Additional Guidance for “Two Midnight” Rule for Inpatient Hospital Admissions

CMS issued additional guidance for the “Two Midnight Rule” that was issued as Final rule CMS-1599-F. The two documents titled “Reviewing Hospital Claims for Patient Status” and “Selecting Hospital Claims for Patient Status Reviews” contain CMS’ instructions for Medicare Administrative Contractors (MACs) regarding how to they are to review inpatient hospital admissions for payment purposes. The selected hospital claims will be reviewed and used during a “Probe and Educate” program for admissions that occur between October 1, 2013 and March 31, 2014. CMS also included a Frequently Asked Questions document titled “Questions and Answers Relating to Patient Status Reviews” to help MACs answer common questions related to the two midnight inpatient admission guidance and patient status reviews.


Final rule CMS-1599-F incorporated two changes to the inpatient hospital prospective payment system for fiscal year 2014 that affects reviews by Medicare contractors, when an inpatient admission is considered reasonable and necessary: (1) 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 (2) 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.

Selecting Hospital Claims

The document “Selecting Hospital Claims for Patient Status Reviews” summarizes CMS’ technical directions to MACs. CMS notes that the term “patient status reviews” will be used to refer to reviews conducted by MACs to determine a hospital’s compliance with CMS-1599-F. The focus will be the appropriateness of an inpatient admission versus treatment on an outpatient basis.

MACs are instructed to apply CMS-1599-F to the “Probe and Educate” patient status reviews they will conduct for claims submitted by acute care inpatient hospital facilities, long term care hospitals and inpatient psychiatric facilities for the period October 1, 2013 to March 31, 2014. Although CMS-1599-F will eventually be applied to critical access hospitals, they are currently excluded from patient status reviews during this initial review period. Another important exclusion is inpatient rehabilitation facilities which were specifically excluded by CMS-1599-F.

  • Claims for hospitals admissions that span 2 or more midnights – CMS instructs MACs to accept the 2 midnight presumption that an inpatient admission is reasonable and necessary for inpatient status as long as the stay is medically necessary. MACs are directed NOT to focus medical reviews on stays that span at least 2 midnights after admission unless there is evidence of gaming, abuse, or delays in the provision of care in order for the hospital to qualify for the 2 midnight presumption.
  • Claims for hospital admissions that span 0 to 1 midnights – CMS instructs MACs that stays of zero to one midnight are not subject to the 2 midnight presumption and may be reviewed. An exception occurs when the total time in the hospital while receiving medically necessary care includes 2 or more midnights, the 2-midnight rule will apply and payment would be supported by a medical review. Effective for admissions after October 1, 2013, MACs are instructed to review and deny claims not in compliance with CMS-1599-F. MACs are also directed to sample 10 claims for prepayment review (25 claims for larger hospitals), and conduct educational outreach efforts based on the results. Outreach efforts include MACs must outline the reasons for each denied non-complaint claim in a letter to the hospital and offer phone calls to hospitals that have significant or major concerns. Further, for providers with significant or major concerns, MACs are instructed to conduct additional reviews of claims with admissions dates between January and March 2014, and then if significant or major concerns continue after March 2014, samples of 100 claims may be chosen for additional review.

Reviewing Hospital Claims

The document “Selecting Hospital Claims for Patient Status Reviews” outlines CMS’ guidelines for MACs when conducting a patient status review. MACs must assess a hospital’s compliance with specific three issues: (1) admission order requirements; (2) certification requirements; and (3) the 2 midnight bench mark. MACs are instructed to assess whether the requirements for the physician order for inpatient admission were met. These requirements are found at MACs must also assess whether inpatient certification requirements were met. These requirements are found at Finally, MACs must assess whether the hospital met the 2 midnight benchmark to identify when an inpatient admission is generally appropriate for Medicare Part A payment under CMS-1599-F. To make this determination CMS instructed MACs in the “Selecting Claims” document to use the following criteria:

  • General Rule for 0-1 Midnight Stays
  • General Rule for 2 or more Midnight Stays
  • General Rule for Services on Medicare’s Inpatient-Only List found under 42 C.F.R. sec. 419.22(n).
  • Short Inpatient Hospital Stays
  • The Need for Hospital Services
  • Documentation Requirements
  • The 2-Midnight Benchmark and Outpatient Time
  • Delays in the Provision of Care
  • Monitoring Hospital Billing Behaviors for Gaming.