Senate takes ‘spring break’; CMS delays ‘doc cuts’ and ‘two-midnight rule’

CMS has indicated that it will give Congress until April 15 to prevent Medicare payments cuts to physicians, and will extend the delay on enforcement of the “two midnight” payment rule until the end of April.

Doc cut

The Medicare payment cuts to physicians are triggered by Medicare’s “sustainable growth rate” formula (SGR), which established yearly targets for physicians’ service under Medicare, and are intended to control the growth in aggregate Medicare expenditures for physicians’ services. Congress has been trying to repeal the SGR formula since 1997.

On March 26, the House approved a $214 billion bill, H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, which would repeal the SGR formula. The vote was 392-37, with 180 Democrats and 212 Republicans voting yes. The Senate left on its spring break before taking action on the bill. When the Senate reconvenes on April 13, it will have only two days to act before the physician payment cuts kick in.

The 21-percent SGR cut was actually scheduled to take effect on March 31, but CMS indicated it would hold off processing claims at the lower rate until April 15, and will reprocess claims paid at a lower rate to reflect the new payment rates, if the Senate passes the bill.

The American Medical Association and the American Hospital Association both expressed extreme disappointment after the Senate failed to pass the SGR repeal bill before it recessed (see Extremely disappointed’ in SGR repeal voting delay, AMA implores Senate to act; AHA concurs, March 30, 2015.

Two-midnight payment rule

CMS also announced that it will delay enforcement of the “two midnight” payment rule for short hospital stays until April 30. This delay will allow the Senate time to pass H.R. 2, which not only repeals the SGR formula, but includes a six-month delay in enforcement of the two-midnight payment rule.

The two-midnight payment rule, which is opposed by inpatient hospitals, assumes that an inpatient admission is appropriate and Medicare Part A payment is warranted if a patient’s stay spans two midnights.

The two-midnight rule was designed to address an increase in observation stays inspired by hospital fears that Medicare’s recovery audit contractors would challenge their admissions. The policy has been repeatedly delayed by legislative and regulatory action. Hospitals claim that the policy undermines their professional judgment to admit a patient for less than two midnights (see Whether two midnights or more, observation is costly for patients, Health Law Daily, September 9, 2014).

CMS plans to continue its Inpatient Probe and Educate process until April 30, 2015, and will thereby continue to prohibit recovery auditor inpatient hospital patient status reviews through that date.