CMS is proposing changes to how Medicare covers stays in the hospital for observation under the “meaningful use” program. The original concern by CMS and the Office of Inspector General (OIG) was that hospitals could potentially use the differences in payment rules to game the system. The proposed changes would allow inpatient coverage of some short hospital stays based on a doctor’s judgment instead of requiring a hospital stay to span at least two midnights to be considered an inpatient stays.
The current policy, known as “the two-midnight rule” has been criticized because it can result in higher costs for seniors. Under Medicare, coverage for inpatient and outpatient care is determined under very different payment rules. In some cases, a hospital admission classified as inpatient can result in lower bills for beneficiaries. The problem arises when patients are admitted for short observation stays. Medicare policy generally requires a hospitalization to span at least two midnights to qualify as an inpatient case. The proposed rules would allow for case-by-case exceptions. Based on a doctor’s judgment, certain short hospital stays could be covered under inpatient payment rules. The two-midnight rule has been on the books since 2013, but is not being enforced because of the controversy surrounding it.
The proposal would also change the Medicare and Medicaid Electronic Health Record (EHR) Incentive Program reporting period in 2015 to a 90-day period aligned with the calendar year, and align the EHR reporting period in 2016 with the calendar year. It also would modify the patient action measures in the Stage 2 objectives related to patient engagement. Additionally, the proposed changes would streamline the program by removing reporting requirements on measures which have become redundant, duplicative, or topped out through advancements in EHR function and provider performance for Stage 1 and Stage 2 of the Medicare and Medicaid EHR Incentive Programs.
This action by CMS is underscored by the fact that the final date by which they would adopt the final rule on the issue remains open. The proposed rule-making period allows for public comments and permits CMS to modify the rule before it is adopted in final form.
Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.
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