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Centers for Medicare and Medicaid Services (CMS) Extends Compliance Period for “Two-Midnight” Hospital Admission Rule

The Centers for Medicare and Medicaid Services (CMS) has extended the period for hospitals to comply with new Medicare requirements governing hospital admissions.

Through guidance on its website, CMS indicated that for a six-month period from Oct. 1, 2013 to March 31, 2014, CMS contractors will engage in a limited review of Medicare claims for inpatient payments to ensure compliance with the so-called “two-midnight rule,” which took effect on Oct. 1, 2013.

Under the rule, CMS generally deems inpatient admissions and inpatient payments under Medicare Part A to be appropriate where the admitting physician expects a patient to stay in the hospital for a period that comprises at least two midnights. Conversely, CMS considers inpatient admissions and inpatient payments under Medicare Part A to be inappropriate where the admitting physician expects the patient to stay in the hospital for a period that comprises less than two midnights. As CMS instructed in implementing the two-midnight rule, claim reviewers will presume that the occurrence of at least two midnights indicates a proper inpatient status for a valid Part A claim. Accordingly, contractors will not ordinarily review such claims and will instead focus their review efforts on claims where the hospital stay spans less than two midnights, to which the contractors will not afford the same presumption.

CMS has explained that the two-midnight rule “responds to both hospital calls for more guidance about when a beneficiary is appropriately treated—and paid by Medicare—as an inpatient, and beneficiaries’ concerns about increasingly long stays as outpatients due to hospital uncertainties about payment.

Under CMS’s revised enforcement policy, recovery auditors will not engage in post-payment review of claims for inpatient payments with stays shorter than two midnights during the six-month period. Other claim reviewers, called Medicare administrative contractors (MACs), will engage in a limited pre-payment review of such claims. These “probe reviews” will involve a sample of 10 claims for most hospitals. MACs will deny all claims in these samples that do not comply with the two-midnight rule. Depending on the number of denied claims, MACs will provide follow-up education or probes of additional sampled claims.

Provider groups have already criticized CMS’s enforcement position as insufficient. In a letter to CMS dated Nov. 8, 2013, the American Medical Association and American Hospital Association argued that hospitals and physicians still need more time to adjust to the two-midnight rule. The associations urged CMS to delay enforcement of the rule until Oct. 1, 2014 and convene a stakeholders meeting to discuss more “comprehensive solutions.” Echoing earlier comments to CMS that were critical of the rule and its impact on clinical decision-making, the trade groups criticized the two-midnight rule for “undermin[ing] medical judgment and disregard[ing] the level of care actually needed to safely treat a patient.”

CMS will hold an open forum on the two-midnight rule on Nov. 12, 2013.

© 2023 BARNES & THORNBURG LLPNational Law Review, Volume III, Number 316
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About this Author

Heather Delgado Healthcare Attorney
Partner

Healthcare providers depend upon Heather Delgado for her commitment to responsiveness and practical legal advice. Heather focuses on finding the right solution for her clients. She is valued for her ability to overcome the obstacles her clients face and for her skill in applying complex laws and regulations to their business practices.

Heather’s experience includes the representation of healthcare providers, including hospitals, health systems, specialty hospitals, ambulatory surgery centers, multi- and single-specialty medical practices, and a wide variety of healthcare...

312-338-5905
Gayland Hethcoat, Health care Attorney, Barnes Thornburg, Law firm
Staff Attorney

Gayland O. Hethcoat II is a staff attorney in Barnes & Thornburg LLP’s Chicago, Ill., office and a member of the Health Care Department. Prior to joining Barnes & Thornburg, Mr. Hethcoat served as a law clerk for McDermott Will & Emery in Miami, Fla., where he focused on matters affecting health insurers and care providers. Mr. Hethcoat also served as a judicial intern for the Honorable Leslie B. Rothenberg of the Florida Third District Court of Appeal.

312-214-8319
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