option, initiating an improvement project when you determine
that a pattern of quality concerns is established, unless an identified quality concern
causes severe risk to health and/or safety, or is a gross and flagrant violation, or the
pattern meets the definition of a substantial violation in a substantial number of cases (see
42 CFR 1004.1(b) and §9000) (Use sound professional judgment to determine what
constitutes a pattern).
4110 - Admission/Discharge Review - (Rev. 2, 07-11-03)
The QIOs must conduct review of admissions and discharges as specified in 42 CFR
476.71(a)(6). Review of the medical record must indicate that inpatient hospital care was
medically necessary, reasonable, and appropriate for the diagnosis and condition of the
patient at any time during the stay. The patient must demonstrate signs and/or symptoms
severe enough to warrant the need for medical care and must receive services of such
intensity that they can be furnished safely and effectively only on an inpatient basis.
A. Determining Medical Necessity and Appropriateness of Admission/Discharge

Review the medical record and use appropriate criteria to determine if an admission to a
PPS or non-PPS hospital should be referred for physician review. Similarly, use criteria
to identify, for physician review, cases of potential premature discharge (i.e., the patient
was not medically stable and/or discharge was not consistent with the patient's need for
continued acute inpatient hospital care) (see §4510 on screening criteria).
The case is referred to a physician reviewer when the non-physician reviewer cannot
approve the hospitalization as necessary and/or another level of care would have been
appropriate without posing a threat to the safety or health of the patient.
The physician reviewer must consider, in his/her review of the medical record, any pre-
existing medical problems or extenuating circumstances that make admission of the
patient medically necessary. Factors that may result in an inconvenience to a patient or
family do not, by themselves, justify inpatient admission. When such factors affect the
patient's health, consider them in determining whether inpatient hospitalization was
appropriate.
Inpatient care rather than outpatient care is required only if the patient's medical
condition, safety, or health would be significantly and directly threatened if care was
provided in a less intensive setting. Without accompanying medical conditions, factors
that may cause the patient inconvenience in terms of time and money needed to care for
the patient at home or for travel to a physician's office, or that may cause the patient to
worry, do not justify a continued hospital stay or justify your approval of a higher-than-
necessary level of care.
B. Determining Whether Covered Care Was Given at Any Time During a Stay in a
PPS Hospital
When you determine that the patient did not require an inpatient level of care on
admission, but that the patient's condition changed during the stay and inpatient care
became medically necessary, review the case in accordance with the following
procedures:
 	The first day on which inpatient care is determined to be medically necessary is
deemed to be the date of admission;
 	The deemed date of admission applies when determining cost or day outlier status
(i.e., days or services prior to the deemed date of admission are excluded for
outlier purposes); and
 	The diagnosis determined to be chiefly responsible for the patient's need for
covered services on the deemed date of admission is the principal diagnosis.
Notify the appropriate Medicare intermediary/carrier when the determination affects
payment.

4115 - Invasive Procedure Review - (Rev. 2, 07-11-03)
An invasive procedure is any procedure that clearly involves an incision, excision,
amputation, introduction, endoscopy, repair, destruction, suture, or manipulation.
Invasive procedures also include any procedure that affects, or has the potential for
affecting, the DRG, and is being reviewed.
Determine if invasive procedures performed were reasonable and medically necessary,
and if the quality of care met professionally recognized standards of medical care. Use
appropriate criteria for non-physician screening. If the admission and the procedure were
medically necessary, but the procedure could have been performed on an outpatient basis
if the patient had not already been in the hospital, do not deny the procedure or the
admission.
When an invasive procedure was not medically necessary, follow these guidelines:
 	If the admission was for the sole purpose of the performance of the non-covered
procedure, and the patient never developed the need for a covered level of service,
deny the admission;
 	If the admission was appropriate, and not for the sole purpose of performing the
procedure, deny the procedure (i.e., remove from the DRG calculation), but
approve the admission;
 	For a day outlier, if the patient was in the hospital for any day(s) solely for the
performance of the procedure or for care related to the procedure, deny the day(s)
and the invasive procedure;
 	For a day outlier, if the patient was receiving the appropriate level of covered care
for all hospital days, exclusive of the procedure or care related to the procedure,
deny the procedure or service (see NOTE in §4210 on day outlier reviews);
 	For a cost outlier, if the patient was in the hospital for any day(s) solely for the
performance of the procedure or care related to the procedure, deny the costs for
the day(s) and for the performance of the procedure; and
 	For a cost outlier, if the patient was receiving the appropriate level of covered
care for all hospital days, deny the procedure or service.
All medically unnecessary procedures represent quality of care problems as well as
utilization problems.
4120 - Length-of-Stay Review - (Rev. 2, 07-11-03)
Determine whether the length-of-stay for PPS day outlier (see NOTE in §4210) (and cost
outlier, when necessary) claims and for specialty hospital/unit claims is appropriate and

medically necessary. Identify cases of potential delayed discharge. For example, the
patient was medically stable, and continued hospitalization was unnecessary, or nursing
home placement or discharge to home with home care would have been appropriate in
providing needed care without posing a threat to the safety or health of the patient (see
§4110).
If Medicare payment is applicable to only part of the stay, review the covered portion of
the stay and enough of the rest of the medical record (if necessary) to answer any specific
questions that may arise from review of the covered part of the stay. If a patient became
Medicare eligible during a hospital stay, review enough of the medical record prior to the
initiation of Medicare benefits to acquire sufficient information to make a determination.
Do not perform lengthy reviews of non-covered care. In PPS waived/excluded areas,
length-of-stay review is performed for all inpatient admissions.
4125 - Coverage Review - (Rev. 2, 07-11-03)
With certain exceptions established by regulation and National Coverage Decisions (see
Coverage Issues Manual, §30-1), items/services that are experimental or are not
efficacious are excluded from coverage in all cases, regardless of patient illness,
treatment history, or setting. Certain other items/services are also excluded from
coverage in all cases even though needed by the patient (e.g., routine physical checkups
or hearing aids) (see §1862(a) of the Act).
The intermediary/carrier, within the parameters of Medicare policy, has the authority to
determine whether specific items/services are covered or excluded from coverage. The
intermediary/carrier must follow existing national Medicare policy (e.g., criteria in the
Coverage Issues Manual). When no national policy exists, intermediaries/carriers have
the authority to establish local coverage policy. For some items/services (e.g.,
blepharoplasty or breast reconstruction following mastectomy), coverage depends upon
meeting specific conditions of medical necessity and reasonableness such as type and
severity of illness. The intermediary refers inpatient claims to you involving
items/services that require a medical necessity determination before the claims can be
considered covered and payment can be made (see 42 CFR 476.86(c)(1)).
For those cases referred to you, review the medical record to determine whether the
admission is appropriate because the patient has other concurrent medical conditions that
would require an inpatient level of care. Deny items/services when you determine they
are not medically necessary, and issue denial notices as specified in §7100. Notify the
appropriate Medicare carrier when your determination affects Part B payment.
Additionally, if in the review of any case you recognize an item/service that is excluded
from coverage in all cases, notify the intermediary or carrier, as appropriate, for
necessary action.
4130 - DRG Validation Review
(Rev. 18, Issued: 10-10-14, Effective: Upon Implementation of ICD-10,
Implementation: Upon Implementation of ICD-10)

Perform DRG validation on PPS cases (including hospital-requested higher-weighted
DRG assignments), as appropriate (see §1866(a)(1)(F) of the Act and 42 CFR
476.71(a)(4)). Review the medical record for medical necessity and DRG validation
(You are also required to perform a quality review if you believe that there may be a
potential quality of care concern). The purpose of DRG validation is to ensure that
diagnostic and procedural information and the discharge status of the patient, as coded
and reported by the hospital on its claim, matches both the attending physician's
description and the information contained in the patient's medical record. Refer the case
for a physician review if medical judgment is needed when changing the narrative
diagnosis that the codes were based upon. Your reviewer must use his or her professional
judgment and discretion in considering the information contained on a hospital’s
physician query form along with the rest of the medical record. If the physician query
form is leading in nature or if it introduces new information, the non-physician reviewer
must refer the case to the physician reviewer.
NOTE: For PPS waived/excluded areas, follow the instructions in your contract rather
than these procedures.
A. Coding
Designate a Registered Records Administrator (RRA) or Accredited Records Technician
(ART) as the individual responsible for the overall DRG validation process. Use
individuals trained and experienced in Medicare diagnosis and procedure coding to
perform the DRG validation functions. The validation is to verify the accuracy of the
hospital's coding of all diagnoses and procedures that affect the DRG.
Base your DRG validation upon accepted principles of coding practice. Be consistent
with guidelines established for ICD coding, the Uniform Hospital Discharge Data Set
data element definitions, and coding clarifications issued by CMS. Do not change these
guidelines or institute new coding requirements that do not conform to established coding
rules.
Verify a hospital's coding in accordance with the coding principles reflected in the
current edition of the ICD Coding Guidelines, and the official National Center for Health
Statistics and CMS addenda, which update the guidelines annually. The annual addenda
are effective on October 1 of each year and apply to discharges occurring on or after
October 1. Use only these guidelines and updates when performing DRG validation.
Hospitals are not required to code minor diagnostic and therapeutic procedures (e.g.,
imaging studies, physical, occupational, respiratory therapy), but may do so at their
discretion.
B. Diagnoses

Ensure that the hospital reports the principal diagnosis and all relevant secondary
diagnoses on the claim. The relevant diagnoses are those that affect DRG assignment.
See §20.2.2 in Chapter 3 of the Claims Processing Manual for procedures for reporting
diagnoses and procedures at: http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/clm104c03.pdf
The hospital must identify the principal diagnosis when secondary diagnoses are also
reported. When a comorbid condition, complication, or secondary diagnosis affecting the
DRG assignment is not listed on the hospital's claim but is indicated in the medical
record, insert the appropriate code on the claim form. If the hospital already reported the
maximum number of diagnoses, delete a code that does not affect DRG assignment, and
insert the new code.
You are not required to place additional diagnoses on the claim as long as all conditions
that affect the DRG are reflected in the diagnoses already listed, and the principal
diagnosis is correct and properly identified. The hospital can list the secondary diagnoses
in any sequence on the claim form because the GROUPER program will search the entire
list to identify the appropriate DRG assignment.
• 	Principal Diagnosis -- Determine whether the principal diagnosis listed on the
claim is the diagnosis which, after study, is determined to have occasioned the
patient's admission to the hospital. The principal diagnosis (as evidenced by the
physician's entries in the patient's medical record) (see 42 CFR 412.46) must
match the principal diagnosis reported on the claim form. The principal diagnosis
must be coded to the highest level of specificity. For example, a diagnosis
reporting symptoms or signs may not be used as the principal diagnosis when the
underlying cause of the patient's condition is known.
• 	Inappropriate Diagnoses -- Exclude diagnoses relating to an earlier episode that
have no bearing on the current hospital stay. Delete any incorrect diagnoses and
revise the DRG assignment as necessary.
C. Procedures
Ensure that the hospital has reported all procedures affecting the DRG assignment on the
claim. If there are more procedures performed than can be listed on the claim, verify that
those reported include all procedures that affect DRG assignment, and that they are coded
accurately.
You are not required to place additional procedures on the claim as long as all procedures
affecting the DRG assignment are listed on the claim. If the hospital reported the
maximum six procedures and you need to add one that affects DRG assignment, delete a
code that has no effect and insert the new code.
D. Guidelines for DRG Validation Review

Apply the following guidelines when conducting DRG validation review:
• 	Your validation of the claim confirms the principal diagnosis, secondary
diagnoses, procedures, and the discharge status. The patient's age and sex need
not be verified because these items are verified by the A/B MAC (A)'s edits before
your DRG validation. If you find an error in discharge status or make corrections
to the diagnosis or procedure information that affect the DRG, report the
necessary information to the A/B MAC (A);
• 	Individuals with training and experience in ICD diagnosis and procedure coding
are to review issues that involve technical coding changes or professional coding
judgment;
• 	Do not make changes that do not require referral to a physician reviewer (e.g.,
technical coding changes) when the change has no effect on DRG assignment;
• 	Do not add diagnosis and procedure information to a claim when the addition
would have no effect on the DRG assignment;
• 	Do not notify the involved hospital or physician of errors identified during the
DRG validation process when the errors have no effect on DRG assignment;
• 	Refer to a physician reviewer issues that involve changes to diagnosis or
procedure narrative descriptions or codes only when resolution of an issue
requires a physician's medical judgment and the related change would affect DRG
assignment;
• 	Do not refer a coding issue to a physician reviewer when the resulting change
would have no effect on DRG assignment. Instead, take no action on the
suspected coding error because a conclusion cannot be reached without a
physician's involvement;
• 	When a correction that would affect DRG assignment requires the professional
judgment of a physician reviewer and the case involves care provided by a health
care practitioner other than a physician, ensure that the physician reviewer
consults with a peer of the affected practitioner before making a determination;
• 	Before making a correction that affects DRG assignment, notify the involved
provider and the patient's attending physician (or other attending health care
practitioner), and provide an opportunity for discussion as specified in §4530.
When a case is also questioned for both DRG changes and quality concerns, do
not send notices at separate times. Notices are to be sent to comply with the
quality review completion timeframes (see Exhibit 4-1A);

