In August 2025, Aetna announced sweeping policy changes for Medicare Advantage and Medicare Special Needs Plans that raised alarm bells across the hospital industry. Those changes were set to take effect November 15, 2025, and were detailed by Aspirion here. Now, just days before the originally proposed implementation date, Aetna has significantly revised its approach with recently announced updates to the policy. We sat down again with Rikki Ashkin, J.D., Director Legal COE, and Elizabeth Purdy, J.D., Associate Attorney, to discuss what has changed and what hospitals need to know as they prepare for the new January 1, 2026, implementation date.
Q: What are the most significant changes in the revised policy?
Rikki Ashkin: There are three major improvements. First, the effective date has been pushed back to January 1, 2026, giving hospitals more time to prepare. Second, and most importantly, Aetna will now issue written severity decisions rather than just paying at reduced rates without explanation. Third, hospitals now have meaningful pre-claim options to contest severity determinations before payment is finalized. These changes restore much of the due process that was absent from the original policy.
Q: Can you explain the new midnight threshold structure?
Elizabeth Purdy: The revised policy creates a tiered approach based on length of stay. For stays of one to four midnights, admissions remain subject to severity review using Milliman Care Guidelines. However, for stays of five midnights or longer, Aetna will automatically pay at the higher severity level without any review. This is a substantial change from the original policy, which applied reviews to all stays beyond one midnight. Essentially, Aetna is acknowledging that longer stays inherently demonstrate medical necessity and complexity.
Q: What happens to very short stays under one midnight?
Rikki Ashkin: Short stays under one midnight remain outside the scope of this policy entirely. Those will continue to be reviewed under traditional CMS medical necessity guidelines. The policy also excludes behavioral health admissions, acute rehabilitation, and long-term acute care hospitals from severity reviews. This is an important protection for facilities that specialize in these types of care.
Q: About the written severity decisions, how does that process work?
Elizabeth Purdy: This is one of the most critical improvements. Under the revised policy, when Aetna determines that a case doesn’t meet their severity criteria for higher-level payment, they must issue a written decision explaining their determination. This gives hospitals visibility into the denial rationale and, crucially, creates documentation that can be challenged. It’s no longer a silent downgrade buried in payment adjustments.
Q: What are the pre-claim options you mentioned?
Rikki Ashkin: Hospitals now have a 14-day window after receiving a severity determination to take action before the claim is finalized. During this period, they can submit additional clinical documentation that might support the higher severity level, or they can request a discussion with an Aetna medical director to review the case. These are meaningful opportunities to overturn incorrect determinations before they become final payments.
Q: Are there any automatic exceptions to the severity review process?
Elizabeth Purdy: Yes, and this is another significant improvement. The revised policy includes three automatic exceptions where payment defaults to the higher severity rate without any review required. These are cases involving unexpected patient death, CMS inpatient-only procedures, and cases where mechanical ventilation was newly initiated during the stay. These exceptions recognize clinical situations that clearly demonstrate medical necessity and complexity.
Q: What new obligations does this policy place on hospitals?
Rikki Ashkin: Hospitals face tighter timelines for notification and documentation. They must notify Aetna within two business days of admission and submit clinical documentation within 24 hours to support the inpatient severity review. These are aggressive timelines that will require workflow adjustments and coordination between admissions, utilization review, and health information management departments.
Q: Which facilities does this policy apply to?
Elizabeth Purdy: The policy applies specifically to participating facilities that are reimbursed under Medicare-Allowable methodologies, which include DRG-based payment systems. It covers admissions under Aetna Medicare Advantage plans and all Special Needs Plans, including Dual-Eligible SNPs, Institutional SNPs, and Chronic Condition SNPs. If your facility contracts with Aetna for Medicare Advantage patients and receives DRG-based reimbursement, this policy affects you.
Q: How does this revised policy compare to the original August announcement?
Rikki Ashkin: The differences are substantial. The original policy was essentially a payment reduction scheme disguised as automatic approval. Hospitals would receive lower payments without denial notices, appeal rights, or any opportunity for discussion. The revised policy restores procedural protections: written decisions, pre-claim challenge opportunities, and automatic exceptions for clear-cut cases. While we still have concerns about the use of proprietary criteria over CMS standards, the revised approach is less obstructive from a hospital operations perspective.
Q: Do the compliance concerns from August still apply?
Elizabeth Purdy: Some concerns remain. The policy still applies Milliman Care Guidelines rather than CMS criteria for payment levels, which could be seen as undermining the Two-Midnight Rule. However, the procedural improvements reduce some of the compliance risks. The fact that hospitals now have written decisions and appeal opportunities means there’s a clearer pathway to challenge determinations that conflict with CMS requirements. That said, we expect this policy will continue to be scrutinized by regulators and industry groups.
Q: What should hospitals be doing right now to prepare for January 1?
Rikki Ashkin: Preparation needs to start immediately across multiple departments. Here are the key action items:
- Update admission notification workflows to ensure Aetna is contacted within two business days for applicable admissions
- Establish processes to submit clinical documentation within 24 hours of admission for severity determination
- Train utilization review staff to recognize cases that qualify for automatic exceptions
- Create tracking systems to monitor severity decisions and identify cases for pre-claim challenge
- Develop protocols for requesting medical director discussions within the 14-day window
- Review existing Aetna contracts to understand how this policy interacts with negotiated terms
- Educate coding and billing staff about the policy so payment variances are properly identified
Q: What’s the bottom line for hospitals?
Elizabeth Purdy: Though the revised policy is better for providers than what was originally announced, but it still represents a major operational change that will affect revenue and workflows. Hospitals need to take this seriously and prepare systematically. The good news is that you now have procedural tools to challenge incorrect determinations. The key is building the infrastructure to use those tools effectively. That means updated workflows, staff training, robust tracking systems, and potentially partnering with vendors who have the expertise and technology to manage these challenges at scale. Start preparing now so you’re ready when January 1 arrives.
Successfully navigating Aetna’s new severity policy requires sophisticated tracking systems and unique expertise to manage tight documentation timelines and pre-claim challenges. Aspirion helps healthcare providers identify affected claims, streamline workflows, and maximize reimbursement. Contact us today to learn how Aspirion can help protect your revenue.
