CMS Open Door Forum Clarifies Hospital “Two Midnight Rule” for Inpatient Stays

During a special Open Door Forum held Thursday, September 26, 2013, “Final Rule CMS-1599-F: Discussion of the Hospital Inpatient Admission Order and Certification; 2 Midnight Benchmark for Inpatient Hospital Admissions,” CMS staff members tried to provide further clarity on its newly announced Two Midnight Rule for Medicare beneficiary inpatient stays.

The agency began the discussion by listing out its reasons for issuing rule CMS-1599 regarding inpatient admissions, including:

  1. The growing concern among beneficiaries that the number of observation stays is on the rise and that care is being provided on an increasingly outpatient basis
  2. Evidence that there is a high error rate on classifying inpatient stays
  3. A “rapid increase” in RAC reviews, and complaints from hospitals that they cannot re-review claims and re-bill after they have been audited

So, for the second time in only a matter of weeks, CMS looked to provide clarity on inpatient versus outpatient stays, and what types of visits are eligible for Part A coverage. Recognizing that hospitals need time to adapt to the new rule, CMS is beginning a “Probe and Educate” program, during which time hospitals will not be penalized so they can update their systems and provide staff training. Within this time period, from October 1, 2013 through December 31, 2013, MACs will only focus on claims that have been designated as one inpatient midnight, not two. They will be collecting ten claims for most hospitals (or twenty-five for large hospitals) that will be reviewed and educational information will be provided to the facilities to let them know how they are faring in the new process. After the review period is over, CMS will be provided with data to decide what comes next.

The most important piece of information from this call clarifies what the Two Midnight Rule really requires and what needs to be provided in the medical record. To qualify for Part A, beneficiaries must require two midnights worth of medically necessary inpatient services. The physician is responsible for making the determination of whether these services are required and providing documentation in the medical record, taking into account:

  • The patient’s medical history
  • The patient’s current medical needs
  • The severity of the current issues
  • Comorbidities
  • Risk of an adverse event
  • The potential outcome of sending the patient home versus keeping them at the hospital

This week’s earlier decision of the U.S. District Court in Connecticut in the case of Bagnall vs. Sebelius to dismiss the case was partially based on the idea that the physician is tasked with the “complex medical judgment” of determining whether a patient should be admitted or be treated under observation status rather than requiring legal language that spells out specifically the scenarios that require inpatient status to be triggered. Bagnall involved a lawsuit where the plaintiffs had each spent several nights in the hospital, but were not aware that they were considered under observation status (except for two plaintiffs who were admitted and then their status was changed to observation status). Subsequently, all of the plaintiffs required skilled nursing services which they had to pay for out of pocket since they had not met the inpatient stay requirements of Medicare Part A. One of the plaintiffs was unable to afford the out of pocket fees for the nursing facility she was placed in, and moved to a more cost-friendly assisted living facility, where she ultimately expired. This particular suit was one that brought to light an issue many Medicare beneficiaries are having with not being able to afford the skilled nursing services they require.

The information provided by CMS on the Open Door Forum call, including the FAQ, is available on their website, and should help hospitals make the proper determinations for inpatient stays versus observations and may provide the opportunity for more patients who require skilled nursing services to be covered by Part A. The Final Rule on CMS-1599 can be found here.

2 thoughts on “CMS Open Door Forum Clarifies Hospital “Two Midnight Rule” for Inpatient Stays

  1. UPDATE:

    The Centers for Medicare & Medicaid Services (CMS) has extended its original “Probe and Educate” program where no penalties will be issued to hospitals while they adjust to the new “Two Midnight Rule.” The adjustment period was originally set for October 1, 2013 with an end date of December 31, 2013, but that date has been extended to March 31, 2014. During that time period, Recovery auditors will not be permitted to review inpatient admissions for 0 or 1 midnight.

    More information can be found in the FAQ: Probe Reviews of InPatient Hospital Claims:

  2. Some seem mistakenly under the impression that only only 2 midnight requirement be there in order to certify the patient. It is important to note that decision for two midnights should stem from medical necessity, and that if this is ignored, then expect claim to be denied. So agree with the blog earlier. Does anyone have a thought about all this.

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