• 	After satisfying the requirement to offer an opportunity for discussion, notify the
involved parties of the changes you are making to diagnostic and procedural
information, as instructed in §§7100-7115; and
• 	Process any request for a re-review according to instructions contained in §7300.
A provider or practitioner dissatisfied with the QIO’s change that results in a
lower payment may request a re-review to the QIO.
NOTE: Inclusion of physicians in the DRG validation process is consistent with the
intent of the acknowledgment statement required by 42 CFR 412.46, which is to make
physicians accountable for their role in the payment process. The physician could be
partially responsible for the incorrect DRG; thus, it is useful to notify him or her of this
matter. Further, it may be useful for the QIO to hear the physician's viewpoint prior to
changing the DRG assignment.
4200 - Introduction - (Rev. 2, 07-11-03)
When you receive a mandatory review case (see §4000), in addition to performing basic
case review (see §4100), you may also determine whether to perform the following Fee-
For-Service (FFS) and Medicare + Choice (M+C) case review activities:
 	Outlier review (see NOTE in §4210);
 	Limitation on liability determinations;
 	Readmission review; and
 	Transfer review.
4210 - Outlier Review - (Rev. 2, 07-11-03)
You are authorized to perform outlier review as specified at §1886(d)(5)(A)(i) and (ii) of
the Act and 42 CFR 476.71(a)(7). Outliers are defined as those cases that have either an
extremely long length-of-stay (day outlier) or extremely high costs (cost outlier) when
compared to most discharges classified in the same DRG (see 42 CFR 476.1). Outlier
review is not performed for M+CO cases or in PPS waived/excluded areas/hospitals. In
these areas/hospitals, length-of-stay review is performed (see §4120).
NOTE: Perform day outlier reviews only for discharges occurring during fiscal years
ending on or before September 30, 1997.
A. Day Outlier Review
Day outlier cases occur automatically at a specified point in time for each DRG.
Eligibility for this additional Medicare payment is automatic, and the hospital need not
request it. Day outlier cases are identified as cases where the length-of-stay exceeds the

outlier cutoff, or threshold, for the assigned DRG. A case becomes an outlier on the day
after the threshold day of the assigned DRG (see 42 CFR 412.82).
Cases identified as day outlier cases may lose or change their day outlier status if, as a
result of review, the DRG assignment is changed and a new threshold is assigned, or if
the outlier (or other) days are not approved. Perform all reviews (admission, quality,
invasive procedure, coverage, DRG validation, documentation, and discharge) for day
outlier cases whether or not the case is confirmed as an outlier.
Factors that may result in an inconvenience to a patient or family do not, by themselves,
justify a prolonged stay in the hospital. When such factors affect the patient's health,
consider them in determining whether continued inpatient hospitalization was
appropriate. You may determine that inpatient care rather than outpatient care was
required only if the patient's medical condition, safety, or health would have been
significantly and directly threatened had care been provided in a less intensive setting.
Without accompanying medical conditions, factors that may have caused the patient
inconvenience in terms of time and money needed to care for the patient at home or for
travel to a physician's office, or which may have caused the patient to worry, do not
justify a continued hospital stay, or justify your approval of a higher-than-necessary level
of care.
Conduct review for the level of care between the admission and the day the outlier
threshold is met, as well as each day beyond the threshold. Consider the following in
your review determination:
 	If the admission was not medically necessary and appropriate (i.e., no covered
inpatient hospital care was needed or delivered during the stay), deny the
admission;
 	If the admission was medically necessary and appropriate, but an acute level of
care was not required for some days of this stay, deny these non-covered days up
to the amount of days above the outlier threshold. For appropriately admitted
cases, charges for denied days cannot be used to reduce the DRG payment
portion. Non-covered days are carved out of the outlier payment, not to exceed
the number of days that occur after the day outlier threshold (see 42 CFR 412.82
(d));
 	If the case is still an outlier after DRG validation, determine if all days in the stay
were medically necessary and at an appropriate level of care. You may determine
that continued inpatient hospitalization was unnecessary and that outpatient care
(e.g., in a nursing home) would have been equally effective in providing needed
care without posing a threat to the safety or health of the patient; and
 	If there is a three-day qualifying stay, approve days awaiting placement in a
Skilled Nursing Facility (SNF), and include them in calculating outlier status if
the patient was receiving a Medicare-covered SNF level of care for the days in

question and the record documents that Medicare SNF placement was being
sought (Days when a patient is awaiting a mental assessment needed for nursing
home placement are considered as "days awaiting placement, no bed availability"
so long as the patient is receiving at least a SNF level of care).
NOTE: Verify that the hospital made a genuine effort to place the patient in a SNF
within the normal out placement area as defined by local community standards.
Although there are no specific guidelines for "placement area" or frequency with which
the hospital must determine availability, there are general guidelines in the Medicare
Intermediary Manual (MIM), chapter 3, §3421.1.
B. Cost Outlier Review
Cases identified as cost outlier cases may lose or change their cost outlier status if, as a
result of review, you change the DRG assignment. Perform all reviews (admission,
quality, invasive procedure, coverage, DRG validation, documentation, and discharge)
for cost outlier cases whether or not you confirm the case as an outlier.
For cost outlier cases, the hospital must provide a copy of the itemized bill and medical
records for your review. The itemized bill must be sufficiently detailed for you to
identify each item or service billed. If, after you complete the DRG validation, the case
still meets cost outlier criteria, use the appropriate medical records plus the itemized bill
to determine that all services (including each day of care) provided were medically
necessary and appropriate and that the services billed were:
 	Not duplicative or erroneously billed;
 	Actually furnished; and
 	Ordered by the physician.
When reviewing cost outlier cases, be alert to certain items such as combined billing.
CMS does not allow payment for combined billing (i.e., physician charges and inpatient
charges) on the inpatient bill. The physician charges are to be included on a separate Part
B billing. If you identify physician charges on the cost outlier bill (e.g., radiologist fees
for reading x-rays), deny these charges. These are technical denials (i.e., not based on
medical necessity and appropriateness).
When you have a hospital that bills a flat per diem rate (i.e., an all inclusive rate hospital)
and, therefore, does not have itemized charges, contact the Regional Office RO to verify
that the hospital does, in fact, bill on an all-inclusive rate basis and does not have
individual charge data available. Once verified, the cost outlier review requirements that
follow apply for the all-inclusive rate hospitals:
 	Review for medical necessity and appropriateness of the admission;

 	Review for medical necessity and appropriateness of each day of the stay for cost
outlier cases from these hospitals;
 	Deny non-covered days and carve the per diem charges out of the outlier
payment;
 	Send notices of such denials to the beneficiary, hospital, physician, intermediary,
and carrier (if appropriate); and
 	Apply limitation on liability provisions to admission denials and denials of days,
where appropriate (see §4230 below).
Deny as non-covered care services that are duplicative or erroneously billed, not
furnished, and/or not ordered by the physician. These denials do not constitute initial
determinations requiring notice to beneficiary, and are not subject to the limitation on
liability and reconsideration provisions. Send a notice explaining such denials of costs to
the hospital, intermediary, and carrier, if appropriate.
C. Day and Cost Outlier Relationship
When the intermediary identifies a claim (case) as both a day outlier and a cost outlier,
the PRICER (the intermediary's computer program) selects the higher payment amount.
In cost outlier cases, after the intermediary notifies the hospital of the adjustment, the
hospital has the option of declining the cost outlier. However, if your review has resulted
in denied costs that reduce the total cost below the cost outlier threshold, and the claim
(case) is above the day outlier threshold, send the adjustment request to the intermediary.
The intermediary will process the adjustment and either pays the provider or holds back
money on another claim.
4230 - Limitation on Liability Determinations - (Rev. 2, 07-11-03)
The statutory authority for applying the limitation on liability provision applicable to
physician's liability is contained in §§1842(l) and (m) of the Act. §1879 of the Act
contains the statutory authority for applying the beneficiary's and provider's limitation on
liability provisions. When you determine that care provided a Medicare beneficiary is
non-covered because such care is not medically reasonable and necessary (see
§1862(a)(1) of the Act), or is custodial in nature (see §1862(a)(9) of the Act), determine
whether or not the beneficiary and/or the provider/practitioner is liable for payment of the
non-covered care.
A. Denials Covered by the Limitation on Liability Provisions
The limitation on liability provision only applies to those denials based on:
 	§1862(a)(1) or (9) of the Act (items/services are not medically reasonable or
necessary, or expenses are for custodial care);

 	§1814(a)(2)(C) of the Act (home health services - patient is not homebound); or
 	§1835(a)(2)(A) of the Act (home health services - patient does not or did not need
skilled nursing care on an intermittent basis).
The following examples illustrate types of denials where payment cannot be made under
the limitation on liability provision because these cases are not §§1862(a)(1), 1862(a)(9),
1814(a)(2)(C), or 1835(a)(2)(A) denials (These examples are not all inclusive):
 	Denials made pursuant to §1886(f)(2) of the Act, where a provider has
circumvented PPS through unnecessary admissions and readmissions;
 	Reduction of payment based on a change in DRG assignment;
 	Cost outlier items and services that were duplicative billed, not furnished, or not
ordered by a physician;
 	Physician charges included on the hospital bill. The physician charges are to be
included on a separate Part B billing;
 	Services/items denied when requested medical records are not received;
 	Services payable under State or Federal workmen's compensation;
 	Charges for convenience items or services; and
 	Provider billing errors.
NOTE: When you review a case that involves non-covered services, such as routine foot
or dental care, you are essentially determining whether or not the services furnished were
medically necessary. Therefore, when you determine that the services should be denied
based on medical necessity, make a liability determination for all affected parties on a
case-by-case basis (see §4125).
B. Determining the Beneficiary's Liability
The regulatory authority for determining that a beneficiary or his/her representative knew
that services/items were excluded from coverage is found at 42 CFR 411.404. Presume
that the beneficiary or his/her representative did not know that services/items were not
covered (and, therefore, he or she is not liable for payment) unless the evidence indicates
that a written notice was given to the beneficiary or his/her representative prior to
performance of the service.
The beneficiary or his/her representative may be determined to be liable when he/she
received:

 	A previous written denial notice because the same service/item did not meet
Medicare coverage guidelines, or the beneficiary or his/her representative
received a written notice concerning similar or reasonably comparable
services/items furnished on a previous occasion. For example, the subject
admission is solely for chemotherapy and the beneficiary or his/her representative
previously received a written denial notice stating that admissions solely for
chemotherapy are not covered;
 	An appropriate written notice of non-coverage (prior to performance of the
services) from a provider or practitioner for the services/items in question; or
 	A written denial notice (prior to performance of the services) from you for the
services/items in question (e.g., preadmission denials).
When you determine that the beneficiary or his/her representative is liable, he/she is held
responsible for payment for the denied services/items. The settlement for the cost of care
is resolved between the provider and/or practitioner and the beneficiary.
C. Determining the Provider/Practitioner's Liability
The regulatory authority for determining that a provider or practitioner knew or could
reasonably have been expected to know that services/items were non-covered is found at
42 CFR 411.406. Determine the provider's liability whenever your denial is based on
medical necessity, appropriateness, or custodial care.
Determine the practitioner's liability only in those cases involving payment denials of
surgical and cost outliers with physician component, and inpatient/ambulatory/outpatient
surgical denials based on lack of medical necessity (In these situations, the carrier
automatically adjusts its records (under the A/B link process) upon receipt of your written
or electronically submitted denial and liability determinations).
A provider or practitioner is considered to have known of non-coverage and, therefore, is
held liable for the denied services/items (no payment will be made under the Medicare
Program) in any of the following circumstances:
 	You, the intermediary, or the carrier informed the provider or practitioner that the
services/items furnished were not covered, or that similar or reasonably
comparable services/items were not covered;
 	The utilization review group or committee for the provider or the beneficiary's
attending physician informed the provider that these services/items were not
covered;
 	The provider or practitioner could have been expected to have known that the
services/items were excluded from coverage based on receipt of CMS notices,
manual issuances, bulletins, or other written guides or directives from

intermediaries/carriers or QIOs, including notification of QIO screening criteria
specific to the condition of the beneficiary for whom the furnished services/items
are at issue. The provider or practitioner may challenge your determination that it
had knowledge of non-covered services/items based on general screening criteria.
However, it is appropriate to use general screening criteria in conjunction with
other types of notification (e.g., prior denial notice for similar services/items);
 	The provider or practitioner was notified of the categories subject to preadmission
review and certification and did not obtain the required review, and the services
are subsequently determined to be medically unnecessary. Do not, however,
automatically hold the provider financially liable when it makes a timely request,
in accordance with its agreement with you, for preadmission review and you do
not review the case (see 42 CFR 476.78(b)(6)(ii)); or
 	The provider or practitioner knows what are considered acceptable standards of
practice by the local medical community.
There may be additional circumstances where the provider or practitioner is also liable if
it can be shown that it had prior knowledge that the services/items were not covered.
If a provider or practitioner is in doubt as to whether a service/item is covered, it may
contact you for advice.
The physician's limitation on liability for payment under §1879 of the Act (when
physician accepts assignment) or protection from making a refund to the beneficiary or
his/her representative under §1842(l) of the Act (when physician does not accept
assignment) is based on your determination of whether or not the beneficiary or physician
knew that the services were non-covered. Unless there is evidence to the contrary (e.g.,
the physician annotated in the medical record that he/she has given the beneficiary a
written advanced notice), presume that the beneficiary or his/her representative had no
knowledge that Medicare would not pay for the denied services provided by the
physician. On a case-by-case basis, this presumption may be challenged by the physician
at the time you offer the physician an opportunity to discuss the case. At the same time,
ask the physician if he/she accepted assignment if you were unable to determine this from
your review of the medical record. The physician should be able to provide you with the
information you need, as well as a copy of the written advance notice that he/she gave the
beneficiary or his/her representative.
D. Determining Liability When a Hospital-Issued Notice of Non-coverage (HINN) Is
Involved
After the hospital issues a notice of non-coverage, the beneficiary or his/her
representative is considered to have knowledge that services are not covered and is liable
for customary charges as shown below.

 	Preadmission HINN -- The beneficiary or his/her representative is liable for
customary charges for all services furnished if he/she enters the hospital after
receipt of a preadmission HINN.
NOTE: This liability determination also applies to direct NF swing bed admissions.
 	Admission HINN -- Determine liability as follows:
• 	HINN Issued on the Day of Admission -- The beneficiary or his/her
representative is liable for customary charges for all services furnished
after the admission HINN is received. However, to hold a beneficiary or
his/her representative liable for charges on the day of admission, the
hospital must issue the admission HINN no later than 3:00 PM on the day
of admission. If the hospital does not meet these requirements, the
beneficiary or his/her representative is protected from liability until the
day following receipt of the admission HINN (e.g., a HINN issued for an
admission after 3:00 PM or a late evening admission).
NOTE: This liability determination also applies to direct NF swing bed admissions.
• 	HINN Issued After the Day of Admission -- The beneficiary or his/her
representative is liable for customary charges for all services furnished
beginning the day following the date of receipt of the admission HINN.
 	Continued-stay HINN -- Determine liability as follows:
• 	HINN Issued With the Concurrence of the Attending Physician Where the
Beneficiary or His/Her Representative Requests QIO Review by Noon of
the First Working Day After the Day He/She Receives the Continued-stay
HINN and He/She Meets the Conditions of §1879(a)(2) -- The
beneficiary's or his/her representative's liability begins at noon of the day
following the date of notification of your determination. The hospital is
held financially liable for costs incurred from the date of the continued-
stay HINN, because it knew that services were non-covered (as
demonstrated by issuance of the HINN).
NOTE: If the hospital does not provide the medical records by close of business of the
first working day after the date that the beneficiary or his/her representative receives the
continued-stay HINN, the beneficiary's or his/her representative's liability does not begin
until noon of the day following the date of notification of your determination.
A provider is considered to have knowledge that services are non-covered as of the date it
issues the continued-stay HINN to the beneficiary.
• 	HINN Issued With the Concurrence of the QIO, or With the Concurrence
of the Attending Physician Where the Beneficiary or His/Her

Representative Does Not Request QIO Review by Noon of the First
Working Day After the Day He/She Received the Continued-stay HINN,
and Beneficiary or His/Her Representative Meets the Conditions of
§1879(a)(2) -- Determine liability as follows:
 	For short-term/acute care hospitals paid under PPS or in waived
States, the beneficiary or his/her representative is liable for
customary charges for services furnished beginning the third day
following the date of receipt of the continued-stay HINN;
 	For hospitals paid on reasonable cost basis, the beneficiary or
his/her representative is liable for customary charges for services
furnished beginning the day following the date of receipt of the
continued-stay HINN; or
 	For swing bed situations (i.e., continued-stay HINN issued to a
beneficiary when his/her level of care changes from acute to SNF
or NF, or from SNF to NF), the beneficiary or his/her
representative is liable for customary charges for services
furnished beginning the day following the date of receipt of the
continued-stay HINN.
NOTE: If the beneficiary leaves the facility on the day following the date of receipt of
the continued-stay HINN, the beneficiary or his/her representative is liable, with respect
to days before the day the beneficiary leaves the hospital, only for applicable deductible
and coinsurance amounts and for charges for convenience items or services normally not
covered by Medicare.
E. Application of Grace Days
The statutory authority for applying grace days is contained in §1154(a)(2)(B) of the Act.
When you determine that the stay in either a PPS or non-PPS hospital is no longer
covered, you may approve up to a maximum of two grace days for the purpose of post-
discharge planning.
You may apply grace days under the following conditions:
 	The beneficiary is still in the hospital (i.e., you are performing concurrent
review); and
 	Both the provider and the beneficiary are found not liable for the denied services
(i.e., a HINN is not involved). Therefore, Medicare payment may be made for the
denied services under §1879 of the Act.
Apply grace days based on the date of your denial notice, not based on the date of non-
coverage.

