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CMS Proposes to Reverse Two-Midnight Payment Cut

The Centers for Medicare & Medicaid Services (CMS) has proposed a solution to reverse the effects of the 0.2 percent cut to hospital inpatient payments associated with Medicare’s two-midnight policy.

The 0.2 percent cut took effect in fiscal year (FY) 2014, despite a delay in enforcement of the two-midnight policy.

As part of the recently released hospital Inpatient Prospective Payment System (IPPS) proposed rule for FY 2017, CMS proposes a

  • permanent prospective adjustment of 0.2 percent to remove the cut beginning in FY 2017; and
  • temporary adjustment of 0.6 percent to retroactively pay for payments forfeited by the cut in FY 2014 through 2016.

Previously, a U.S. district court ordered CMS to issue a justification for the cuts, having determined that the agency provided insufficient explanation and did not adequately explain the methodology behind its assumptions.

America’s Essential Hospitals is reviewing the full IPPS proposed rule and will publish an Action Update later this week summarizing all relevant provisions.

Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

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

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