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August 26, 2019

DOH Sepsis Reminder Opens Doors for Provider Recoveries

Many managed care organizations (MCOs) have improperly used Sepsis-3 criteria to deny claims submitted by hospitals that utilized the widely accepted Sepsis-2 criteria contained in NYS Department of Health (DOH) regulations. If these denials are left unchallenged, significant revenue will be lost by hospitals for services provided to patients in need.

On July 15, 2019, the DOH Division of Health Plan Contracting and Oversight, Office of Health Insurance Programs released a letter to health plan administrators regarding coding and reimbursement for sepsis. This letter confirmed the definition of sepsis, as contained in DOH regulations, has remained the same, and, therefore, health plans are required to define sepsis utilizing the clinical guidelines for the definition of Sepsis-2 rather than the Sepsis-3 definition (NYCRR § 405.4(a)(8)).

The DOH reminder that state regulations require the use of the Sepsis-2 criteria will have broad impacts, as the improper use of the Sepsis-3 criteria by MCOs has resulted in significant claims denials and financial losses for hospitals, prompting complaints to both the DOH and the Department of Financial Services (DFS). In addition to the DOH issuing the July 15 letter in response to these complaints, the DFS also issued guidance directing MCOs to the letter and emphasized its expectation that health plans will act consistently with DOH guidance.

Sepsis-2 vs. Sepsis-3: An Important Distinction

Sepsis-2 is the most widely accepted definition of sepsis. Under this definition, sepsis is separated into three categories: uncomplicated sepsis, severe sepsis, and septic shock. Uncomplicated sepsis requires a suspected infection plus two out of four systemic inflammatory response system (SIRS) criteria. A diagnosis of severe sepsis is appropriate when a patient is diagnosed with uncomplicated sepsis and either one or more organ dysfunctions or a serum lactate of greater than 4.0 mmol/L. The most severe diagnosis under Sepsis-2, septic shock occurs when a patient has severe sepsis plus hypertension after a fluid bolus. 

Introduced in February 2016, Sepsis-3 defines sepsis as life-threatening organ dysfunction caused by a dysregulated host response to infection. Under this definition, organ dysfunction is found when there is an acute change in a patient’s total sequential organ failure assessment (SOFA) score of two points or more above the individual’s baseline. Included within Sepsis-3 is quickSOFA (qSOFA), a tool intended as a bedside clinical approach to identifying patients who have a high risk of adverse outcomes due to a suspected infection––i.e., those likely to have a prolonged intensive care unit stay or to die in the hospital. Finally, septic shock is defined as a subset of sepsis in which the underlying circulatory and cellular or metabolic abnormalities are profound enough to substantially increase the probability of death. Notably, Sepsis-3 removes the term “severe sepsis”––which is found within Sepsis-2––as redundant, noting all sepsis is severe.

MCOs’ Switch to Sepsis-3: A Thinly Veiled Attempt at Reducing Costs

The changes in the Sepsis-2 definitions included within Sepsis-3 were aimed at challenges related to the definition’s specificity as well as acknowledging the improved understanding of pathobiology that has occurred since the early Sepsis-1 and subsequent Sepsis-2 definitions.

However, the ultimate and unyielding results of MCOs’ application of the Sepsis-3 definition have been a significant increase in the denial of claims by health plans and significant revenue loss by hospitals and providers treating acutely ill patients and providing a high volume of necessary yet costly care.

Importantly, sepsis claims are commonly known to have a high reimbursement rate for hospitals and providers. As the Sepsis-3 definition is more narrow and requires patients to be more severely ill than Sepsis-2, the Sepsis-3 clinical standards were frequently used by MCOs to down-code or deny these claims. This has also led to systemic documentation issues due to the inconsistent criteria required by Sepsis-2 and Sepsis-3. 

For example, MCOs have denied otherwise clean claims for failing to adequately document organ dysfunction, a hallmark of the Sepsis-3 definition. These documentation issues were further compounded by the continued use of SIRS pursuant to the Sepsis-2 definition rather than SOFA or qSOFA as required by Sepsis-3. Health plans took advantage of the gaps in the criteria utilized under Sepsis-2 and Sepsis-3 by agreeing that a sepsis diagnosis had been documented but continuing to deny claims based on an alleged lack of clinical records to support the diagnosis. The end result has been a windfall for MCOs due to their often unchallenged ability to cut costs by denying these claims.

DOH Announcement Should Encourage Hospitals and Providers to Appeal

With the DOH’s July 15 announcement, hospitals should see these billing, coding, and reimbursement challenges resolved going forward. The DOH specifically noted in the announcement the regulations pertaining to sepsis remain unchanged––i.e., the Sepsis-2 criteria was always the appropriate standard, not Sepsis-3—and, as such, by implication, MCOs have been improperly denying claims using the Sepsis-3 criteria. These improperly denied claims, however, remain undisturbed unless challenged by the hospital.

Barclay Damon has successfully represented providers in matters related to improper denials of clean claims. If you have any questions regarding the content of this alert or if you are interested in pursuing claims improperly denied as a result of the incorrect Sepsis-3 criteria being applied during the claims-adjudication process, please contact Bob Hussar, partner, at rhussar@barclaydamon.com; Brad Gallagher, counsel, at bgallagher@barclaydamon.com; or Dena DeFazio, associate, at ddefazio@barclaydamon.com or another member of the firm’s health care controversies team.

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