EXAMPLE: You determine that the services are no longer covered under Medicare
beginning 1/22. The denial notice is dated 1/23. You may approve payment for either
one or two days after the date of the denial notice. Therefore, the beneficiary would be
liable beginning 1/25 or 1/26, based on whether one or two grace days are applied.
NOTE: Grace days do not apply to situations involving HINNs. A provider must be
unaware of non-coverage and the issuance of a HINN demonstrates otherwise.
F. Indemnification
The statutory authority for indemnification of the beneficiary is specified in §1879(b) of
the Act. When the conditions specified in 42 CFR 411.402 are met, the beneficiary can
be indemnified (i.e., reimbursed) for payment of denied services.
 	Determining Indemnification for Payment of Denied Services/Items -- When you
determine that the beneficiary is not liable and that the provider and/or
practitioner is liable for the denied services (i.e., Medicare will not make
payment), the beneficiary is indemnified as follows:
• 	For denials of services furnished prior to January 1, 1989, the beneficiary
is indemnified for the denied services, including any deductible and
coinsurance amounts (The beneficiary remains liable for payment of any
convenience services and items);
• 	For denials of services furnished on or after January 1, 1989 through
December 31, 1989, the beneficiary is indemnified for the denied services,
including any deductible amounts (The beneficiary remains liable for
payment of any convenience services and items); and
• 	For denials of services furnished on or after January 1, 1990, the
beneficiary is indemnified for the denied services, including any
deductible and coinsurance amounts (The beneficiary remains liable for
payment of any convenience services and items).
NOTE: Deductible does not apply to SNF swing bed denials.
When you determine that both the beneficiary and the provider and/or practitioner are not
liable for the denied services, indemnification does not apply since Medicare will make
payment under §1879 of the Act. The beneficiary remains liable for payment of any
applicable deductible, coinsurance, and convenience services and items.
 	Requesting a Refund -- For refund of denied inpatient and outpatient hospital
services, the beneficiary or his/her representative should contact the intermediary.
For refund of ambulatory surgical services and services furnished by physicians
accepting assignment, the beneficiary or his/her representative should contact the
carrier. For refund of services furnished by physicians not accepting assignment,
the beneficiary or his/her representative should contact the physician.

4240 - Readmission Review - (Rev. 2, 07-11-03)
Readmission review involves admissions to an acute, general, short-term hospital
occurring less than 31 calendar days from the date of discharge from the same or another
acute, general, short-term hospital (see §1154(a)(13) and 42 CFR 476.71(a)(8)(ii)).
Neither the day of discharge nor the day of admission is counted when determining
whether a readmission has occurred.
A. Medical Review Procedures
Obtain the appropriate medical records for the initial admission and readmission.
Perform case review on both stays. Analyze the cases specifically to determine whether
the patient was prematurely discharged from the first confinement, thus causing
readmission. Perform an analysis of the stay at the first hospital to determine the cause(s)
and extent of any problem(s) (e.g., incomplete or substandard treatment). Consider the
information available to the attending physician who discharged the patient from the first
confinement. Do not base a determination of a premature discharge on information that
the physician or provider could not have known or events that could not have been
anticipated at the time of discharge.
Review both the initial admission and the readmission at the same time unless one of
them has previously been reviewed. In these cases, use, at a minimum, the PRAF case
summary of the other admission in addition to the medical record of the case under
review.
B. Review Involving Two QIOs
During the course of your review, you may identify a readmission where the initial stay
was not in your State. If you identify a possible utilization or quality of care problem
relating to the initial admission, send your findings to the responsible QIO.
C. Denials
Deny readmissions under the following circumstances:
 	If the readmission was medically unnecessary;
 	If the readmission resulted from a premature discharge from the same hospital; or
 	If the readmission was a result of circumvention of PPS by the same hospital (see
§4255).
4250 - Transfer Review - (Rev. 2, 07-11-03)

Transfers are identified by the code entered on the bill and by the entries in the medical
record. Transfers are planned admissions to a second hospital/excluded unit. Transfer
review involves transfers between hospitals (e.g., from a PPS hospital to either a second
PPS hospital or a second specialty hospital/unit) and transfers within a PPS hospital to an
excluded unit in the same hospital. Using the relevant medical records, perform case
review for medical necessity and appropriateness of admission for the admission and
discharge from the first hospital and the second hospital/excluded unit. In the case of
transfers to distinct part psychiatric units, the claim must show that the diagnosis
necessitating the transfer was psychiatric in nature and that the patient received active
psychiatric treatment (see §1814(a)(2)(A) of the Act). When review involves two QIOs,
follow instructions in §4240.B.
4255 - Circumvention of Prospective Payment System (PPS) -
(Rev. 2, 07-11-03)
A. Background
Section 1886(f)(2) of the Act provides specific actions that the Secretary may take when
you determine that a provider of Medicare services took an action with the intent of
circumventing PPS and that action resulted in unnecessary admissions, premature
discharges and readmissions, multiple readmissions, or other inappropriate medical or
other practices with respect to beneficiaries or billing for services (see §476.71(a)(8)).
The Secretary may have you:
 	Deny Part A payment with respect to inpatient hospital services with respect to
the unnecessary admission or subsequent admission of the same individual; or
 	Require appropriate corrective action to prevent or correct the inappropriate
practice.
Actions taken pursuant to §1886(f)(2) of the Act and 42 CFR 476.71(a)(8) and (d) are in
addition to the medical necessity, quality, and level of care determinations you make
under §1154 of the Act. Because the denial actions specified in this part are made
pursuant to §1886(f)(2) of the Act, providers are generally entitled to a hearing and
judicial review of the denial determination.
§1862(d) of the Act, the statutory authority to appeal §1886(f)(2) of the Act denials, was
repealed and replaced with §1128(c) through (g) of the Act. When §1128 of the Act
replaced §1862(d) of the Act, it appears that the right to a hearing of denials made in
accordance with §1886(f)(2) of the Act was not specifically addressed. However,
§1128(f) of the Act provides that, "…any entity that is excluded (or directed to be
excluded) from participation under this section is entitled to reasonable notice and
opportunity for a hearing thereon by the Secretary to the same extent as is provided in
§205(b)…" §205(b) of the Act gives the Secretary, on his/her own motion, the authority
to hold hearings and other proceedings as necessary. Therefore, while §1128 of the Act

does not specifically address §1886(f)(2) of the Act denials, it does not remove the
provider's right to due process.
These determinations are not made under §1154 or §§1862(a)(1) or (a)(9) of the Act,
therefore, the limitation on liability provisions of §1879 of the Act are not applicable, and
the provider will be held liable. The beneficiary will not be charged for services denied
under these instructions.
The Secretary may terminate a hospital's provider agreement under §1866(b)(2)(A) of the
Act for failure to comply substantially with corrective action required under
§1866(f)(2)(B) of the Act. In addition, under §1128(b)(13) of the Act, the Secretary may
exclude a hospital from participation in any program under Title XVIII of the Act and
from any State health care program, if the hospital fails to comply substantially with a
corrective action.
B. QIO Review Responsibilities
Perform readmission and transfer review as described in §§4240 and 4250. Review the
medical record for both the initial admission and the readmission or transfer. Complete
the Physician Reviewer Assessment Format (PRAF) in accordance with §§4300-4325 for
each case where the first level physician reviewer believes there is a potential quality
concern. Monitor early readmission and transfer/discharge activities, including potential
circumvention of PPS, in your State/jurisdiction (see §§4240 and 4250). Report any
substantial issues identified and any resulting analyses to your Project Officer.
C. Types of Prohibited Actions That Circumvent PPS
Following are the four types of prohibited actions:
 	Premature Discharge of Patient That Results in Subsequent Readmission of
Patient to Same Hospital -- This prohibited action occurs when a patient is
discharged even though he/she should have remained in the hospital for further
testing or treatment or was not medically stable at the time of discharge. A
patient is not medically stable when, in your judgment, the patient's condition is
such that it is medically unsound to discharge or transfer the patient. Evidence
such as elevated temperature, postoperative wound draining or bleeding, or
abnormal laboratory studies on the day of discharge indicate that a patient may
have been prematurely discharged from the hospital.
 	Readmission of Patient to Hospital for Care That Could Have Been Provided
During First Admission -- This prohibited action occurs when a patient is
readmitted to a hospital for care that, pursuant to professionally recognized
standards of health care, could have been provided during the first admission.
This action does not include circumstances in which it is not medically
appropriate to provide the care during the first admission.

 	Inappropriate Transfer of Patient From PPS Unit to PPS-excluded Unit in Same
Hospital -- This prohibited action occurs when a patient is admitted to an acute
care part of the hospital even though the medical record shows that the patient
required care in a PPS-excluded psychiatric or rehabilitation unit within the same
hospital, a bed in the PPS-excluded unit was available at the time of initial
admission, and the patient is subsequently transferred to the PPS-excluded unit.
This also applies to similar transfers from PPS units to beds in hospital-based
SNFs and SNF swing beds. A transfer is considered an admission for purposes of
payment under PPS (see 42 CFR 412.4).
 	Inappropriate Transfer of Patient From PPS-excluded Unit to PPS Unit in Same
Hospital -- This prohibited action occurs when a patient, who requires only the
level of care being provided him/her in the PPS-excluded unit, is transferred to a
PPS unit in the same hospital. A prohibited action also occurs when the transfer
is from a PPS-excluded unit to a hospital-based SNF or swing bed.
D. Actions to be Taken by QIO
Your review process must provide opportunities for feedback to and from the hospital
and for correcting identified prohibited actions before a pattern develops. Work with the
hospital to identify the most efficient and effective method to improve care or to correct
any identified problems. You should make it clear to the provider that there is a problem.
Appropriate follow-up may include working with the provider and will always include
monitoring provider activity. Working with the provider would be sufficient initially if
there is no clear provider intent to circumvent PPS and if there is no evidence of
imminent danger to the patient.
NOTE: If a single case of circumvention of PPS is identified with no other cases or
other grounds for initial denials, you need to take the most appropriate action(s) to
address this situation. A single episode of improper readmission or transfer would not
support a circumvention of PPS finding absent some other evidence.
Refer the case with a brief summary of the issues to your Project Officer. If the
prohibited action causes severe risk, or is a gross and flagrant violation, or fails in a
substantial number of cases to comply that meets §1156(b) of the Act, refer to 42 CFR
1004.1(b) and §9005 for further instructions.
Enter the results of your review into the Standard Data Processing System (SDPS) as
specified in your contract, the SDPS Database Administrator Guide, or other
administrative directives, and into your database for pattern analysis. On an ongoing
basis, analyze patterns of care involving quality concerns resulting from readmissions and
transfers that may have significance beyond a single episode.
If the results of your pattern analyses clearly established that a hospital has been taking
actions with the intent of circumventing PPS and that these actions resulted in

unnecessary admissions, premature discharges and readmissions, or multiple
readmissions of Medicare beneficiaries, you may:
 	Deny the second admission and issue a denial notice to the hospital (see §§7100,
7440, and Exhibit 7-34);
NOTE: Initiate a corrective action plan to address the circumvention of PPS issues. If
the hospital demonstrates a lack of interest in participating in a proposed improvement
project addressing circumvention of PPS issues, you should try again to gain the
hospital's participation by pointing out the potential benefits in eliminating prohibited
actions.
 	Initiate a sanction report and recommendation, based on a gross and flagrant
violation of the responsible provider's or physician's Medicare obligations, if the
prohibited action caused a patient's death, presented an imminent danger to the
health, safety, or well-being of a Medicare beneficiary, placed the beneficiary
unnecessarily in high-risk situations, or resulted in permanent damage of a major
physical function (see chapter 9); or
 	Refer the cases included in a pattern to the Regional Office of the Inspector
General (OIG) for potential termination of the provider agreement under §1866(b)
of the Act and 42 CFR 489.21(e) (including cases where there is evidence of
intent and the hospital refuses to cooperate/participate in corrective activities, or
the corrective action plan fails to resolve these payment issues).
If you suspect that fraud or an abusive practice is involved, consult with your RO project
officer and the OIG regional office. Refer individual cases to OIG for further
investigation when necessary. Examples of such practices include a hospital submitting
two separate claims for a given patient, as if the patient were readmitted to the hospital
but you find that the patient was discharged only once from the hospital, or you identify
two hospitals as having an unexplained pattern of Medicare transfers between them.
4260 - Onsite Review - (Rev. 2, 07-11-03)
Section 1154(a)(15) of the Social Security Act (the Act) requires you to perform
significant onsite review activities, including onsite review in at least 20 percent of the
rural hospitals in your review area. Onsite QIO activities include, but are not limited to:
 	Providing information and engaging in discussion with hospitals to aid them in
improving performance;
 	Examining medical records for project data collection or case review;
 	Supporting continuous quality improvement activity; or
 	Presenting findings from program integrity projects.

