This week in Washington—CMS released guidance on the “two-midnight” rule. You are tuning in to the health policy update from America’s Essential Hospitals for the week of Oct. 7.
The federal Centers for Medicare & Medicaid Services (CMS) released guidance on Sept. 26 that explains how Medicare reviewers will determine whether hospitals are properly following the two-midnight rule. This rule was finalized in August as part of the inpatient prospective payment system final rule.
Under the two-midnight rule, inpatient hospital stays that last two midnights or more are presumed reasonable and necessary, which means that Medicare will pay inpatient rates for these hospital stays. However, hospital stays that last less than two midnights will not automatically be presumed reasonable and necessary inpatient stays. As a result, the contractors that review hospitals’ claims for Medicare payments may consider stays lasting less than two midnights as outpatient stays, for which Medicare pays less.
In order to understand if hospitals are appropriately admitting patients as inpatients under this new rule, CMS established a special review process for the months of October, November, and December, which is explained in the Sept. 26 guidance. The guidance says that, during this time period, Recovery Audit Contractors will not be able to question the appropriateness of inpatient hospital stays that last one midnight or less.
In addition, both Medicare Audit Contractors and Recovery Audit Contractors will not need to review inpatient hospital stays that last more than two midnights during this time period because those inpatient stays are presumed appropriate under the new rule. However, Medicare Audit Contractors will look at a small sample of inpatient visits that lasted less than two midnights to determine if they were appropriate. If reviewers find that they were, the hospital will not be reviewed again during these months, unless there are significant changes in billing patterns for admissions. If reviewers identify problems, though, the guidance states that reviewers will then better educate hospital staff.
While this special process was intended to give hospitals and CMS time to evaluate the new two-midnight rule, hospitals remain concerned that there is too little information to move forward with implementation. In addition, some hospitals are concerned that the new rule may mean that fewer hospital visits will be considered inpatient visits, ultimately affecting the reimbursement rates for treating patients. In light of the concerns, it will be critical that CMS provide information to help hospitals understand the new review process and how it could impact their Medicare payments.
Thanks for listening to another edition of This Week in Washington. I’m Erin Richardson; join us next week for another health policy update.