“Two Midnight” rule is here to stay – partially

Last week, the Centers for Medicare and Medicaid Services (CMS) announced proposed changes to the highly controversial “Two Midnight” rule that governs inpatient vs observation stays at hospitals and has resulted in many patients not qualifying for skilled nursing care. As part of the 2016 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Payment Rule, the section on the “Two Midnight” rule states that CMS proposes to modify the existing “rare and unusual” exceptions policy to one that allows more flexibility for the physician to decide on an individual case basis whether the stay qualifies as an exception to the existing benchmark. Currently, Medicare Administrative Contractors (MACs) have been tasked with reviewing whether stays were qualified or not, but as of October 1, 2015, CMS has announced that Quality Improvement Organizations (QIOs) will oversee these short-stay reviews instead.

In June, MedPAC recommended that the rule be withdrawn in its entirety. CMS has noted that no viable alternatives were provided by MedPAC or anyone else during the public comment periods, which led to this proposed revision. The proposed rule will be published in the July 8, 2015 Federal Register, but a preview of the document can be viewed here.

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