Regularly assess these activities to determine the efficiency and effectiveness of your
methods, which may include onsite visitation, videoconferences, teleconferences,
regional meetings, or any other formats that are mutually acceptable to you and the
hospitals to achieve the desired ends.
NOTE: Rural hospitals are hospitals located outside of a Metropolitan Statistical Area or
New England County Metropolitan Area, as defined by the Executive Office of
Management and Budget.
4300 - Introduction - (Rev. 2, 07-11-03)
Integrated case review is the process used to review all categories of care (e.g., the three
categories of review: quality review, utilization review (see §4410), and DRG validation;
or when applicable, two categories of review: utilization review and DRG validation)
when conducting Fee-For-Service (FFS) and Medicare + Choice (M+C) case review.
Integrated case review begins with the receipt of the medical record. The PRAF is a
review tool designed to integrate case review and promote a seamless medical review
process as a case proceeds from one review level to another. Complete the PRAF
whenever a case is referred for physician review.
4305 - Non-physician Review - (Rev. 2, 07-11-03)
A. First Screening Review
The non-physician reviewer performs an initial screening review of the case to determine:
 	If the documentation in the medical record is adequate for you to make a medical
review determination (i.e., all necessary reports and notes are physically present
and legible); and
 	If the case requires referral to a physician reviewer.
The non-physician reviewer uses the following screening instruments, as applicable, for
each case:
 	Admission criteria;
 	Discharge screens;
 	Invasive procedure criteria;
 	QIO-developed quality screens;
 	CMS coverage guidelines;

 	Published CMS criteria (e.g., rehabilitation criteria in the Medicare Intermediary
Manual (MIM));
 	DRG validation guidelines;
 	Coding guidelines;
 	QIO-developed documentation guidelines; and
 	Other screens, criteria, and guidelines (e.g., practice guidelines that are well
accepted by the medical community) as supplied by you.
In all cases, in addition to screening instruments, the non-physician reviewer applies
his/her own professional expertise to identify potential concerns for referral to a
physician reviewer.
If the medical record passes the first non-physician screening review, enter the data into
your system for pattern analysis activities and close the case.
If the non-physician reviewer determines that a case should be referred for physician
review, he/she initiates the PRAF and refers the case (see Exhibit 4-1).
If the non-physician reviewer cannot decide whether to refer the case to a physician
reviewer because a component of the medical record is missing or illegible, request the
appropriate component from the facility and record a documentation error as specified in
§4520.D.
NOTE: Decisions that do not require clinical judgment to resolve (e.g., technical coding
errors) are not referred to a physician reviewer.
B. Second Screening Review
The non-physician reviewer performs second screening review when missing or illegible
medical record components are subsequently provided by the facility/plan. If the medical
record passes the second non-physician screening review, enter the data into your system
for pattern analysis activities and close the case. If, even with the additional information,
the case does not pass all screens, criteria, and application of the non-physician reviewer's
professional expertise, the non-physician reviewer initiates the PRAF and refers the case
for physician review.
If the facility does not provide the requested information, technically deny the case as
specified in §4520.D and enter the case into your system for pattern analysis activities.
Reopen the case as specified in §7102 if the information is supplied at a later date.
4310 - First Level Physician Review - (Rev. 2, 07-11-03)

Perform first level physician review for every case where the non-physician reviewer has
identified a potential concern requiring a clinical decision. The physician reviewer
reviews the PRAF and the complete medical record to determine:
 	If the potential concerns identified and referred by the non-physician reviewer are
valid; and
 	If review of the medical record demonstrates potential concerns not identified by
the non-physician reviewer.
The first level physician reviewer completes the PRAF for first level physician review
(PRAF 1) (see Exhibit 4-1).
If the first level physician reviewer determines that all concerns identified by the non-
physician reviewer are resolved and does not identify additional potential concerns, enter
the data from first level physician review into your system for pattern analysis activities
and close the case.
If the first level physician reviewer determines that a potential concern exists, provide the
appropriate parties an opportunity to discuss the case (see §4530). In the case of potential
quality concerns, the first level physician may make a preliminary identification of the
source(s) of the concerns using the source legend of the PRAF. Send preliminary notices
to the involved physician(s) and to the provider.
Provide the physician review results (including the physician reviewer case decision
abstract and rationale from PRAF 1) of each first level physician review to the non-
physician reviewer who made the referral (You may also choose to supply this
information to your non-physician reviewers from additional levels of physician review
as part of your quality improvement process).
NOTE: A gross and flagrant violation may be identified at any level of physician
review. When the physician reviewer identifies a potential gross and flagrant violation,
follow the procedures for development of a case with a potential gross and flagrant
violation (see §9000)
4312 - Action Following Opportunity for Discussion - (Rev. 2, 07-11-03)
A. Response Received to Opportunity to Discuss
When the involved physician(s) and/or provider respond to your opportunity for
discussion, refer the case to a second level physician reviewer.
B. No Response Received to Opportunity to Discuss
When neither the involved physician(s) nor provider respond to your opportunity for
discussion, you may choose not to perform second level physician review. Make a
determination based on the available information at the time of the first physician review.

Send final notices of your determination to the provider and to all physicians who
received a preliminary notice, regardless of the outcome of the determination.
In the case of quality concerns, if the preliminary sources of quality concerns were
identified by the first level physician reviewer, you may assign those sources without
further physician review. If the preliminary sources of quality concerns were not
identified by the first level physician reviewer and are unclear, then the case is referred
for a second level physician review.
4315 - Second Level Physician Review - (Rev. 2, 07-11-03)
Always perform second level physician review when a potential concern has been
identified by the first level physician reviewer and the involved physician(s) and/or
provider have responded to the opportunity for discussion. The second level physician
reviewer reviews the medical record, the PRAF, and any additional information received
during the opportunity for discussion.
The degree to which the medical record must be reviewed a second time by a physician in
these cases should be determined on a common sense basis by the physician reviewer. If
the physician reviewer is very familiar with the medical record in question (i.e., he/she
served as the first level physician reviewer), only minimal review (e.g., evaluation of how
the response conforms to the information in the medical record) should be necessary. If
the second level physician reviewer did not perform the first level review, a more
thorough examination of the medical record is indicated. The second level physician
reviewer makes the final determination and completes the PRAF for second level
physician review (PRAF 2) (see Exhibit 4-1).
Send final notices of your determination to the provider and to all physicians who
received a preliminary notice, regardless of the outcome of the determination.
Enter the data from second level physician review into your system for pattern analysis
activities and close the case.
4320 - Third Level Physician Review - (Rev. 2, 07-11-03)
Perform third level physician review when the involved physician(s) and/or provider
request a reconsideration (for initial utilization denials) or a re-review (for confirmed
DRG or quality concerns). The third level physician cannot be a physician who was
originally involved in the first or second level review. The third level physician reviewer
reviews the medical record, the PRAF, and any additional information received during
the discussion period or later. The third level physician reviewer completes the PRAF for
third level physician review (PRAF 3).
Send notices of the reconsideration/re-review determination of the third level physician
reviewer to the provider and involved physician(s).

Enter the data from third level physician review into your system for pattern analysis
activities and close the case.
4325 - Use of the Physician Reviewer Assessment Format (PRAF) -
(Rev. 2, 07-11-03)
A. Purposes of the PRAF
The PRAF has been designed to achieve two objectives:
 	Standardize the structure of the review process to obtain more consistent, reliable
review decisions; and
 	Standardize data reporting to provide both you and CMS with more reliable data
for pattern analysis, feedback, and improving care.
To achieve these objectives, it is crucial that the format be an integral part of the review
of each case (i.e., each reviewer must assess the case according to the requirements of the
PRAF). Attempting to collect PRAF data from cases not reviewed according to the
PRAF structure does not fulfill the objectives of the PRAF.
The PRAF is a format, not a form. You may design a form other than the model PRAF.
However, collect and report all of the information found on the model PRAF. Collect the
information in such a way that the same linkages can be made as if you were using the
model PRAF (e.g., final determinations can be linked to specific quality screen criterion
failures, and category assignments can be linked to specific concerns) (see Exhibit 4-1).
B. Personnel Using the PRAF
All non-physician and physician reviewers must use the PRAF, as appropriate.
 	The Non-physician Reviewer -- Non-physician reviewers will identify potential
concerns and initiate the PRAF by completing the:
• 	Patient identifying information section(s);
• 	Non-physician reviewer decision summary;
• 	Non-physician reviewer identification; and
• 	Case decision abstract and question/statement of concern. The non-
physician reviewer may also write a case summary, depending on your
protocol.
NOTE: You may assign personnel other than non-physician reviewers to complete the
patient identifying information section(s).

 	The First Level Physician Reviewer -- The first level physician reviewer
determines if a potential concern(s) exists. Whether a potential concern raised by
the non-physician reviewer is validated or invalidated, and/or if an additional
concern(s) is independently identified by the first level physician reviewer, he/she
must complete the:
• 	Physician reviewer preliminary decision summary;
• 	Physician reviewer identification; and
• 	Physician reviewer case decision abstract and rationale.
NOTE: The first level physician reviewer checks the "Immediate Attention" box, when
appropriate.
 	The Second Level Physician Reviewer -- The second level physician reviewer
determines if a confirmed concern(s) exists. Whether a potential concern is
confirmed or not, he/she must complete the:
• 	Physician reviewer initial/final decision summary;
• 	Physician reviewer identification; and
• 	Physician reviewer case decision abstract and rationale.
NOTE: The second level physician reviewer checks the "Immediate Attention" box,
when appropriate.
 	The Third Level Physician Reviewer (Reconsideration/Re-review) -- The third
level physician reviewer determines if an initial utilization denial, a confirmed
quality concern, or a QIO DRG validation should be upheld or reversed. Whether
a determination is reversed or not, he/she must complete the:
• 	Physician reviewer reconsideration/re-review decision summary;
• 	Physician reviewer identification; and
• 	Physician reviewer case decision abstract and rationale.
NOTE: The third level physician reviewer checks the "Immediate Attention" box, when
appropriate.
C. Elements of the Model PRAF
The PRAF is used to make review decisions for patients in any setting (e.g., inpatient
hospital, physician office).

 	Patient Identifier Information -- The patient identifier information provides
administrative data for case identification. Enter patient identifier information at
the top of the Decision Summary, the Non-physician Reviewer - Case Decision
Abstract and Question/Statement of Concern, and the Physician Reviewer Case
Decision Abstract and Rationale at all levels of review.
 	Non-physician Reviewer Decision Summary -- In the non-physician reviewer
decision summary, the non-physician reviewer identifies each concern by
sequential number, notes which quality screen criterion each concern failed as
appropriate, and assigns a suggested category to each concern. The non-physician
reviewer's ability to clearly identify, distinguish, and categorize potential concerns
is crucial to the development of further information on the PRAF. The non-
physician reviewer enters his/her identification number and the date.
 	Physician Reviewer Preliminary Decision Summary -- The first level physician
reviewer enters the category of each concern identified by the non-physician
reviewer in the sequential order assigned by the non-physician reviewer. If the
physician reviewer believes that the non-physician reviewer's concern is not valid,
he/she enters "0".
The first level physician reviewer may also add concerns he/she has identified
independent of the non-physician reviewer. These are to be assigned sequential concern
numbers and categorized by the physician reviewer.
The first level physician reviewer also enters the name(s) of the physician(s) who is to
receive a preliminary notice for each concern. The physician reviewer must identify
those physicians who should receive preliminary notices. Send preliminary notices only
to those physicians who can supply information necessary to address the concerns raised.
The first level physician reviewer enters his/her identification number and the date.
 	Physician Reviewer Initial/Final Decision Summary -- The second level physician
reviewer enters the category of each concern he/she reviews in sequential order
(The category assignment may change after the opportunity for discussion). If the
concern is not confirmed, the physician reviewer enters "0".
The second level physician reviewer enters the source(s) of any confirmed quality
concerns in sequential order. The sources to be assigned are found on the source legend.
For DRG or utilization concerns, the source is "0".
The second level physician reviewer also sequentially enters the name(s) of any
physician(s) determined to be the source, or one of the sources, of a confirmed quality
concern.
The second level physician reviewer enters his/her identification number and the date.

 	Physician Reviewer Reconsideration/Re-review Decision Summary -- The third
level physician reviewer enters the category of each concern he/she reviews in
sequential order (The category assignment may change after the
reconsideration/re-review). If the concern is not reconfirmed, the physician
reviewer enters "0".
The third level physician reviewer enters the source(s) of any reconfirmed quality
concerns in sequential order. The sources to be assigned are found on the source legend.
The third level physician reviewer also sequentially enters the name(s) of any
physician(s) believed to be the source, or one of the sources, of a confirmed quality
concern.
The third level physician reviewer enters his/her identification number and the date.
 	Office Use Only -- Use this section to identify physicians who are to receive
notices by Unique Physician Identification Number (UPIN) and to track the case
as it moves through the physician review process.
 	Immediate Attention -- A physician reviewer at any level of review may check the
Immediate Attention box when he/she believes that you should pay special
attention to the case under review (e.g., the physician reviewer believes that
additional investigation should be undertaken).
When the box is checked, the physician reviewer must justify the need for special
attention in the physician reviewer Case Decision Abstract and Rationale section of the
PRAF. Determine the appropriate way to process PRAFs marked for special attention
(e.g., immediate review by the medical director).
 	Non-physician Reviewer Case Decision Abstract and Question/Statement of
Concern -- For each potential concern he/she has identified, the non-physician
reviewer must define the concern clearly and concisely and provide clinical data
from the medical record to support the identified potential concern. You may also
require a non-physician reviewer case summary in this section.
The non-physician reviewer may sign this section (optional), but must enter his/her
identification number and the date.
 	Physician Reviewer Case Decision Abstract and Rationale -- Note whether the
case decision abstract and rationale is for the preliminary, initial/final, or
reconsideration/re-review determination.
First level physician reviewers are to address all potential concerns raised by the non-
physician reviewer, as well as any independently identified concerns. Second level
physician reviewers are to address all concerns for which the opportunity for discussion

is provided. Third level physician reviewers are to address all concerns for which the
reconsideration or re-review is requested. At each level, the physician reviewer must
justify his/her decision clearly and concisely and provide clinical data from the medical
record to support the decision. You may also require a physician reviewer case summary
in this section. Second and third level physician reviewers are to include alternative
courses of action that would have precluded the confirmed (or reconfirmed) concern.
Physician reviewers are to consider concerns from a systems perspective. It is seldom
that a concern is the result of a single individual's action. For example, if the physician
ordered an incorrect dose of medication and the medication was administered, the
reviewing physician should consider the elements (e.g., nursing department, pharmacy)
and the processes (e.g., poor communications) that failed to prevent the occurrence.
The physician reviewer may sign this section (optional), but must enter his/her
identification number and the date.
 	Categories for Classifying Concerns -- Categories are grouped as Utilization
Categories (applicable to review of NODMARs), Prohibited Action Categories,
Quality Categories, and DRG categories (Only the Quality Categories are used for
managed care review except for review of NODMARs). Place each potential and
confirmed concern in these categories. In general, assign one category to each
concern. If a concern seems to fall into several categories, rethink the concern
because it may be that several separate concerns are being combined. There may
be several concerns within one clinical episode.
NOTE: There are a few DRG validation categories that are to be reported as such even
though the case may not have been referred for physician review (e.g., D.14, D.15).
4400 - Introduction - (Rev. 2, 07-11-03)
You are authorized to conduct Fee-For-Service (FFS) review under §1154 of the Social
Security Act (the Act) and 42 CFR, Part 476, Subpart C. You are also authorized to
conduct Medicare + Choice Organization (M+CO) review under §§1154(a)(4) and
1852(e)(3) of the Act and 42 CFR 476.70 and 476.72.
For FFS cases, you are to review services provided by PPS providers located in your
State or review area or by non-PPS providers in a waived/excluded area. For M+C cases,
you are to review services provided by M+COs in the State covered by the organization's
contract (except for beneficiary's immediate review request of the Notice of Discharge
and Medicare Appeals Rights (NODMAR), see chapter 7). Where the M+COs
immediate service area crosses State lines, your review responsibility extends across
State lines also (i.e., review remains the responsibility of the QIO in the State in which
the M+CO has its contract).
4405 - Review of Medicare Services - (Rev. 2, 07-11-03)

