In October 2013, the Center for Medicare and Medicaid Services (“CMS”) implemented a new reimbursement rule that only patients admitted for at least two nights will qualify for inpatient care and reimbursement. According to CMS, physicians should admit patients that “require two or more midnights of hospital services, and should treat most other beneficiaries on an outpatient basis.” Further, the hospital must sufficiently document at the time of admission the reasons the patient needs two nights in the hospital, including a physician’s assessment, plan of care, and a signed order for admission.
The “two-midnight” rule has raised concerns among hospitals and physicians who attest that the rule is confusing and will lead to arbitrary admissions. The rule essentially requires physicians to predict ahead of time whether a patient needs to be admitted for two nights. Further, the Medicare Administrative Contractors (“MACs”) and the Recovery Audit Contractors (“RACs”) that review admissions can dispute any decision after the fact. The necessity for sufficient documentation has caused many hospitals to begin to improve and update their clinical documentation. However, many hospitals fear that reforming their documentation processes will not be enough, and they will face losses due to the two-midnight rule. The American Hospital Association and a group of hospitals filed a series of lawsuits in federal court arguing that the new rule is arbitrary and capricious. Last month, these plaintiffs filed motions for summary judgment.
The outcry from the provider community caused CMS to twice delay the deadline for when recovery auditors would begin reviewing hospital admissions for compliance with the two-midnight rule. Ultimately, CMS delayed auditing short-stay hospital admissions until March 2015, although MACs will continue auditing a limited number of short-stay claims. Most recently, however, CMS announced it has begun exploring alternatives to the two-midnight rule. It has requested input and comments on how to design a payment system for treating patients who require short hospital stays.
Regardless of the final decision from CMS, hospitals will need to prepare for the changes to the reimbursement system for short hospital stays.
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