News to Note – October 2026

  • The Office of the Inspector General (OIG) recently released a notice about a fraudster who was paid almost three million dollars by Medicare Advantage (MA) plans for durable medical equipment (DME) which was not ordered by a physician, not needed by the patients, and not even approved by the MA plans. How is it that these plans paid such a substantial amount of money for DME they never approved but won’t pay hospitals for medically necessary Inpatient hospitalization that meets the Medicare Two-Midnight Rule? 
  • There’s a major flaw in the upcoming Comprehensive Care for Joint Replacement Expanded (CJR-X) program.
    • If you’re trying to understand how the Centers for Medicare and Medicaid Services (CMS) is going to set the target rates for calculating savings, it’s important to realize that we’re still in the baseline period for setting the target rate for the first four years of the program. 
    • Why is this important?  Hospitals will share in the savings if their 2028 spending is less than the target rate, which will be calculated based on spending during a rolling period from 2023 to 2027. In other words, in theory, it’s in your hospital’s best interest to send as many total hip and knee replacement patients to skilled nursing facilities (SNFs) and use as much home care and outpatient therapy as possible so that, when January 2028 rolls around, you have lots of room to improve. 
    • Of course, you shouldn’t increase your usage of high-cost services in order to earn more later, but CMS really needs to think about the impact of these programs which will harm those hospitals that are already high-performing.
  • United HealthCare recently made headlines when they announced that they are eliminating a large number of prior authorizations. This was applauded by many, but, of course, the devil was in the details. 
    • The actual lists of procedures that will no longer need prior authorization are different for each type of plan, and the list for MA plans is significantly smaller than the list for their commercial plans. There are 160 prior authorizations coming off the MA list but over 800 associated with their commercial plan list.
    • Physician offices and hospitals will still have to determine what CPT code is planned and check the specific list.  Since the elderly need health care at a higher rate than younger people, the burden reduction is less than impressive.
  • A new bill was proposed in Congress called the “Stop Corporate Takeovers of Physicians Act.” While the main intent of the bill is to limit the ability of private equity and health care systems to own and control medical practices, there are two parts that are baffling. 
    • First, the bill states that corporate owners could not, “interfere with, control, or otherwise direct the professional judgment or clinical decisions of a physician,” including determining whether the patient should be admitted to Inpatient status or kept in Outpatient status with Observation services. Of course, this flies in the face of the Conditions of Participation which require hospitals to have a utilization review plan to ensure that the admission status of patients is correct. 
    • Second, it states that physicians have final decision-making authority over diagnoses recorded in the medical record. Clinical Documentation Integrity experts likely are cringing at the prospect of being required to report acute kidney injury (AKI) when the patient’s creatinine went up by two tenths of a point simply because the doctor documented “AKI”. 
  • An organization called the Electronic Frontier Foundation reported hearing about patients suffering from delayed care due to issues with AI companies tasked with performing Wasteful and Inappropriate Service Reduction (WISeR) model authorizations. They were able to get a treasure trove of documents from CMS using the Freedom of Information Act. 
    • While the data on performance is limited, it does appear that, for at least for two contractors, Virtix and Zyter, their ability to hit the required turnaround times for requests is less than optimal. 
    • Also, at one point, contractor Genzeon had over 123 requests that were past the 72-hour limit, with one that was not reviewed even after 83 days had passed! Compare that to Humata, another AI company, that had only four requests that passed the 72-hour limit.  
    • The documents also indicate that CMS’ Innovation Center is already thinking about expanding of the WISeR program to more procedures, including MRIs, PET scans, air ambulance, cardiac catheterizations, chemotherapy, and pacemaker and defibrillator placements, including when these procedures are needed emergently. This bears watching closely.
  • Each year, Medicare sends a book to each Medicare beneficiary called “Medicare & You.” This book explains in detail the Medicare program, what is covered and not covered, and how much services will cost. It’s the book Medicare thinks every beneficiary carefully reads so that there will never be a question about coverage or benefits. There are two portions to note within the content. 
    • First, there is a nice section about the Advance Beneficiary Notice (ABN), but it doesn’t have one single mention of the Hospital Issued Notices of Non-Coverage (HINNs). For that, a beneficiary must go to the online version of the book and click on a link. 
    • Second, there’s a section discussing Observation services. It starts by stating in bold letters, “Important! Each day you have to stay, you or your caregiver should ask the hospital and/or your doctor, a hospital social worker, or a patient advocate if you’re an inpatient or outpatient.” It then notes, “Sometimes doctors will keep you as an outpatient for observation services while they decide whether to admit you as an inpatient or release you” and then outlines the requirements for MOON delivery. 
    • But then things really get wonky.  CMS notes, “You have appeal rights when a hospital changes your status from inpatient to outpatient if you meet certain conditions. Go to page 105 for more information.” Turning to page 105, there is this statement: “you have the right to ask for a fast appeal while you’re still in the hospital if you were admitted to the hospital as an inpatient and the hospital changed your status to outpatient getting observation services,” followed by a long web link. 
    • Going to the link on that page, you must click another link and go to another page which is devoid of any mention of the strict requirements a beneficiary must meet to qualify to formally appeal a Condition Code 44 change.  There is also no mention of the delivery of the Medicare Change of Status Notice (MCSN).
    • The 2026 book had similar language but also included the statement, “You must meet certain requirements to appeal” which CMS left out for 2027. Will the absence of the “certain requirements” statement mean that we will see more patients requesting an appeal of their Condition Code 44 change when one isn’t available because they have Medicare Part B or did not remain hospitalized for three days after the change from Inpatient to Outpatient with Observation services? It’s possible. So, what should you do?
      • Allow the patient to call the QIO and ask for the appeal. 
      • Hopefully, the QIO will tell them they have no formal appeal rights but offer to review the situation through their informal immediate advocacy program. 
      • Remember, if the patient’s hospital care is complete and they insist upon staying to await immediate advocacy, you can issue an ABN for custodial care and charge them to remain hospitalized.