The objectives of case review are dependent on whether you are conducting FFS or
M+CO review. Review FFS and M+C services paid under Medicare when all of the
following conditions are met:
A. Types of Services
The services were covered by Medicare, regardless of whether they were covered for this
particular beneficiary or whether Medicare payment was made (see 42 CFR 424.5(a)(1)).
For example, review the Medicare-covered services provided in a Medicare-certified
SNF or SNF distinct part of a hospital even if the beneficiary's SNF days may have been
exhausted at the time. Consult the intermediary if you have questions as to whether the
services are covered by Medicare.
B. Sources of Services
The services were furnished by a provider, non-participating hospital, or supplier that
was, at the time it furnished the services, qualified to have payment made to it (see 42
CFR 424.5(a)(2)).
C. Recipient of Services
The recipient of the service(s) in question must be a Medicare beneficiary (see 42 CFR
424.5(a)(3)). If it is not apparent that the case involves a Medicare beneficiary, check the
Beneficiary Eligibility Status Tapes (BEST) through the RO, the Social Security Office,
or the intermediary/carrier to determine Medicare status.
4410 - Review Settings - (Rev. 2, 07-11-03)
Conduct a utilization, quality review and/or beneficiary complaint review applicable to
the review setting.
 	Utilization Review -- A review focused on determining the medical necessity and
reasonableness of the items/services furnished or to be furnished to a patient and
the appropriateness of the care settings (see §1862(a) of the Act and 42 CFR
476.71(a)(1) and (a)(3)). As a result of your review, you may make an initial
denial determination with respect to the above issues (see 42 CFR 476.83). This
review does not apply to M+CO settings.
 	Quality Review -- A review focused on determining whether the quality of the
services meets professionally recognized standards of care (see 42 CFR
476.71(a)(2)). For M+CO settings, the review includes whether appropriate
health care services have not been provided or have been provided in
inappropriate settings (see 42 CFR 476.72(a)(1)). Perform FFS (may include
utilization and/or quality) and M+C (includes quality only) review of services
furnished in health care settings specified below:

• 	Ambulatory Surgery Performed in Ambulatory Surgical Centers (ASCs)
and Hospital Outpatient Areas (HOPAs) -- ASCs are distinct entities that
operate exclusively for the purpose of providing surgical services to
patients not requiring hospitalization. ASCs must meet the Conditions for
Coverage specified in 42 CFR Part 416, Subpart C. HOPAs must meet the
Conditions of Participation (CoP) specified in 42 CFR, Part 482 (Conduct
beneficiary complaint review only for both ASC and HOPAs).
• 	Comprehensive Outpatient Rehabilitation Facilities (CORFs) -- CORFs
provide diagnostic, therapeutic, and restorative services to outpatients for
the rehabilitation of injured, disabled, or sick persons. CORFs must meet
the CoP specified in 42 CFR, Part 485, Subpart B (Conduct beneficiary
complaint review only).
• 	Home Health Agencies (HHAs) -- HHAs are public or private agencies
that specialize in giving skilled nursing services and other therapeutic
services, such as physical therapy, in the home. HHAs must meet the CoP
specified in 42 CFR, Part 484 (Conduct beneficiary complaint review).
• 	Hospices -- Hospices are public agencies or private organizations that are
primarily engaged in providing care to terminally ill individuals. Hospices
must meet the CoP specified in 42 CFR, Part 418 (Conduct beneficiary
complaint review only).
• 	Hospitals -- Hospitals (including emergency services/departments) are
acute care, general hospitals, and acute long-term care hospitals that are
subject to the provisions of the Prospective Payment System (PPS) or cost
reimbursement. Inpatient hospitals must meet the CoP specified in 42
CFR, Part 482 (For PPS Hospitals and non-PPS hospitals in Maryland,
conduct utilization and, when applicable, conduct quality review and
beneficiary complaint review) (For psychiatric hospitals or rehabilitation
hospitals, conduct beneficiary's request for immediate review of a
HINN/NODMAR).
• 	Inpatient Hospital Units -- These units are distinct-part, separately
certified PPS-excluded units within PPS hospitals (e.g., psychiatric and
rehabilitation). PPS-excluded hospital units must meet the CoP specified
in 42 CFR, Part 482 (Conduct beneficiary complaint review only).
• 	Providers of Outpatient Physical Therapy and Speech/Language Pathology
Services -- These providers must meet the CoP specified in 42 CFR, Part
485, Subpart H (Conduct beneficiary complaint review only).
• 	Critical Access Hospitals (CAHs) -- CAHs offer emergency care and
short-term inpatient care. CAHs must meet the CoP specified in 42 CFR,

Part 485, Subpart F (Conduct beneficiary complaint review and
beneficiary's request for immediate review of a HINN/NODMAR).
• 	Skilled Nursing Facilities (SNFs) -- SNFs are specially qualified facilities
that have the staff and equipment to provide nursing care or rehabilitation
services and other health-related services. SNFs must meet the CoP
specified in 42 CFR 483, Subpart B (Conduct beneficiary complaint only).
• 	SNF Swing Beds -- These are inpatient hospitals that have beds certified
as swing beds or CAHs that provide post-hospital SNF care. Inpatient
hospital swing beds must meet the CoP specified in 42 CFR 482.66. CAH
swing beds must meet the CoP specified in 42 CFR 485.645 (Conduct
beneficiary complaint review only).
• 	Specialty Hospitals -- Examples of specialty hospitals are psychiatric and
rehabilitation hospitals. Specialty hospitals must meet the CoP specified
in 42 CFR, Part 482 (Conduct beneficiary complaint review and
beneficiary's request for immediate review of a HINN/NODMAR).
• 	Community Mental Health Centers -- CMHCs deliver partial
hospitalization services (specialized outpatient mental health services) to
Medicare beneficiaries. CMHCs must meet the requirement for coverage
specified in 42 CFR 410.110 (Conduct beneficiary complaint review
only).
4500 - Introduction - (Rev. 2, 07-11-03)
Other Fee-For-Service (FFS) and Medicare+Choice Organization (M+CO) review
procedures include:
 	Using screening criteria;
 	Requesting medical records/reviewing documentation;
 	Affording practitioners and providers an opportunity to discuss potential initial
denials, DRG assignment changes, and potential quality of care concerns;
 	Adhering to timing of review requirements;
 	Monitoring practitioners’/providers’ improvement plans;
 	Profiling case review results, and developing and implementing projects to
address hospital admission and coding patterns;
 	Monitoring hospital's physician acknowledgment statements; and

 	Conducting internal quality control activities (see chapter 13).
4510 - Using Screening Criteria - (Rev. 2, 07-11-03)
See §1154(a)(6) of the Act.
You are to establish written criteria or obtain national criteria for non-physician reviewer
use when screening FFS and M+CO cases for referral for physician review (see 42 CFR
476.100). Criteria must be based on typical patterns of practice in your area for each
review setting. For M+CO review, use FFS criteria plus additional criteria unique to
M+COs. Criteria must be reassessed regularly and updated as necessary to reflect current
standards of practice. CMS does not require that you use a specific criteria set so long as
the criteria you select meets the above requirements.
Consult with physicians/practitioners actively engaged in practice in the State when
establishing or updating criteria. Also request comments from physician organizations
(e.g., State medical societies, the osteopathic society, and specialty societies), the State
Hospital Association, and the Medicare carrier(s) in the State. Attempt to develop
mutually satisfactory timeframes for comment periods. Involve Health Care Practitioners
Other Than Physicians (HCPOTPs) in the development of criteria used in the review of
services delivered by HCPOTPs (see 42 CFR 476.102(a)).
Notify provider, physician, and M+COs within the State of newly established or revised
criteria at least 30 calendar days prior to implementation. New QIO contractors must
notify provider, physician, and M+COs of their medical criteria within 30 calendar days
of their contract effective date. Provide copies of criteria to
providers/practitioners/M+COs, upon request. Provide copies of criteria to carriers upon
mutual agreement. Do not send copies of your criteria to CMS for approval, but you
must have copies available for CMS' review upon request.
NOTE: If the screening criteria you use are copyrighted, provide the
provider/practitioner with the information on how and where a copy of the screening
criteria may be obtained, and any associated costs.
Specify in your Memorandum of Agreement (MOA) with providers, M+COs, and payers
how they will provide input in the development/amendment process and how you will
notify them when you are establishing the criteria you will use (see chapter 3).
4520 - Requesting Medical Records/Reviewing Documentation -
(Rev. 2, 07-11-03)
A. Requesting Medical Records
You are authorized to access and obtain medical records, pertinent to health care services
furnished to Medicare patients, held by any provider in your review area (see 42 CFR

480.111). A provider claiming Medicare payment must permit you to examine its
medical records as necessary for you to perform your review functions (see 42 CFR
476.88(a)). Your review is performed outside the provider facility. Providers must
cooperate in the conduct of your review by photocopying and delivering all required
information within 30 days of a request (see 42 CFR 476.78(b)(2)). If the medical record
is not received by the 15th day, send a reminder notice to the provider or practitioner.
Under the Hospital Payment Monitoring Program (HPMP), the Clinical Data Abstraction
Centers (CDACs) are responsible for making the initial request for the surveillance
sample of medical records as well as performing a screening review. Hospitals are
expected to deliver the requested medical records to the CDAC within 30 days from the
date of the request. For these records, the CDACs mark a medical record as canceled
(not received) 31 days from the date of the request. The CDACs are instructed to
forward any records received after the past due date to you. The CDACs do not perform
any screening review on these late records.
Allow the provider/M+CO 30 calendar days from the date of your request to locate and
submit a copy of the medical records to you. Advise the provider/M+CO of the action
you will take if the records are not furnished within the 30-day timeframe (see §4520.B).
If the M+CO is unable to obtain medical records from a provider, or if the provider
charges the M+CO a significantly higher amount than Medicare pays for photocopying
costs, the M+CO may ask you to obtain the records directly from the provider. The
M+CO must submit its request in sufficient time so that the timing of review
requirements is not adversely affected.
NOTE: This requirement does not apply to the beneficiary's immediate QIO review
request of a Notice of Discharge and Medicare Appeals Rights (NODMAR) (see chapter
7).
B. Failure to Submit Medical Records -- When an inpatient hospital, Ambulatory
Surgical/Surgery Center (ASC), or swing bed provider fails to submit the medical records
for a FFS patient within the prescribed timeframes, issue a technical denial and record a
documentation error (see §7101.B). If a requested record is not received, then the
documentation necessary to establish payment is missing and a payment error has
occurred. Issue a technical denial (see §7101.B) for all requested medical records
(including from CDACs) not received 45 days from the date of the record request.
If the provider submits the medical records after the technical denial is made, reopen the
case as specified in §7102.B. When a case is reopened, do not instruct the intermediary
to adjust the technical denial until your review is completed. If a M+CO fails to submit
medical records within 30 calendar days from the date of your request, record a
documentation error.
When medical records are not submitted within the prescribed timeframes in all other
situations (or an inpatient hospital, ASC, or swing bed provider displays a pattern of

failing to submit medical records for FFS patients), refer the case to your RO Project
Officer. In cases involving FFS patients, the Project Officer will collaborate with the
Division of Medicaid and State Operations to threaten revocation of the provider's
Provider Agreement for failure to comply with the terms of the agreement. In cases
involving M+C beneficiaries, the Project Officer will consult with the Center for Health
Plans and Providers regarding regulatory or contractual actions that may be taken.
C. Reviewing Documentation
Collect patient data required by 42 CFR 476.78(b)(2), including medical records. The
medical record should contain documentation to justify admission, services furnished,
and, when pertinent, continued care. The documentation should support the diagnoses
and treatments performed and describe the patient's progress and response to medication
and treatment.
 	Medical Record Requirements -- Medical records are to conform to the following
regulatory requirements for content:
• 	Ambulatory Surgical/Surgery Centers (ASCs) are to meet the
requirements specified in 42 CFR 416.47(b).
• 	Comprehensive Outpatient Rehabilitation Facilities (CORFs) are to meet
the requirements specified in 42 CFR 485.60(a).
• 	Home Health Agencies (HHAs) are to meet the requirements specified in
42 CFR 484.48.
• 	Hospices are to meet the requirements specified in 42 CFR 418.74(a).
• 	Hospital Outpatient Areas (HOPAs) are to meet the requirements specified
in 42 CFR 482.24(c).
• 	Inpatient hospitals/units are to meet the requirements specified in 42 CFR
482.24(c).
• 	Providers of outpatient physical therapy and speech/language pathology
services are to meet the requirements specified in 42 CFR 485.721(b).
• 	Psychiatric hospitals are to meet the requirements specified in 42 CFR
482.61.
• 	Rehabilitation hospitals are to meet the requirements specified in 42 CFR
482.24(c).
• 	Critical access hospitals (CAHs) are to meet the requirements specified in
42 CFR 485.638(a)(4).

• 	Skilled nursing facilities (SNFs) and SNF swing beds are to meet the
requirements specified in 42 CFR 483.75(l)(5).
• 	Community mental health centers (CMHCs) are to meet the requirements
specified in 42 CFR 424.24(e)(2).
 	Establishing Documentation Guidelines -- QIOs may establish guidelines for the
components of a medical record that must be physically present to proceed with a
review (e.g., pathology report when tissue is removed). Guidelines must be
consistent with the regulatory Conditions of Participation (CoP) in 42 CFR
Subchapter G regarding providers/suppliers of care.
NOTE: Documentation guidelines are not guidelines as to actual clinical practices.
They should address only what must be present in the facility's medical record for review
to proceed.
When establishing or changing documentation guidelines:
• 	Consult with the provider and physician communities within the State.
Request comments from physician organizations such as State medical
societies, the osteopathic society, specialty societies, and from provider
organizations such as the State Hospital Association. Attempt to develop
mutually satisfactory timeframes for comment periods.
• 	Involve Health Care Practitioners Other Than Physicians (HCPOTPs) for
guidelines used in the review of services delivered by HCPOTPs.
• 	Collaborate with other QIOs, when appropriate.
• 	Notify provider, physician, and M+COs within the State at least 30
calendar days prior to implementation. New QIO contractors must notify
provider, physician, and M+COs within 30 calendar days of their contract
effective date.
• 	Provide a copy to providers/practitioners/M+COs upon request.
• 	Reassess regularly and update as necessary.
Specify in your MOA with providers/M+COs and payers the method for them to provide
input in the development process and of notifying them when the guidelines you will use
are established (see chapter 3).
D. Medical Record Incomplete or Illegible
If the non-physician reviewer cannot complete review because a portion of the record is
missing or illegible, record a documentation error and request the provider/M+CO to

submit the necessary documentation within 15 calendar days. If an inpatient hospital,
ASC, or swing bed provider does not submit the requested documentation for a FFS
patient within the allotted timeframe, issue a technical denial as specified in §7101.B. If
the requested documentation is submitted after the technical denial is made, reopen the
case as specified in §7102. If other providers (including inpatient hospitals for M+CO
patients) do not submit the requested documentation, refer the problem to your RO
Project Officer. Do not allow additional time beyond the allotted 15 days before taking
corrective action.
In most cases, when a portion(s) of the medical record is absent or illegible, your non-
physician reviewers can determine the presence of documentation errors. Occasionally, a
non-physician reviewer may not be able to determine if a documentation error exists (i.e.,
the non-physician reviewer cannot determine whether a missing report is crucial to
complete the review). In these cases, a physician reviewer must make the determination.
At this point in the review, the physician reviewer is to address only the question of the
missing/illegible documentation. A complete review would be performed by a physician
reviewer at a later time if the case were referred.
The QIO physician and non-physician reviewers are expected to be proficient in
deciphering a variety of handwriting styles and copy qualities. Make all reasonable
efforts to read medical records as supplied by the facility. At least two reviewers must
attempt to locate and/or read the problematic section(s) of the record prior to requesting
missing/illegible documentation. If the review is performed onsite, seek assistance from
the provider/M+CO in locating or reading the problematic section(s).
E. Missing Physician Documentation
Record a documentation error if information required for a physician reviewer to make a
determination is not found in the body of the medical record. In this situation, the
physician reviewer must request additional information from the
provider/M+CO/physician(s) prior to making a review determination.
F. Recording Documentation Errors
Record a documentation error in cases where a non-physician or physician reviewer must
request additional information from a provider or M+CO because a determination cannot
be made on the basis of the medical record alone. A documentation error occurs when:
 	The provider/M+CO fails to produce the medical record;
 	The documentation necessary for the non-physician reviewer to make a review
determination is illegible or is missing from the medical record; or
 	The physician reviewer must request additional documentation from the attending
physician.

