News to Note June 2026

  • The Kidney Disease Improving Global Outcomes (KDIGO) organization has published a new draft document updating their clinical practice guideline for acute kidney injury (AKI) and acute kidney disease (AKD). The document is 499 pages, but the section defining AKI is near the beginning. The only change they’re proposing is to add the use of Cystatin-C. Is this going to help reduce the number of clinical validation denials? Only time will tell. 
  • As a reminder, when the Medicare Two-Midnight Rule came out in 2013, the Centers for Medicare and Medicaid Services (CMS) required several things that are no longer applicable.  
    • The admission order used to require authentication prior to patient discharge. CMS removed that requirement a couple of years later, so don’t self-deny inpatient hospitalizations when the Inpatient order isn’t authenticated until after discharge. If your medical staff rules require authentication prior to discharge, get them changed and understand that violating those rules will merely result in a citation from your survey organization; you can still get paid for the admission.
    • For Inpatient-only surgeries, the Inpatient order used to be required to be placed before the surgery started or immediately after the surgery was performed. This ended in 2015 when CMS expanded the three-day payment window to include Inpatient-only surgeries. It is certainly best to get the Inpatient order preoperatively, especially if the patient will need to go to a skilled nursing facility (SNF) after hospitalization. But you have three days to get it, as long as the patient is still hospitalized.  
    • While invasive mechanical ventilation is an exception to the Two-Midnight Rule, it doesn’t apply to the use of mechanical ventilation associated with surgery. The use of general anesthesia for an elective, non-inpatient-only surgery does not make it worthy of inpatient admission. 
  • An interesting case, involving a patient covered by a Medicare Advantage (MA) plan, recently came to our attention.  
    • The patient was hospitalized as Inpatient for seven days due to sepsis related to urinary tract infection. The MA plan issued a diagnosis-related group (DRG) downgrade, invalidating the principal diagnosis of sepsis and downgrading it to urinary tract infection with a Major Complication or Comorbidity (MCC). This change cut the DRG weight down from about 1.9 to 1.1, a significant difference. 
    • The hospital disagreed and appealed to the Qualified Independent Contractor (QIC) on behalf of the patient. As with all appeals to the QIC, the MA plan is responsible for sending along the medical records. When the QIC did not receive the proper records, they reached out to the plan to follow up. Ultimately, the plan responded that “they did not receive medical records for this Inpatient stay and did not request any.”
    • In response to this, the QIC found “that the plan [had] not substantiated their denial in this case. Their denial [was] about the fact that the medical records [did] not support the diagnoses billed for this inpatient stay.”
    • Luckily, even the QIC noted that, if a plan is going to claim the medical record doesn’t support the billed diagnoses, they should at least request the records. This is a reasonable ask, even if the plans don’t actually read them.
  • Another QIC-related case involved a patient with a 14-day Inpatient hospitalization for a Methicilllin-resistant Staphylococcus aureus (MRSA) infection. 
    • The hospital claim included a principal diagnosis of sepsis due to MRSA. The MA plan changed it to a simple infection, arguing that there was “no physician documentation of life-threatening organ dysfunction caused by a dysregulated response to infection.” 
    • The QIC’s response supported the diagnosis of sepsis, noting, “the enrollee had a known source of infection from MRSA with multiple SIRS criteria, thus meeting the criteria for sepsis.”
    • With a 14-day stay, one must presume that the patient is sick and that there is a potential for improperly documented organ dysfunction. However, SIRS plus infection alone is not sepsis, so this might be a gift for the hospital.
  • You may hear from some Medicare beneficiaries that they received a new Medicare card without asking for one. Medicare moved away from using Social Security Numbers (SSNs) as the Medicare ID number to reduce fraud, but some bad actors figured out the Medicare algorithm for generating Medicare ID numbers and used them to submit a series of fraudulent claims. As a result, CMS is deactivating all fraudulent account numbers and issuing new cards to affected patients. 
  • CMS has stressed how important it is for patients to read the Explanation of Benefits (EOB) they get in the mail and to contact CMS if there are charges for care they did not receive. Granted, EOBs aren’t easy to read, but if there is a charge for medical care that did not occur, the patient should notice it and call Medicare. 
