More weird rules in healthcare

3 liters of blood, sequential billing, COBRA, and more

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Rules are Cruel

Last time I wrote about a few different healthcare rules I thought had funny downstream effects. I asked you all to send some in and you didn’t disappoint.

Today I’m posting some of my favorite ones that were sent in.

3 Pints Rule

[NK note: I also have a rule with this name to stop from me getting blacked out at the company happy hour at Slattery’s Pub]

“The 3 pints rule is something most Medicare brokers are tested on, which is the first I heard of it, even through I had been at UHC for 5+ years at the time. The even more hilarious part is the “unless you or someone else donates the blood you replace”. Me: “Cool, I will be in in a few weeks to make my replacement donation. Hold the billing, please!”

Blood transfusion coverage (

 Image below from a CMS overview on Medicare.”

-From Michael Gonzales 


[NK Note: Dog if I need more than 3 pints of blood, you’re probably not getting paid anyway. I’ll be chilling at the pearly gates.

I do actually like the idea that you need to replace the blood or pay for it. It’s a cool way to add some shared social responsibility to healthcare. I wonder if we could try this for other things or if it would be too dystopian. “Pay for your prescription drug copay, or get it free if you volunteer at a local nursing home for a weekend.”]

COBRA is outdated

“I'm going to bring up a big one that you've probably already written about at some point... let's talk about COBRA. 

[NK note: Consolidated Omnibus Budget Reconciliation Act of 1985, does explaining the acronym help? This is when you can stay on your old employers health plan after you leave, but you have to pay the full premiums including the part your employer was covering]

Yes, it certainly made sense in the days before ACA/Obamacare to require employers to make available their group plan for people separated from employment for whatever reason, because those who really need it would likely have been underwritten out of affordable coverage in the pre-ACA individual marketplace. BUT, in the now of guaranteed issue coverage, special enrollment periods for loss of employer coverage, and ARPA-boosted premium tax credits, COBRA seems to be doing more harm than good. 

First, the comfort of the employer's name on their group plan makes people think that it is the right plan to choose. For some reason this makes me think of the scene in Tommy Boy where he talks about the "guarantee fairy" but maybe my brain just goes to strange places. 

Second, the price rarely makes sense at 102% of the employer's premium equivalent rate (the inclusion of that fun little 2% to cover administration of the COBRA offer itself is a silly little sub-rule), especially when compared to the broader range of coverage levels and price points in the ACA marketplace. This results in healthier people risking some period of time with no coverage, and only people who need a lot of coverage choosing to elect COBRA, which leads to the third issue... 

It's a terrible deal for employers too. Since only the sickest people elect it the claims costs are at the high end of the curve, but the employer can only charge 102% of premium so they are almost guaranteed to be upside-down on COBRA enrollees and those losses need to be spread across the rest of their employee population driving up costs for the active employee coverage (albeit likely not by much). 

All said, it seems pretty silly to require that employers offer COBRA when the alternatives are better for just about everyone.”

-From Ryan Jessell

[NK note: Here’s my analysis…more like Co-Bruh. 

I think because COBRA is such a bad deal for employers they purposefully make it the worst possible experience to enroll in it. I watched my roommate try to enroll in COBRA when he was starting his company, and they charged a massive premium to take credit card payments so you had to mail a check in. But if the check arrived to them too early or too late for a given month, you wouldn’t count for coverage for that month. To discover this required 3 separate phone calls.

My conspiracy but not so conspiracy theory is they purposefully make it hard for you to actually sign up for COBRA so you don’t use it.]


Annual Wellness Visit Constraints

[NK note: A primer on Annual Wellness Visits here. It’s essentially a risk assessment done of the patient, which tends to help Medicare Advantage plans get more money by showing that their patients are sicker via risk adjustment. And also figure out how to help that patient based on their risks]

"Due to how the ICD/CPT codes are set up, what services are completed for an annual wellness exam do not allow for any questions. It is really designed to only collect your healthcare information (provide risk information to the insurance company back when they could change prices based on health risk). If you have high blood pressure, can't talk about it or then the visit will now be coded as an office visit. If you have a question about managing your depression or mental health, that is not included in a wellness exam. It is now an office visit. 

Basically it is like bringing your car to the mechanic and they tell you all the things going on with your vehicle and they give you a nice sheet with the things that are green, red, yellow ... and if you have questions to address the "reds and yellow" concerns, you have to pay up. How does that help the owner of the car or the mechanic?

People are told it is a free exam but if they want to do anything with the information then they have to pay (this leads to TONS of calls to call centers, bait and switch feeling for the patient, and overall discourages patients from taking control of their health issues, often chronic ones)

Providers don't want patients to be dissatisfied with not getting their free service so they limit the service they provide so that it doesn't overstep and become an office visit. Primary care clinics explain what is not included in an annual wellness visit and explain you will be charged more for asking questions, discussing mental health, diet, substance abuse, etc. There are documents provided to patients and posters put up in the exam room to explain what's not included and basically what not to ask about. 

That is a huge problem with our healthcare system. The billing and coding system is in many ways dictating how providers deliver their services and ultimately the experience we have available to patients when consuming healthcare.”

-From Anna Haug

[NK Note: This is an interesting problem and one that seems to be more about patient messaging and expectations. I think if this was framed as “free initial risk assessment” with a follow-up paid consultation, maybe thing wouldn’t feel so bad? Right now it feels positioned like it would be a free checkup, even calling it an “annual wellness visit” has that connotation.]

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Email for group discounts, bundles, etc. Wow who knew running a business would be this much marketing and selling???