A single record can have more than one documentation error. For example, the record
was provided to you untimely (error one); when you did receive it, it was missing
necessary documentation (error two); and after the provider sent the missing
documentation, the physician reviewer did not have enough information to make a review
decision (error three).
Do not record a documentation error if you subsequently determine that the requested
information was:
 	In the medical record and simply overlooked; or
 	Not documented in the medical record because the care was not furnished.
G. Examples of Documentation Errors
Following are examples of how a documentation error should be recorded by a non-
physician reviewer. The examples address possible documentation errors for a
percutaneous transluminal coronary angioplasty (PTCA). A non-physician reviewer may
determine that a cardiac catheterization report, or its equivalent, should be included in the
medical record to establish the medical necessity/appropriateness of a PTCA. Equivalent
documentation should contain the information normally found in a catheterization report
(e.g., coronary arteries involved, extent of blockage).
 	There is evidence in the medical record that the catheterization was performed,
but the report is missing. However, the information that would normally be
contained in the report is given in a detailed progress note in the medical record.
In this case:
• 	Do not record a documentation error; and
• 	Proceed with the review.
 	There is evidence in the medical record that the catheterization was performed,
but there is no report or equivalent entry. In this case:
• 	Record a documentation error;
• 	Request the report or its equivalent from the provider; and
 	If the provider supplies the requested report within the required
timeframe, proceed with the review; or
 	If the provider fails to supply the requested report within the
required timeframe, issue a technical denial and do not proceed
with the review.

 	There is no evidence in the medical record that a catheterization was performed.
In this case:
• 	Request the report or its equivalent from the provider; and
 	If the provider supplies a report or its equivalent within the
required timeframe, record a documentation error and proceed with
the review;
 	If the provider acknowledges that the catheterization was
performed, but does not supply the report or its equivalent within
the required timeframe, record a documentation error, issue a
technical denial, and do not proceed with the review;
 	If the provider does not supply the report or its equivalent within
the required timeframe, record a documentation error, issue a
technical denial, and do not proceed with the review;
 	If the provider acknowledges that the catheterization was not
performed, do not record a documentation error at this point and
proceed with the review. When the case is referred, the physician
reviewer must make a determination as to whether a medical
necessity/quality of care concern exists. If an initial denial is
issued, it is a medical necessity denial and a quality of care
concern.
H. Requesting Action Plans
Determine whether a pattern of documentation errors exists. Request an action plan from
a provider for correcting documentation errors in the following situations:
 	When a pattern seriously and repeatedly impedes review; or
 	When a pattern seriously threatens the quality of care (e.g., relevant
documentation important in assuring adequate care is missing in
physicians'/nurses' notes, and the lack of this documentation could threaten the
quality of care).
4530 - Providing Opportunity for Discussion - (Rev. 2, 07-11-03)
When you identify a potential utilization, DRG assignment, or quality concern, notify
providers/practitioners/M+COs in writing of the opportunity for discussion. Give them
20 calendar days from the date of your notice for oral discussion with appropriate QIO
personnel and/or to submit written comments/information prior to making your final
determination (see §1154(a)(3) of the Act and 42 CFR 476.93). Consider any
information submitted when reaching your final determination. Send a final

determination notice whenever an opportunity for discussion is afforded (see §7230 for
notice requirements for potential quality concerns. Modify these notices accordingly
when addressing potential utilization and DRG validation concerns).
Take all reasonable measures to ensure that practitioners/providers/M+COs have an
opportunity to discuss the potential concern. For example, provide a toll-free telephone
number available during normal business hours, or advise that you will accept collect
calls if you do not have a toll-free number. Document the content of telephone or
personal conversations with practitioners/providers/M+COs.
A. Practitioners
Afford practitioners an opportunity for discussion in accordance with the following
guidelines:
 	Afford involved physicians an opportunity to discuss the concern(s) directly with
a QIO physician (You are encouraged to provide physicians an opportunity to
discuss the case with a like specialist).
 	Afford involved HCPOTPs an opportunity to discuss the concern(s) directly with
a QIO HCPOTP, if available, or with a QIO physician who is a specialist in the
type of services under review.
 	If the involved practitioner is out of town for an extended period of time,
document that he/she is unavailable and when he/she will return. Hold the case
until the practitioner is available to discuss it. Notify the practitioner when he/she
returns, and allow the customary 20-day period for reply. This situation is not
expected to occur frequently.
 	Contact the admitting physician directly to obtain additional information in
situations where the attending physician did not admit the patient and cannot
provide the relevant facts.
 	When the attending and admitting physicians are in the same group practice,
continue to direct your correspondence and discussions to the attending physician.
In these situations, it is not unreasonable to expect the attending and admitting
physicians to consult on the case.
B. Providers/Medicare+Choice Organizations (M+COs)
Afford providers/M+COs an opportunity for discussion in accordance with the following
guidelines:
 	Afford providers/M+COs an opportunity to discuss the concern(s) with a QIO
physician if the provider's/M+CO’s representative is a physician. If the

provider’s/M+CO's representative is a nurse or other staff person, use
knowledgeable non-physician staff for the discussion, as appropriate.
 	For cases reviewed on a preadmission basis (e.g., assistant at cataract surgery), if
the physician does not know which provider will furnish the services, document
the case file accordingly. In this situation you will be unable to offer the provider
an opportunity for discussion.
 	M+COs may coordinate responses with the physician/provider and forward one
combined response to you.
4540 - Adhering to Review Timeframes - (Rev. 2, 07-11-03)
A. Review Beginning/Completion Dates
The timeframe for FFS and M+C retrospective review begins when you have adequate
information to request medical records. For HPMP cases (including DRG validation), the
review time begins when you receive the medical records from CDAC. If you receive an
incomplete medical record from CDAC, follow the review timeframes specified in
§4540.B. The review of a case ends with a completion date as follows:
 	When a case is not referred for physician review, the review completion date is
the date the review of the medical record is completed.
 	When a case is referred for physician review and the physician reviewer indicates
that no further review is necessary, the review completion date is the date the
Physician Reviewer Assessment Format (PRAF) is completed.
 	When an opportunity to discuss a case has been afforded the
physician/provider/M+CO, the review completion date is the date the final notice
is sent to all parties. Do not issue an initial denial, DRG assignment change, or
confirmed quality concern notice until the earlier of either completion of the
discussion or 20 calendar days after the date you make a preliminary notification
to the physician/provider/M+CO. When a case is questioned by the physician for
quality of care and is also questioned for DRG validity or utilization, do not send
notices at separate times. Notices should be sent to comply with the review
deadline for quality of care.
Within the general timeframes of review, you may accelerate your review in some areas
and use the time gained in other areas.
B. Review Timeframes
Use the Time of Review document provided with the Case Review Information System
(CRIS) User's Guide to determine the review timeframes for each category of review
(e.g., quality review, utilization review). The timeframe for retrospective review includes

the 30 days a provider has to submit the medical record. If the requested medical record
comes in earlier than 30 days, then the QIO gains the extra time to complete its review.
The completion review timeframes vary for different review categories. See Exhibit 4-
1A for the timeframes applicable to each specific review category.
 	Retrospective Review -- The timeframes for questioned cases include the 20-day
opportunity for discussion requirement as specified in §4530. The time reduction
for HPMP cases is based on the review start date defined as the date the medical
record is received by the QIO. For HPMP cases, the QIO simply receives the
records from the CDAC and begins the review unless time is needed for
additional information (15 days). When requesting record information because a
provider/M+CO submits an incomplete or partially illegible medical record, add
15 calendar days to the review timeframes specified below (see Exhibit 4-1A for
the timeframes applicable to case review). In general, complete retrospective
review within the timeframes:
• 	60 calendar days for an unquestioned case (30 days for HPMP cases);
• 	90 calendar days for a case questioned for DRG validity or by the
physician reviewer for utilization (60 days for HPMP cases); or
• 	100 calendar days for a case questioned by the physician reviewer for
quality of care (70 days for HPMP cases) (Excludes beneficiary
complaints of quality of care review).
 	Re-openings -- Complete review within the following timeframes:
• 	30 calendar days for an unquestioned case;
• 	50 calendar days (from receipt of request) for a case questioned for DRG
validity or by the physician reviewer for utilization; or
• 	60 calendar days (from receipt of request) for a case questioned by the
physician reviewer for quality of care.
4550 - Profiling Case Review Results - (Rev. 2, 07-11-03)
You are required to build a database of information collected from all case review
activities. The principal purpose of this database is to generate PPS and non-PPS
provider/M+CO profiles to use as a data source in conducting your State analysis for use
in your Hospital Payment Monitoring Program (see chapter 11) and to identify possible
interventions, including improvement projects and beneficiary communications activities.
You are to generate routine and ad hoc provider profiles whenever necessary. You are
not required to disseminate reports on a regular basis. However, produce them upon
request by PPS and non-PPS providers/M+COs or by CMS. Reports disseminated to

PPS and non-PPS providers/M+COs are governed by the confidentiality regulations
contained in 42 CFR Part 480.
Use profiles to determine if individual concerns, when considered as a whole, or a pattern
of quality concerns might be indicative of a systemic concern. A systemic concern is one
that reflects the PPS and non-PPS providers'/M+CO's internal policies/procedures or a
general problem that exists within the medical community. For example, the M+CO only
permits enrollees to have a certain number of a particular diagnostic study within a given
timeframe, or the PPS/non-PPS hospital's system for consultation referrals causes delay
in the provision of necessary care.
When you suspect the existence of a systemic problem, request information from the PPS
or non-PPS provider/M+CO regarding its systems/guidelines governing the issue,
including how the PPS or non-PPS provider/M+CO monitors the provision of the
services in question.
You may request this type of information based on one or more reviews. If, for example,
you believe the PPS or non-PPS provider’s/M+CO’s guidelines for a specific
test/condition are a concern, you may request the specific guidelines in this area and work
with the PPS or non-PPS provider/M+CO to correct any concerns. The intent is to see
whether the problem derives from the PPS or non-PPS provider's/M+CO's internal
directives or whether the directives are acceptable. However, the PPS or non-PPS
provider/M+CO does not have the ability to monitor that its directives are being
followed.
4560 - Maintaining Memoranda of Agreements (MOAs) -
(Rev. 2, 07-11-03)
Maintain MOAs with providers, payers, M+COs, and State licensing/certification
agencies as instructed in chapter 3.
4570 - Prepayment Review System (PRS) Implementation -
(Rev. 2, 07-11-03)
Your request to intermediaries and carriers to implement pre-procedure and prepayment
review of a procedure, diagnosis, provider, or practitioner must conform to the negotiated
Memoranda of Agreements (MOAs) between you and the payers outlining the conditions
for necessary data exchange requirements (see chapter 3).
4580 - Monitoring Hospitals' Physician Acknowledgement Statements -
(Rev. 2, 07-11-03)
A. Background

Regulations at 42 CFR 412.46 (one of the conditions at 42 CFR 412, Subpart C) require
hospitals to obtain only one signed acknowledgment from physicians who are being
granted admitting privileges at a particular hospital. The physician must complete the
acknowledgment at the time that he/she is granted admitting privileges at the hospital or
before, or at the time the physician admits his/her first patient to the hospital. When the
hospital submits a claim, it must have on file a signed and dated acknowledgment from
the attending physician that the physician has received the notice specified in 42 CFR
412.46(b). Existing acknowledgments signed by physicians already on staff remain in
effect as long as the physician has admitting privileges at the hospital.
Hospitals must meet the conditions specified in 42 CFR 412, Subpart C, to receive
payment under the PPS for inpatient hospital services furnished to Medicare
beneficiaries. If a hospital fails to comply fully with these conditions with respect to one
or more Medicare beneficiaries, CMS may, as appropriate:
 	Withhold Medicare payment in full or in part to the hospital until the hospital
provides adequate assurances of compliance; or
 	Terminate the hospital's provider agreement.
B. Monitoring Requirements
At least annually, monitor hospitals to ensure that they are appropriately obtaining the
acknowledgment statements from physicians with new admitting privileges as required at
42 CFR 412.46. You may perform this annual monitoring requirement at one single time
or more frequently during each contract year. Perform this activity offsite or onsite the
hospital setting. To perform this activity, you must do the following:
 	Be familiar with the hospitals' own internal procedures to secure the
acknowledgment statements from physicians (see §4580.A). Ensure that each
hospital, in your review area, is in compliance with the acknowledgment
requirement;
 	Inform providers in your review area about your monitoring activities;
 	Request from the hospitals a list of all physicians with new admitting privileges
for the year/period under review. The list should include the physician name,
Unique Physician Identification Number (UPIN), the date admitting privileges
were granted, the date acknowledgment was signed, and the date of the first claim
submitted to the FI for that particular physician, when applicable. As needed, you
may request copies of the signed acknowledgements for verification. Validate the
information received from the hospital against the claims data. Validate all
acknowledgements if there are 5 or less. For 6 or more acknowledgements, select
a random sample of the listed physicians. If a deficiency was found on the sample
validated, select and validate all or another random sample to ensure that a pattern
does not exist. You must determine what constitutes a pattern based on the

number of physicians’ first claims submitted by the hospital before the physician
signed the acknowledgement statements;
 	Coordinate, as necessary, with the intermediary in your review area to facilitate
action by the Fiscal Intermediary (FI) or you when needed. For example, you
may coordinate with the intermediary to establish a mechanism to facilitate
reporting by the intermediary when the intermediary is aware/has knowledge of a
hospital not obtaining appropriate acknowledgment(s) before billing;
 	As needed, request an improvement plan to correct any deficiencies that are
found;
 	Report results into SDPS.
C. Reporting Requirements
If you determine that corrective action is necessary (i.e., the deficiency affects payment
under the PPS Program):
 	Notify the intermediary of the deficiency for claim adjustment;
 	Notify the hospital that it must correct the deficiency immediately. Concurrently,
inform the appropriate CMS Associate Regional Administrator through your
Project Officer; and
 	If the problem continues, or a pattern of noncompliance is established, refer the
case to the appropriate CMS Associate Regional Administrator for further
action(s) through your Project Officer.
4590 - Reporting Requirements for Review Activities -
(Rev. 2, 07-11-03)
A. Reporting on Case Review
Report all your review activities, including HPMP activities, into the Standard Data
Processing System (SDPS) as specified in your contract, the SDPS Database
Administrator Guide, or other administrative directives.
B. QIO and Intermediary Information Exchange
After completing case review, report to the intermediary and the provider, as specified in
the SDPS Database Administrator Guide, any claims that need adjustment because of:
 	A change in the DRG;
 	Admission denied;

