Congress Members Ask CMS to Delay “Two Midnight” Rule for Inpatient Admissions

Over 100 members of the House of Representatives have signed a letter to CMS Administrator Marilyn Tavenner asking her to delay for six months new regulations regarding the “two midnight” stay requirement for inpatient hospital admissions to qualify for Medicare reimbursement.

Two-Midnight Rule

The Final rule incorporating changes to the inpatient hospital prospective payment system for fiscal year 2014 (which starts October 1) includes two changes regarding reviews by Medicare contractors, such as recovery audit contractors (RACs), when an inpatient admission is considered reasonable and necessary:

  • a two-midnight presumption, which directs Medicare review contractors not to select inpatient claims for review if the inpatient stay spanned two midnights from the time of admission, absent evidence of gaming or abuse; and
  • a two-midnight benchmark, which instructs admitting practitioners and Medicare review contractors that an inpatient admission is generally appropriate when the admitting practitioner has a reasonable and supportable expectation, documented in the medical record, that the patient would need to receive care at the hospital for a period spanning two-midnights.

Both hospitals and Medicare beneficiaries have complained that they have been financially burdened by CMS’ policy regarding the determination of when hospitals can be reimbursed for inpatient stays. In the Final rule, CMS expressed an expectation that this change in reimbursement policy for observation services will address hospitals’ concerns about reimbursement and beneficiaries’ concerns that they are kept in observation status for long periods of time because hospitals are unsure about how they will be reimbursed. (Beneficiaries pay more out-of-pocket for observation services than for services provided on an inpatient basis.)

Modifications Needed

The letter from the members of Congress acknowledges that “CMS does not intend to redefine medical necessity but to clear up confusion that has led to significant hospital resources being diverted to [RAC] appeals related to documentation of inpatient admissions.” The letter further states, “we believe that further modifications to the admission and medical review criteria are needed to ensure patients are not forced to spend more out of pocket for their care and that our hospitals are not unfairly subject to denied claims or made vulnerable to unnecessary RAC audits.”

Both the American Hospital Association and the Association of American Medical Colleges have also asked CMS to delay enforcement of the rule.

CMS Forum

On Thursday, September 26, CMS held a special open door forum to discuss the two-midnight rule for hospital inpatient admissions.