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CMS Issues Additional Rationale for Two-Midnight Payment Cut

The Centers for Medicare & Medicaid Services (CMS) issued a notice with comment period providing additional justification for the 0.2 percent cut to hospital inpatient payments associated with Medicare’s two-midnight policy. The additional justification in the notice includes a discussion of the analytical models and assumptions that drove CMS’ conclusion that the two-midnight policy would increase inpatient costs by $220 million.

The 0.2 percent cut took effect in fiscal year 2014, despite a delay to the start of the two-midnight policy. CMS recently finalized a modified version of the policy in the calendar year 2016 Outpatient Prospective Payment System (OPPS) final rule.

A U.S. district court recently ordered CMS to issue this justification, having determined that the agency provided insufficient explanation for the cut and did not adequately explain the methodology behind its assumptions. The court’s ruling required CMS to issue further justification for the cut and an additional opportunity for hospitals to comment. Comments are due on Feb. 2, 2016.

Contact Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Matt Buechner is the policy and advocacy associate for America's Essential Hospitals.

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