  • Part of the Inpatient Prospective Payment System (IPPS) Proposed Rule for the 2027 fiscal year signals acceleration in Medicare’s transition toward mandatory value-based care. This includes a plan to expand the Comprehensive Care for Joint Replacement(CJR) Model nationwide through a redesigned version referred to as CJR-X. 
    • CMS proposes that CJR-X begin on Oct. 1, 2027.
    • Hospitals participating in the Transforming Episode Accountability Model(TEAM), specifically those with lower extremity joint replacement (LEJR) episodes, would be exempt from CJR-X until TEAM concludes.
    • Eligible beneficiaries include those enrolled in Medicare Parts A and B who have Medicare as the primary payer. MA beneficiaries are excluded. 
    • CMS also proposes that hospitals provide written notification to every eligible beneficiary prior to discharge from the anchor hospitalization or outpatient anchor procedure. The notification must explain the CJR-X model, reinforce beneficiary freedom of choice, describe data-sharing practices, explain access to claims data through Blue Button, and disclose any financial relationships between the hospital and CJR collaborators.
    • The proposed episode design includes all Medicare Part A and Part B services furnished during the 90-day post-discharge period related to the LEJR episode: physician services, Inpatient and Outpatient hospital care, skilled nursing facility (SNF) services, inpatient rehabilitation, home health, outpatient therapy, hospice, durable medical equipment, laboratory services, and Part B drugs and biologics, unless specifically excluded. 
    • Certain readmissions and diagnosis categories may be excluded such as, for example, oncology, trauma, organ transplant, ventricular shunt cases, and select Major Diagnostic Categories (i.e., pregnancy, newborns, HIV, and ophthalmologic disorders). 
    • One of the benefits of the program is utilization of the three-day SNF waiver. Under CJR-X, hospitals could discharge eligible beneficiaries to SNFs without a qualifying three-day Inpatient stay. However, the SNF must meet CMS quality requirements, including maintaining at least a three-star overall rating for seven of the previous twelve months. Failure to appropriately discharge to qualified SNFs could result in denied SNF payments and financial liability on the part of the hospital. 
    • Hospitals participating in CJR-X will need stronger integration between case management, quality, finance, analytics, and post-acute care navigation teams. Historically focused on status determination and denial prevention, physician advisors could increasingly become involved in episode stewardship, post-acute utilization oversight, avoidable readmission reduction, and alignment of clinical documentation supporting episode complexity and resource utilization.
  • CMS also continues to expand its focus on hospital readmissions in the IPPS Proposed Rule for 2027, introducing sepsis as a new condition within the Hospital Readmissions Reduction Program(HRRP). 
    • According to sources listed in the ruling, such as AHRQ Report to Congress (September 2024) and Pub-Med meta-analysis by Shanker-Hari et. al (January 2020), sepsis remains one of the most frequent principal diagnoses among adult Inpatients with more than 2.2 million hospitalizations annually and an estimated 30-day readmission rate approaching 21%. These rates place sepsis alongside other HRRP conditions such as heart failure and chronic obstructive pulmonary disease (COPD), reinforcing CMS’s rationale to address both high-volume and high-cost conditions with targeted oversight.
    • If finalized, this measure will be implemented in the 2029 HRRP program fiscal year with a performance period from July 1, 2025, through June 30, 2027. 
    • The measure will include both traditional Medicare and MA beneficiaries.
    • Sepsis would need to be approached as a condition requiring ongoing management across the care continuum. In turn, then, this change would require earlier identification of high-risk patients and more proactive coordination of post-acute services. Hospitals would need to ensure that follow-up care is arranged, accessible, and timely within the first week after discharge.
    • CMS’s own analysis demonstrates variation in performance across hospital types, with higher readmission rates observed in teaching hospitals, safety-net hospitals, and those with higher Disproportionate Share Hospital (DSH) percentages. This variation highlights the influence of social complexity, resource availability, and care coordination infrastructure on outcomes. 
    • The proposal includes adjustments for a broad set of patient-level factors including age, comorbid conditions, frailty indicators, transplant status, and clinical markers of severe sepsis, as well as the aggressiveness of infectious organisms. These variables are derived from the index hospitalization and claims spanning up to 12 months prior, including Inpatient, Outpatient, and physician encounters, as well as diagnoses documented as present-on-admission. 
    • CMS will also exclude complications that arise during hospitalization from risk adjustment, as it considers these to reflect the quality of care delivered rather than the patient’s underlying risk profile.