 	Day outlier days denied (see NOTE in §4210);
 	Cost outlier services denied;
 	Non-PPS hospital or SNF swing bed days denied;
 	Incorrect date for hospital to begin charging the beneficiary;
 	Failure to provide medical documentation for review (see §4520.B);
 	Partial or complete reversals of a previous QIO decision;
 	Change in discharge status in a PPS hospital;
 	Deemed admission denials or approvals;
 	Readmission/transfer denied;
 	Assistant-at-cataract denied; and
 	Outpatient services denied.
4600 - Introduction - (Rev. 2, 07-11-03)
You must have access to a sufficient number of non-physician reviewers to screen
medical records and physician reviewers to make QIO determinations for Fee-For-
Service (FFS) and Medicare+Choice (M+C) cases under review as specified in your
contract.
4610 - Non-physician Reviewers - (Rev. 2, 07-11-03)
Use non-physician reviewers with the necessary clinical education and experience to
perform medical record screening. Non-physician reviewers must be familiar with your
review norms and criteria. Reviewers who perform DRG validation must be trained and
experienced in ICD-9-CM and CPT-4/HCPCS coding. At least one Registered Records
Administrator (RRA) or Accredited Records Technician (ART) must be employed to
oversee the overall coding and DRG validation process.
4620 - Physician Reviewers - (Rev. 2, 07-11-03)
A. Eligibility Requirements
A physician reviewer must be a doctor of medicine, osteopathy, dentistry, podiatry, or
optometry, or another individual who is authorized under Federal or State law to practice

medicine, surgery, osteopathy, dentistry, podiatry, or optometry (see §1154(c), 42
CFR 476.1, and 42 CFR 476.98(a)).
Only a physician reviewer can make a final determination concerning another physician.
A final determination is a decision made by your physician reviewer that a potential
utilization or quality concern is or is not a confirmed utilization or quality concern. The
determination can be made only after complying with all applicable review requirements,
including affording opportunity for discussion (see §4530).
B. Active Practice Requirements
Your physician reviewers must either be engaged in active practice in the State or be
military physicians who actively practice in a military or Department of Veterans Affairs
(DVA) health care facility in your State, even though the physician's license to practice
has been issued by a different State. If the M+CO's immediate services area includes the
provision of services in an adjacent state, use actively practicing physicians who are
licensed and provide care in the adjacent State to review these services.
Active practice means that the physician usually practices (on a routine basis) a minimum
of 20 hours per week. Temporary interruptions of a short-term nature are acceptable as
long as the physician clearly has an ongoing, active practice throughout the year and the
physician's involvement in the practice averages 20 hours per week during the year. The
"routine basis" requirement is met if a physician sees Medicare beneficiaries on an
ongoing basis throughout the year, regardless of the total number of contacts with these
beneficiaries.
Active practice must also include active staff privileges in a health care facility on a
regular basis (see 42 CFR 476.1). Doctors of medicine, osteopathy, or dentistry must
have active staff privileges in one or more hospitals in the State. Doctors of podiatry
must have active staff privileges in one or more facilities in the State. Doctors of
optometry are not required to have staff privileges. Note that emergency room physicians
and dentists who do not have admitting privileges in an acute care hospital can meet the
requirement of active staff privileges as it is defined in this regulation.
Accept the physician's certification that he/she is in active practice with active staff
privileges in the State (the hospital/facility must be specified) unless there is reason to
believe otherwise. In questionable cases, have the physician provide documentation.
The physician's certification must be renewed on a biennial basis. Inspect biennially each
physician reviewer's license to practice in your State.
C. Licensure Requirements
Generally, the physician reviewer must have the same licensure as the physician whose
services are under review. That is, a licensed doctor of medicine, osteopathy, dentistry,
podiatry, or optometry must be reviewed by another licensed doctor of medicine,
osteopathy, dentistry, podiatry, or optometry respectively (see §1154(c) of the Act).

If use of the required reviewer is impractical, creates an unavoidable potential conflict of
interest, or compromises the effectiveness or efficiency of your review process, you may
use a licensed doctor of medicine or osteopathy to review the services furnished by any
physician (A dentist, optometrist, or podiatrist can only review services furnished by
other physicians with the same licensure).
D. Specialty Requirements
The physician reviewer must generally be a specialist in the same field as the physician
whose services are under review. For example, assign an internist to review care
furnished by an internist, an orthopedist to review care furnished by an orthopedist, etc.,
regardless of the type of services under review. In the case of psychiatric and physical
rehabilitation services, however, make arrangements to ensure that (to the extent
possible) initial review of such services are made by a physician who is trained in
psychiatry or physical rehabilitation (as appropriate) (see §1154(a)(7) of the Act). For
reconsideration reviews, the regulations at 42 CFR 478.28 generally require the physician
reviewer to be a specialist in the type of services under review.
Whenever possible, use physician reviewers who are certified by a specialty board
recognized by the American Board of Medical Specialties (for Medical Doctors) or by a
specialty board under the auspices of the American Osteopathic Association (for Doctors
of Osteopathy). Each prospective board-certified physician reviewer must provide
evidence of that certification.
If use of the required reviewer is impractical, creates an unavoidable potential conflict of
interest, or compromises the effectiveness or efficiency of your review process, use
another physician reviewer whose practice and experience is relevant to the facts and
circumstances of the case to be reviewed. In these cases, use the most appropriate
reviewer available (see 42 CFR 476.98(a)(2).
E. Setting Requirements
Generally, the physician reviewer must practice in a setting similar to the setting in which
the physician whose services are under review practices. If use of the required reviewer
is impractical, creates an unavoidable potential conflict of interest, or compromises the
effectiveness or efficiency of your review process, you may use a physician reviewer who
practices in a different setting than the physician whose services are under review.
Whenever possible, use M+CO physicians when physician review of M+C services is
required. A M+C physician is a physician who, as a regular part of his/her practice,
provides care that is paid for by a M+CO. These physicians may be employed by a staff
model M+CO or work under arrangements with an organization (e.g., an Independent
Practice Association (IPA) model).
F. Hierarchy of Exceptions

The concept of peer review requires that, whenever possible, QIOs use physician
reviewers whose licensure, specialty, and practice setting are the same as (or similar to)
those of the physician whose services are under review. Consider these variables when
assigning cases to physician reviewers.
Your goal is to match all the variables (i.e., licensure, specialty, and practice setting).
When this is not possible, document the reasons for your physician reviewer selection.
There are valid reasons for failing to match all variables for every case (e.g., your pool of
physician reviewers in a rare specialty is too small when also considering the physician
reviewer requirements needed for a possible reconsideration).
When you cannot meet all reviewer requirements for a particular case, apply the
exceptions in §§4620.C through F in specific order to retain the more significant
requirements as much as possible. When an exception is necessary:
 	Try to resolve the problem by using the exception for similar setting requirements
before using the exception for the specialty or licensure requirements;
 	If unsuccessful, try to resolve the problem by using the exception for the specialty
requirements before using the exception for licensure requirements; or
 	As a last resort, use the exception for the licensure requirements.
G. First Level Physician Reviewers
First level physician review occurs in every case where a non-physician reviewer has
identified a potential concern requiring a clinical decision (see §4310). First level
physician reviewers must meet the physician reviewer requirements outlined in §§4620.A
through F.
H. Second Level Physician Reviewers
Second level physician review occurs when a potential concern is identified and the
provider/practitioner/M+CO responds to your opportunity for discussion (see §§4315 and
4530). Second level physician reviewers must meet the physician reviewer requirements
outlined in §§4620.A through F. The second level physician reviewer may be the same
person that performed the initial review.
I. Third Level Physician Reviewers
Third level physician review occurs when the provider/practitioner/M+CO requests a
reconsideration/re-review (see §4320). To conduct reconsiderations, reviewers must
meet the qualification requirements outlined in §7420.A (see 42 CFR 478.28). To
conduct DRG validation re-reviews, reviewers must meet the qualification requirements

outlined in §7300.C. To conduct quality re-reviews, reviewers must meet the
qualification requirements outlined in §7310.C.
4630 - Health Care Practitioners Other Than Physicians (HCPOTP) -
(Rev. 2, 07-11-03)
A HCPOTP is a person credentialed in a recognized health care discipline who provides
the services of that discipline to patients (e.g., a nurse anesthetist). A HCPOTP peer is an
individual credentialed in the same health care discipline (see 42 CFR 476.1, 42
CFR 476.98(b), and 42 CFR 476.102).
When the services being reviewed are furnished by a HCPOTP, use a physician reviewer
who is a specialist in the type of services under review. In this case, your physician
reviewer must also consult with a HCPOTP peer before making the determination (see 42
CFR 476.102(a)(3)).
For services furnished by a HCPOTP, you must meet the requirements for consultation
with a peer practitioner, unless you have been unable to obtain a roster of peer
practitioners available to perform review or the practitioner is precluded from performing
review because he/she has, or is perceived to have, a conflict of interest. If the services
of the appropriate consultant are not available, adequately document this fact.
4640 - Conflict of Interest - (Rev. 2, 07-11-03)
A person may not review health care services, make initial denial determinations, or
make changes as a result of DRG validation, if he/she has, or is perceived to have, a
conflict of interest (see §1154(b)(l) of the Act). You must make every effort to avoid
potential conflicts of interest. A case should not be assigned to a physician reviewer if
the reviewer:
 	Participated in the development or execution of the beneficiary's treatment plan;
 	Is an associate or close competitor of the physician under review;
 	Is a member of the beneficiary's family; or
 	Is a governing body member, officer, partner, 5 percent or more owner, or
managing employee of the health care facility where the services were, or are to
be, furnished (see 42 CFR 476.98(d)).
The QIOs must also be aware of potential conflicts of interest specific to M+CO review.
For example:
 	Only FFS physicians reviewing the quality of M+CO services;

 	M+CO physicians reviewing care provided or arranged for by a M+CO from
which these physicians receive financial benefit; or
 	Physicians who perform services for one M+CO and review services of another
M+CO that competes directly with their M+CO for enrollment of area Medicare
beneficiaries.
Whenever possible, also avoid assigning a case to a physician reviewer if the reviewer
actively practices in the same hospital as the physician under review. Finally, avoid
potential conflicts of interest when selecting physicians to serve on your quality
improvement and sanction committees.
4650 - Training - (Rev. 2, 07-11-03)
Provide training for physician and non-physician (including HCPOTP) reviewers to
improve the case review process continuously. The purpose of training is to enhance the
likelihood that determinations are both reliable and valid. Focus training on the
application of clinical knowledge utilizing CMS' directives in the review of health care
issues of the Medicare population. Include training beyond the mechanical aspects of
review procedures (e.g., worksheet completion, timekeeping).
You are responsible for the training of your reviewers (including the development of any
training materials). Also, conduct training to address needs that have been identified
during your own internal quality control monitoring or needs that have been identified by
CMS or other CMS contractors. To minimize expenses and maximize exchange of ideas,
you are encouraged to collaborate with other QIOs, hospitals, M+COs, academic
institutions, and professional societies to develop courses. All training materials
developed by you are the property of the Federal Government to be reported to the RO
Project Officer, and are to be available to CMS upon request.
A. Training Plans
Develop training plans, accompanied by individual course descriptions, for non-physician
and physician reviewers. Update plans as necessary. Keep your RO Project Officer
informed of your training plans, and make your plans available to CMS upon request. In
developing training plans:
 	Identify the needs of non-physician and physician reviewers, the goals and
objectives of the training, the methodology to be used, and the training topics to
be included;
 	For each course, identify the cost, length of time in hours, location, audience,
course description, and trainer credentials, regardless of whether the course is
offered in-house, by a QIO consortium, or by a non-QIO source;

 	Identify the methodology you will use to evaluate the effectiveness of the
training.
NOTE: Training plans must ensure that investment in initial physician reviewer training
is recovered. For example, you may decide not to pay physician reviewers during their
initial training. Upon completion of the training, you could double the physicians' hourly
rates of pay for review activity up to the approved number of hours spent in training.
B. Initial Training
At a minimum, initial training should include:
 	An overview of your review process, goals of your review, and the effect of
individual case review determinations. Explain that a major purpose of review is
to improve care through educational feedback and continuous quality
improvement. Stress the educational focus of your actions when concerns are
identified;
 	An overview of the cooperative project process and disease-specific quality
indicators;
 	A review of relevant Medicare statutory and regulatory requirements, the QIO
Manual, and the Statement of Work (SOW);
 	A review of incentives that may affect care in both the FFS and M+CO settings;
 	A review of the DRG validation process;
 	A review of the norms and criteria you use for case review;
 	An overview of types of medical record formats used by facilities in your area;
 	Instruction on how to extract information necessary to make a determination from
the medical record;
 	Instruction on how to verify information found in one area of the medical record
by using information from another part of the medical record;
 	Instruction on coding guidelines and practices (for personnel responsible for
coding decisions);
 	Discussion of the role of the reviewer in determining whether care is inconsistent
with principles on which there is substantial consensus (e.g., published specialty
guidelines);

