Aetna delays, issues additional details on ‘level of severity inpatient payment’ policy

Aetna’s new “level of severity inpatient payment” policy is now set to take effect Jan. 1, 2026, the company recently announced, along with providing additional details about the policy. The policy was supposed to take effect Nov. 15. 
 
Aetna earlier this year said it was creating a new type of inpatient reimbursement for so-called “low severity” inpatient stays that it has said will be “comparable” to observation rates. This policy will take the place of Aetna’s (and essentially every other insurer’s) long-standing approach of denying inpatient stays it deems medically unnecessary and then, in most instances, downgrading them to outpatient observation status. Instead, Aetna will approve these inpatient stays but reimburse hospitals at a lower rate it determined unilaterally outside of the good faith contract and rate negotiation process. This policy only will apply to Aetna’s Medicare Advantage and dual eligible lines of business. 
 
In its Nov. 6 announcement, Aetna clarified that:

• The level of severity review will apply only to urgent/emergent inpatient stays of at least one midnight but less than five midnights.
• Stays of five midnights or greater will not be subject to level of severity review and will be paid at the inpatient DRG (diagnosis related group) rate.
• For inpatient stays of at least one midnight but less than five midnights that do not meet MCG criteria, providers may request a severity review and engage in a severity discussion with an Aetna medical director.

“The AHA appreciates Aetna’s decision to delay implementation of its level of severity policy for inpatient hospital admissions from November to January,” the AHA said. “This pause provides additional time for hospitals and health systems to prepare and for continued dialogue on the policy’s impact.” 
 
The AHA Sept. 15 sent a letter to Aetna urging it to rescind the level of severity inpatient payment policy. The AHA said the policy “could erode the transparency consumers rely on to make informed decisions about their care, undermine important regulatory protections that safeguard patients’ coverage, and jeopardize the ability of hospitals to provide high-quality, accessible care to all who need it.”