Multiple Procedure Payment Reduction Policy

“Multiple Procedure Payment Reduction Policy (MPPR) policy is applied by Medicare and many private insurance companies. It reduces reimbursement for certain procedures performed during the same encounter on a patient.

 Here's how MPPR works:

  • Multiple Procedures, One Payment Reduction: If a healthcare provider performs multiple procedures on the same patient during a single visit, MPPR kicks in.
  • Full Payment for Highest-Valued Service: Typically, the insurance company pays full price for the procedure with the highest value (based on coding).
  • Reduced Payment for Subsequent Procedures: Payments for second and subsequent procedures are reduced, often by 50%.

Basically you collect 50-75% of your allowable amount for a service. This sucks in specialties like physical therapy where "procedures" are often billed in 15 min increments so if you go for a 45 min PT session, whereas you can bill a 45 min single CPT code in many outpatient services, for PT you have to bill 3, 15 min service codes and only get paid 100% of reimbursement on one of them”

- From Avery Bullock


[NK note: This is another one of those rules where I get the intent - if you’re opening someone up to do a surgery and do multiple procedures in that time, then the overhead cost of the operating room and prepping and all are lower. So in theory the payment should be lower.

But this also shows what happens when you try to create broad rules that apply to all cases. Things start breaking at the edges. Now we gotta make another layer of carve outs or something for physical therapy, which then will break something else.] 

Hospice Billing Sequentially

“Here’s mine, also pertains only to Medicare: billers who work with home health care often also do hospice billing. They are both billed monthly at a daily rate, regardless of how many or how few visits are provided. A month of home care can be billed at any time, whether the prior months have been billed or not, and whether or not another home care agency has billed before or after you. 

But hospice must be billed sequentially. That is, if something is holding up your Jan claim, you can’t bill Feb, March etc. And, if another agency picked up the patient in April, they can’t bill until we have billed Jan, Feb, and March. 

And if they DO bill before we are finished, they need to cancel all their claims and wait for us to be finished. 

And if somehow (and it happens often) there’s an agency prior to us that needs to change something on their claim, or remembers months after the fact that they forgot to bill, they have to contact us and tell us (and sometimes the agency AFTER us) to cancel all our claims so they can get theirs billed in sequential order. Everybody has to cancel sequentially BACKWARDS or it @&$@s up. 

This one is too boring and too much of an outlier to post, but it makes hospice a bear and it so fit your thread I just had to tell you.”

-From Leda Sternberg

[NK Note: *narrator: it was not too boring to post*. Why does hospice have this specific rule but home care doesn’t? Also Jimmy Carter must be an absolute billing nightmare.

This feels like some strange admin problem on the Medicare claims processing side that should be fixable. I feel like…if there are nearly 2000 errors related to sequential billing a month and it’s the most cited billing error in hospital then…I think I might be seeing the problem…


If you work in Medicare and want to tackle this, please do!!!]

Bonus: 2 Midnight Rule Context

[NK note: Last week I wrote about the 2 midnight rule, but a reader sent in some context about why the rule exists. This is advanced wonk stuff.]

“I was involved in some of the policy making discussions around the 2-midnight rule and thought to share some history and context.  You're correct that concerns about billing practices related to “short stay” admits were growing around this time.  However, the 2-midnight rule was actually part of a broader policy fighting playing out - medical necessity denials and A/B rebilling.

As you noted, Medicare retrospectively reviews inpatient admits and denies claims that were medically unnecessary.  As you can imagine, patients with short inpatient stays would often be denied.  When an inpatient claim was denied CMS’ original policy allowed a limited number of services to be rebilled to Part B.  However, this limited rebilling allowance wasn’t enough reimbursement for hospitals who began to increasingly appeal and sue to overturn these denials. 

Might be the most niche meme I’ve made so far

CMS was trying to address these growing appeals by launching the A/B rebilling demonstration in which hospitals could rebill a denied Part A stay to Part B for 90% of the Part B reimbursement amount.  However, while this demonstration was playing out, CMS was winning their denial determinations in litigation but administrative judges were ordering CMS to reimburse hospitals as if they were rendered at an outpatient or observation level of care (i.e. the full Part B amount). (See this Administrator's Ruling for more detail). 

CMS basically accepted these rulings and changed their policy to allow for full Part B rebilling for denied inpatient bills in 2013 (see current Medicare Benefit Policy Manual Sec. 10.1).  Of course, you can imagine that this would incentivize a hospital to bill everything as inpatient - bill Part A and worst case I get denied and get paid Part B amount. This could potentially undermine all the efforts to address short inpatient stays. Hence the 2-midnight rule was born at the same time.  

With all that said, I consider the A/B rebilling policy coupled with the 2-midnight rule as a compromise solution between CMS and the provider community with respect to medical necessity reviews of inpatient stays - CMS will allow denied inpatient claims to be rebilled to Part B and the hospital community will accept that stays below 2 midnights are Part B.  (As an aside an alternative to the 2-midnight would have been the creation of a “short stay DRG” where Part A pays a reduced amount for these stays).  

-From Ankit Patel

[NK note: One of my favorite parts of writing this newsletter is that there are people on this newsletter that can fill in gaps like this. If my attention span could focus long enough to read all that, I’m sure I’d learn something important.

Kidding, but it does make me wonder whether a short stay DRG would have actually been a better route to go for this?]

Thinkboi out,

Nikhil aka. “Come here rule boy boy”

Twitter: ​@nikillinit​

IG: ​@outofpockethealth​

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