Medicare’s Two-Midnight Rule Still Puzzles Providers

Reviews for reimbursement are on hold through July

Confusion persists over how government contractors should apply Medicare’s regulations for determining inpatient status when a hospital stay spans less than two midnights, according to a report from HealthLeaders Media.

Recently, a spokesman for the Centers for Medicare and Medicaid Services (CMS) announced that a temporary suspension of initial reviews for Medicare reimbursement of short-term patient stays in hospitals would continue to the end of July. In early May, the CMS told government contractors to suspend initial reviews of Medicare claims for inpatient stays shorter than a span of two midnights.

Under the CMS’ two-midnight rule, established in 2013, most hospital stays lasting fewer than two midnights are considered inappropriate for an “inpatient” designation and are ineligible for Medicare Part A reimbursement.

Last October, the CMS announced that initial reviews of the rule would be transferred from recovery audit contractors to Beneficiary and Family Centered Care-Quality Improvement Organizations (BFCC-QIOs). On June 6, the CMS ordered BFCC-QIO contractors to re-examine “all claims they denied in their medical review process since October 2015 to make sure medical review decisions and subsequent provider education are consistent with current policy. The current 'pause' will allow time for the BFCC-QIOs to conduct these re-reviews.”

According to Ronald Hirsh, MD, FACP, vice president of Accretive Health's regulations and education group, hospitals need to understand seven key points about the two-midnight rule:

  • The basics of the rule have not changed since it was introduced. Patients with an expectation of two medically necessary midnights in the hospital or who spend two medically necessary midnights in the hospital should be admitted as inpatients.
  • Determining medical necessity for hospital care involves physician judgment. Physicians should be documenting the factors that make treating patients in a doctor’s office or at a nursing facility unsafe.
  • Medicare pays hospitals to provide services seven days a week. If hospitals keep patients an extra day because they do not offer a test or service on a weekend or holiday, that is not a medically necessary day.
  • Do not use the outcome of a case to retrospectively review a short stay. Hospitals should use the information available at the time of the admission decision only to determine whether the right status was chosen.
  • Every inpatient admission that spans less than two midnights—unless it was an inpatient-only surgery, death, or transfer—should be reviewed prior to billing to ensure that the correct status was chosen.
  • Hospitals that aggressively admitted high-risk patients with an expected short stay before the two-midnight rule can expect a markedly higher observation rate under the rule.
  • Do not leave patients on observation status for periods longer than two midnights. If patients have medical necessity for hospital care, admit them as inpatients. If they do not, send them home.

Source: HealthLeaders Media; June 7, 2016.