27 January 2016

CMS Releases Revised Guidelines on the Two-Midnight Rule

The Centers for Medicare and Medicaid Services (“CMS”), through the Medicare Learning Network, recently released revised guidelines on the Two-Midnight Rule. The Two-Midnight Rule has long been a thorn in the side of many health care providers and has been the subject of countless Medicare Administrative Contractor (“MAC”) and Recovery Audit Contractor (“RAC”) appeals. The Final Rule was released back on October 30, 2015, but the revised guidelines provide additional clarification regarding the changes which became effective January 1, 2016.

Under the Two-Midnight Rule, inpatient hospital stays that are expected to last 2 midnights are payable under Medicare Part A. Inpatient hospital claims with lengths of stay 2 midnights or greater after the formal admission are presumed to be appropriate unless CMS finds evidence of systematic gaming, abuse or delays in the provision of care. When evaluating inpatient admissions, the Quality Improvement Organization (“QIO”) will review the documentation to determine if it was reasonable for the admitting physician to expect the beneficiary to require medically necessary hospital care lasting 2 midnights.

Patient status reviews to assess compliance with the Two-Midnight Rule will continue to be performed primarily by QIOs rather than MACs and RACs. However, effective January 1, 2016, RACs may perform patient status reviews for providers that have been referred by the QIO as exhibiting persistent non-compliance with Medicare payment policies including the Two-Midnight Rule.

Key Takeaways:

  • Part A payment is appropriate on a case-by-case basis where the medical record supports the admitting provider’s determination that the patient requires inpatient care, despite the lack of a 2 midnight expectation
  • Medicare’s “Inpatient Only List” identifies certain services that support inpatient admission and Part A payment regardless of the expected length of stay
  • Part A payment may be appropriate when unforeseen circumstances, such as a patient transfer or clinical improvement, result in a length of stay less than 2 midnights
  • Beginning in January 2016, RACs may conduct patient status reviews for providers that have been referred by the QIO

As always, medical documentation by the admitting provider will be key in assessing compliance with the Two-Midnight Rule.