Déjà vu Two-Midnight Rule.

By Gary Call, M.D.
Oct. 7, 2015

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Two-MidnightOne of the most controversial healthcare regulations in recent times has been the Two-Midnight rule. The Centers for Medicare and Medicaid (CMS) created the rule for greater clarity and to address the increased volume of those treated as hospital outpatients. With the reinstatement of the financial enforcement of this rule, we still have a little while to wait to see the ramifications.

According to CMS, “in general, the Two-Midnight rule stated that:

Inpatient admissions will generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supports that reasonable expectation.

Medicare Part A payment is generally not appropriate for hospital stays not expected to span at least two midnights.

After many complaints, concerns, criticisms and ultimately suspension of financial enforcement since the inception of the proposed rule in 2012, CMS reversed course, deciding to enforce penalties for noncompliance as of October 1, 2015, starting with reviews using Quality Improvement Organizations (QIO). CMS included enforcement of the Two-Midnight rule in its Proposed Rule for 2016 Outpatient Prospective Payment System (OPPS) (released July 8, 2015 with expected release of the final rule November 1, 2015.)

CMS specified the Two-Midnight rule as follows: “All treatment decisions for beneficiaries were based on the medical judgment of physicians and other qualified practitioners. The Two-Midnight rule does not prevent the physician from providing any service at any hospital, regardless of the expected duration of the service.”

During the suspended financial enforcement of the Two-Midnight rule, CMS used federal administrative contractors to perform “probe and educate” audits of hospitals to look for compliance with the rule. Many health plans suspended their efforts to control “short stay” hospitalizations while waiting for clarification from CMS.

With the reinstatement of the financial enforcement of this rule, claims overpayments from improper “short stay” inpatient hospitalizations will continue to be an area of significant financial exposure for payers. Most telling is the requirement that practitioner statements of a two-midnight stay expectation must be supported by the documentation in the medical record. This continues to be a key provision. Health plans should assure that their medical management program includes clinician-led medical record audits of hospital stays when they are less than two midnights. This will help them avoid paying claims with an inappropriate place of service and the resulting unnecessary medical expense.

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