 	Discussion of the need to base cooperative projects and determinations on widely
supported analyses of scientific data, rather than on the beliefs of the reviewer,
even if supported by anecdotal or other evidence;
 	Discussion of the goal of achieving consistency in case review by having the
reviewer be confident that other reviewers would agree with his/her interpretation
based on the evidence and would reach a similar conclusion regarding the issue;
 	Instruction on the process for performing project data collection, including when
it is to be performed and its goal; and
 	Instruction on how to discuss potential and confirmed concerns with the
providers/practitioners/M+COs (for QIO physician reviewers and personnel who
are expected to interact with providers/practitioners/M+COs).
C. Continuing Education
In developing ongoing training, identify training needs from multiple sources such as:
 	Internal quality control findings;
 	Staff recommendations;
 	Other QIOs;
 	Providers/M+COs under review; and
 	CMS and CMS contractors.
D. Continuing Medical Education (CME) and Continuing Education Units
(CEUs)/Hours
The CME/CEU courses are necessary for clinical staff to be aware of changes in practice.
Make reasonable efforts to secure CME/CEU credit for QIO-developed education
programs. If unsuccessful, make other arrangements, where possible (e.g., arrange for a
QIO consortium to offer CME/CEU courses, pay for Medicare reviewers to attend
courses offered by non-QIO sources). In either case, document your efforts.
4700 - Introduction - (Rev. 2, 07-11-03)
The review process provides opportunities for feedback to and from you, as well as to
and from providers and practitioners. When you identify a single confirmed concern,
notify the provider and the physician(s) involved. The practitioner and/or provider may
use the notification process as an opportunity to correct identified concerns before a
pattern develops. If the concern requires an adjustment to be made (e.g., a denial or DRG
adjustment), proceed with the adjustment. Unless a concern causes severe risk or is a

gross and flagrant violation that meets §1156(b) of the Act, no other QIO performance
improvement activity is required until a pattern of concerns is established (see §9000 for
further instructions concerning violations of the practitioners'/providers' statutory
obligations).
NOTE: You may institute project data collection as the result of a single case review.
Project data collection is not, in itself, considered a QIO performance improvement
activity, but rather a way for you to gather data to help you better understand patterns of
concerns, which may require performance improvement activities, or to monitor the
results of performance improvement activities.
If a physician provided care in more than one setting (e.g., an inpatient acute care setting
and a SNF), use all information at your disposal concerning the care furnished in the
combination of these settings to determine whether to proceed with an improvement
activity. You may work with one, several, or all of the providers concerned to improve
the level of the physician's performance; however, you may not share information among
providers (see §§10000-10090).
Use all the information available to determine where the feedback and action plan
process can be utilized most efficiently and effectively to improve overall performance.
Prioritize performance improvement activities in terms of their effect on Medicare
beneficiaries, benefits to the program, and the feasibility of improvement. Concerns
believed to be systemic (e.g., consistent up-coding for DRG enhancement, consistent
failure in effective discharge planning) should receive priority consideration.
4705 - Feedback to the Provider and Involved Physicians -
(Rev. 2, 07-11-03)
When you have identified a pattern of concerns for a physician or provider, work with the
provider and the involved physicians to identify remediable problems (e.g., poor
communication between the pharmacy and the nursing units, causing medication errors)
that have given rise to the pattern of concerns. The provider is to review the information
you have provided to identify any underlying problems that are the root cause of the
identified pattern of concerns. The provider is expected to develop an action plan to
address the pattern of concerns or to provide convincing evidence that an action plan is
not needed.
Work with both the administrative and the medical staffs of the provider (e.g., a hospital
quality assurance committee) when providing information, and developing,
implementing, and monitoring action plans. Where the source of the quality, utilization,
documentation, or DRG concern is a physician, notify him/her that you will work with
him/her and the provider in a cooperative effort to improve performance.
NOTE: Use the opportunities you have in providing individual feedback to provide
positive feedback to providers and physicians in order to reinforce best practices in
quality, utilization, and documentation of care.

4710 - Request for an Action Plan - (Rev. 2, 07-11-03)
Require the provider to develop an action plan for all patterns of concerns except gross
and flagrant situations, for which the sanction process applies (see §§9000-9045). Your
initial request for an action plan must include a summary of the findings that are the basis
for the request. You may include suggestions for an appropriate action plan. Provide
assistance to the provider by identifying the pattern of concerns as narrowly as your data
allows (e.g., Is a pattern of post-operative infections linked to a specific surgeon, or to a
specific type of procedure?). You may also share information concerning best practices,
providing you maintain appropriate confidentiality.
Inform the provider that the action plan must:
 	Describe the expected outcome (goals) of the action plan. The stated outcome
must be measurable;
 	State what the provider believes to be the underlying cause of the pattern of
concerns and how it identified the cause;
 	Describe the specific actions the provider will take to correct the underlying cause
of the pattern of concerns;
 	Provide a timeframe for initiating and completing the action plan;
 	Where a physician is the source of the pattern of concerns, obtain an
acknowledgment by the physician that he/she will cooperate with the provider in
the action plan; and
 	Describe the process the provider will use internally to ensure that the actions
resolve the pattern of concerns.
Review the provider-developed action plan and determine whether it will effectively
address the pattern of concerns you have identified. If you determine that the action plan
is inadequate or inappropriate, work with the provider to develop an improved plan.
4715 - When an Action Plan Is Not Needed - (Rev. 2, 07-11-03)
You are not expected to obtain an action plan when:
 	A case is referred to a Federal or State enforcement agency responsible for the
investigation or identification of fraud or abuse of the Medicare program (see 42
CFR 480.106(b));
 	The provider can offer an explanation for the identified pattern of concerns and
you accept the explanation as satisfactory (e.g., you failed to consider an element
in your data analysis that satisfactorily explained the identified pattern);

 	After diligent inquiry, neither you nor the provider can identify a reason for the
identified pattern of concerns;
 	The provider has already identified the problem underlying the pattern of
concerns and has taken action to correct it (e.g., a Medicare coder who has been
making numerous errors has been retrained and is now performing well);
 	The identified pattern of concerns is the same as that previously identified and
occurred prior to or during the time when action was being taken to improve the
pattern; or
 	The source of the concern is a physician, and the physician has retired, expired, or
moved his/her practice out of the State.
NOTE: When a physician has moved his/her practice out of the State, and you have
quality or utilization concerns that require action, forward the information to the QIO in
the new State of practice. Provide your Project Officer with a copy of any concerns
forwarded to another QIO.
4720 - Provider Implementation of an Action Plan - (Rev. 2, 07-11-03)
If the provider's action plan meets your approval, the provider is expected to implement
the plan according to the agreed timeframe. Notify the provider/practitioner(s) promptly
whenever an action plan is concluded or significantly modified.
4725 - Additional Performance Improvement Activities -
(Rev. 2, 07-11-03)
If a provider's action plan is not successful (i.e., the stated outcome has not been
achieved) within the stated timeframe, meet with the provider to discuss the continued
pattern of concerns, identify reasons for failure of the plan, and attempt to develop a
modified plan. Share with the provider any data you have that would assist in explaining
the difficulties experienced with the original action plan and in developing a modified
plan.
It is expected that, in most instances, a satisfactory action plan will be developed by the
provider, or by the provider with your assistance, and that the plan will correct the pattern
of concern. However, there are occasions when:
 	The provider is unwilling or unable to formulate a satisfactory action plan within
the required timeframe;
 	An action plan cannot be satisfactorily modified;

 	A provider formulates a satisfactory action plan but fails to adequately follow
through on its implementation; or
 	A provider continues to be unsuccessful in resolving identified patterns of
concerns.
In these cases, identify and implement appropriate actions to improve performance and
correct the identified pattern of concerns. Use your assessment of the nature and
magnitude of the pattern of concerns and your previous experience with the provider
and/or practitioner involved to identify the appropriate action. Utilize the least intrusive
action(s) necessary to correct the behavior involved. Actions you may take include:
 	Imposition of a QIO-directed action plan;
 	Direct negotiation of an action plan with a physician when a physician is the
source of the pattern of concerns;
 	Referral to the CMS RO (or to a State survey agency through the RO) for a
facility investigation for compliance with the facility's Medicare provider
agreement;
 	Referral to the State Board of Licensing according to your agreement (Federal and
State licensing and accreditation bodies are responsible for the professional
licensure of a practitioner or the accreditation of a particular institution. Federal
regulations at 42 CFR 480.138 require you to disclose confidential information to
State and Federal licensing bodies, upon request, to the extent required by the
agency to carry out its function under Federal or State law. You may also provide
this information without a request);
 	Referral to the Medicare carrier (for a physician with an identified pattern of
utilization or other concerns, as appropriate); and/or
 	Referral to the Office of the Inspector General (OIG) for possible sanction action
(see §9000 for development of a sanction recommendation of a substantial
violation in a substantial number of cases).
In instances where a physician is the source of a utilization, documentation, DRG, or
quality of care pattern of concerns, if you and the provider are unable to reach agreement
on an action plan, or if an action plan (including a modified action plan) is not successful,
negotiate an action plan directly with the physician. Educational actions you recommend
must be designed to correct the root cause(s) of the pattern of concerns.
In order to successfully employ educational actions, you must:

 	Be knowledgeable concerning the availability of specific Continuing Medical
Education (CME) courses, and consider recommending attendance at courses that
address the categories of concern;
 	Be knowledgeable concerning various self-education tools, and consider
recommending the use of such tools when appropriate (In general, these
modalities may be utilized to correct very specific behaviors or when lesser
grades of correction are required);
 	Contact teaching institutions about their willingness and ability to provide mini-
residency courses that address specific categories of concerns, and consider
recommending attendance at such mini-residency courses to address appropriate
behaviors of concern;
 	Be knowledgeable concerning the rules regarding board certification
examinations, and consider recommending taking (not necessarily passing) board
certification exams; and
 	Be knowledgeable concerning the availability of courses and certifications to
address special needs, and consider recommending such courses/certifications
(e.g., Advanced Cardiac Life Support certification for physicians with a pattern of
concerns in emergent care situations).
Customize educational actions to address the particular behavior causing the pattern of
concerns. Do not disclose concerns with the performance of individual practitioners to
educational bodies without the practitioner's written consent (see §§10000-10090).
4730 - Monitoring Performance Improvement Actions -
(Rev. 2, 07-11-03)
Assess the impact of your performance improvement actions. Consider the nature of
each action to determine the most efficient and effective means of assessing the impact of
your activities. In the case of provider action plans, employ assessment techniques to
enable you to make accurate decisions as to when a provider action plan can be modified
or discontinued. In the case of other actions (e.g., direct negotiation with a physician
concerning educational activities), assess whether an action has been successful or
whether another action (e.g., sanction) must be instituted.
Develop specific criteria for judging whether an action plan or other performance
improvement action has succeeded. Tailor your assessment to your assessment criteria
and the data available. You may determine that process (e.g., review/audit of a provider's
modified quality assurance procedures) or outcome assessment (e.g., analysis of billing
data from the provider for a DRG of concern), or both, may be the most appropriate
method to determine the success of your actions. You may institute project data
collection to monitor performance when other modalities will not satisfactorily collect the
data you require to assess impact.

Your impact assessment techniques must be:
 	Appropriate to the clinical and other issues involved;
 	Objective;
 	Cost-effective; and
 	Reproducible.
When appropriate (e.g., an outcome measure has an extended timeframe), perform an
interim impact assessment. Subject that assessment to subsequent validation (e.g., by
pattern analysis or case review findings).
Share your assessment of the outcome of an individual provider's action plan with the
provider. Also, share interim assessments, if performed. If a physician is involved, share
your assessment with the physician.
NOTE: Released assessments must conform to all QIO confidentiality requirements.
The identities of individual providers/practitioners must be protected (see §§10000-
10090).
4735 - Timing Requirements for Performance Improvement Activities -
(Rev. 2, 07-11-03)
Request an action plan from a provider within 30 calendar days of the date you have
determined an action plan is required. You may delay this request for a short period with
good reason. However, it is expected that delays will be rare. Allow 30 calendar days
for the provider to develop an action plan.
Be familiar with timeframes in which performance can reasonably be expected to
improve. Use your assessment of the nature and magnitude of the pattern of concerns
and your knowledge and experience of the nature of institutional change in general and
with specific providers to set appropriate timeframes for improvement. Do not allow
providers or practitioners unreasonable periods of delay in developing or implementing
action plans or in proceeding with other improvement activities (e.g., a mini-residency).
Interpret unreasonable delays as refusal to cooperate and proceed accordingly.

Exhibit 4-1 - Standard Mandatory Case Review Process -
STANDARD MANDATORY CASE REVIEW PROCESS
Concern?
End
QIO receives
case for review
QIO requests
medical records
from provider
QIO closes
case and logs
decision in
SDPS
QIO requires
addit. medical
record info.
QIO reviews
medical records
30 C-Days*
Yes
No
QIO sends
concern to
provider/
practitioner
QIO refers
case to approp.
agency
QIO reviews
response
Provider/
practitioner
responds
No action
necessary
Initial Denial of
Payment
(Utilization)
Quality
Determination
(Quality)
QIO notifies
provider/
practitioner
No
QIO receives
request for
reconsideration
QIO
reconsiders
case
QIO notifies
provid./practit./
intermed./bene.
QIO prepares
Acknowledg.
Letter
ALJ reviews
case
ALJ notifies
CMS and QIO
of decision
QIO receives
request for re-
review
QIO re-reviews
case
Provid./practit./
bene. request
reconsid.
QIO notifies
provid./practit./
intermed./bene.
QIO notifies
provid./practit./
intermed./bene.
Yes 	30 C-Days*
Yes
Notify provider/
practitioner
Provider/
practitioner
request re-
review
Yes
No
30 C-Days**
Notify provider/
practitioner
No
20 C-Days*
Concern
Confirmed?
End
End
Accept
Decision? 	End
Reverse
Decision?
Req. ALJ
Hearing?
QIO prepares
file for ALJ
Retrospective Review
*C-Days = calendar days 	**W-Days = working days
Re-Openings Review
15 C-Days*
QIO logs
decision on
SDPS
QIO logs
decision on
SDPS
QIO makes
decision
QIO logs
decision on
SDPS
End
End
Yes
30 C-Days*
QIO logs
decision on
SDPS
60 C-Days*
QIO logs
decision on
SDPS
QIO logs
decision on
SDPS
No
30 W-Days*
60 C-Days*
30 W-Days**

(Rev. 2, 07-11-03)s_Exhibit_4_1A
Exhibit 4-1A - Standard Mandatory Case Review Process Timeframes - (Rev. 2, 07-11-03)

S TANDARD MANDATORY CASE REVIEW PROCESS TIMEFRAMES
Re-Openings Review	Retrospective Review
Timeframes:
60 Calendar Days: 	Unquestioned Case
90 Calendar Days: 	Questioned Case (for DRG/validation)
100 Calendar Days: Questioned Case (for Quality of Care)
Timeframes:
30 Calendar Days: 	Unquestioned Case
50 Calendar Days: 	Questioned Case (for DRG/validation)
60 Calendar Days: Questioned Case (for Quality of Care)
(A DD 15 C ALENDAR D AYS WHEN A PPLICABLE )
(F ROM R ECEIPT OF R EQUEST )	(F ROM R ECEIPT OF MEDICAL R ECORDS )

Transmittals Issued for this Chapter
Rev # 	Issue Date 	Subject 	Impl Date 	CR#
R18QIO 10/10/2014 	Update to Pub. 100-10, Chapters 04 and 07
to Provide Language-Only Changes for
Updating ICD-10
Upon
Implementation
of ICD-10
N/A
R02QIO 07/11/2003 	Miscellaneous Revisions 	N/A 	N/A
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