how to adjust to medicare and medicaid cuts two midnight rule]

Stays lasting less than two midnights must be treated and billed as outpatient. In other words, physicians should admit Medicare beneficiaries as inpatients if they expect beneficiaries will "require two or more midnights of hospital services, and [physicians] should treat most other beneficiaries on an outpatient basis," according to CMS. 3.

Full Answer

What is the two-midnight rule for Medicare?

Meet Medicare requirements when a provider expects a patient to be admitted for an inpatient stay of at least two midnights. If you report hospital inpatient services for Medicare patients, you need to know about the two-midnight rule. If you haven’t heard of it, or could use a reminder, here are the facts.

What is the two midnight rule for outpatients?

The Two-Midnight Rule To provide greater clarity to hospital and physician stakeholders, and to address the higher frequency of beneficiaries being treated as hospital outpatients for extended periods of time, CMS adopted the Two-Midnight rule for admissions beginning on or after October 1, 2013.

Is the two-midnight rule impacting physician and hospital practices?

Following the adoption of the Two-Midnight rule, CMS received significant feedback from the stakeholder community, including concerns that the new policy was impacting physician and hospital practices.

How long has the two-midnight rule been in effect?

Get clarity on how the two-midnight rule is applied and enforced, and discover how to improve compliance as the observation-to-inpatient decision approaches. It’s hard to believe, but CMS’s controversial ‘Two-Midnight’ rule (2MN rule) has been in effect for more than five years.

What are exceptions to the Medicare 2 midnight rule?

Of course, there are exceptions to the 2MN rule, including unforeseen events such as patient death, transfer, unexpected improvement, departure against medical advice (AMA), admission to hospice, and new-onset mechanical ventilation.

Does 2 midnight rule apply to Medicare Advantage?

The two-midnight rule applies only to traditional, fee-for-service Medicare. Commercial payers (including Medicare Advantage plans) do not follow the two-midnight rule.

Does the 2 midnight rule negate the medical necessity requirement for hospitalization?

The Two-Midnight rule did not prevent the physician from providing any service at any hospital, regardless of the expected duration of the service.

Does Medicare cover overnight stays?

Rather, your claim will be paid under Medicare Part B, which covers outpatient care – even if you actually stay overnight in a hospital or you receive extensive treatment that made it seem like you were an inpatient.

How has the two-midnight rule affected patients?

A new study found that it may actually cost hospitals more money to discharge a patient after a single midnight and bill them as an outpatient versus keeping the patient for two midnights and billing them as an inpatient. Adam J. Schwartz, MD, MBA, presented the study as part of the Annual Meeting Virtual Experience.

Does Medicare pay for 2 days in hospital?

Medicare covers the first 60 days of a hospital stay after the person has paid the deductible. The exact amount of coverage that Medicare provides depends on how long the person stays in the hospital or other eligible healthcare facility.

When did CMS enact the two-midnight rule?

To reduce inpatient admission errors, CMS implemented the Two-Midnight Rule in fiscal year 2014. Under the Two-Midnight Rule, CMS generally considered it inappropriate to receive payment under the inpatient prospective payment system for stays not expected to span at least two midnights.

How does Medicare count days in hospital?

Patients meet the 3-day rule by staying 3 consecutive days in 1 or more hospital(s). Hospitals count admission day but not discharge day. Time spent in the ER or outpatient observation before admission doesn't count toward the 3-day rule. Inpatient days are counted using the midnight-to-midnight method.

How does Medicare define a benefit period?

A benefit period begins the day you're admitted as an inpatient in a hospital or SNF. The benefit period ends when you haven't gotten any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after one benefit period has ended, a new benefit period begins.

How do you avoid observation status?

Recommendations To Mitigate Medicare Observation Status (1) Purchase a Medicare Advantage Plan or a Medicare Supplement plan which waives the inpatient requirement for a skilled nursing facility. Medicare will not cover your skilled nursing costs if you had observation status.

What is considered an observation stay?

Observation Stay is an alternative to an inpatient admission that allows reasonable and necessary time to evaluate and render medically necessary services to a member whose diagnosis and treatment are not expected to exceed 24 hours but may extend to 48 hours, but no longer than 48 hours without a discharge or ...

What does Medicare consider observation?

Observation services are hospital outpatient services you get while your doctor decides whether to admit you as an inpatient or discharge you. You can get observation services in the emergency department or another area of the hospital.

What is the 2 midnight rule?

Under this rule, most expected overnight hospitalizations should be outpatients, even if they are more than 24 hours in length, and any medically necessary outpatient hospitalization should be “converted” to inpatient if and when it is clear that a second midnight ...

How long is an inpatient hospitalization?

For years, Medicare’s definition of an inpatient hospitalization was primarily based on an expectation of a hospitalization of at least 24 hours and a physician’s judgment of the beneficiary’s need for inpatient hospital services.

Why is it important for hospitalists to have a basic understanding of these rules?

It is important for hospitalists to have a basic understanding of these rules because it can affect hospital billing, the hospitalist’s professional fees, beneficiary liability, and payer denials of inpatient care. For years, Medicare’s definition of an inpatient hospitalization was primarily based on an expectation of a hospitalization ...

How does inpatient versus outpatient affect payment?

The distinction between inpatient versus outpatient status can affect payment and is based on rules that a hospital and payer have agreed upon. (Inpatient hospital care is generally paid at a higher rate than outpatient hospital care.) It is important for hospitalists to have a basic understanding of these rules because it can affect hospital ...

When will CMS accept comments on the 2 midnight rule?

As with the entire Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule, CMS will accept comments on the Two Midnight portion of the proposed rule until August 31, 2015 and will respond to comments in a final rule to be issued on or around November 1, 2015. The proposed rule will appear in the July 8, 2015 Federal Register and can be downloaded from the Federal Register at: http://www.federalregister.gov/inspection.aspx.

What is the Two-Midnight Rule?

The Two-Midnight rule also specified that all treatment decisions for beneficiaries were based on the medical judgment of physicians and other qualified practitioners. The Two-Midnight rule does not prevent the physician from providing any service at any hospital, regardless of the expected duration of the service.

How long is a hospital stay for Medicare Part A?

For hospital stays that are expected to be two midnights or longer, our policy is unchanged; that is, if the admitting physician expects the patient to require hospital care that spans at least two midnights, the services are generally appropriate for Medicare Part A payment.

When did CMS update the 2 minute rule?

Fact Sheet: Two-Midnight Rule. On July 1, 2015, CMS released proposed updates to the “Two-Midnight” rule regarding when inpatient admissions are appropriate for payment under Medicare Part A. These changes would continue CMS’ long-standing emphasis on the importance of a physician’s medical judgment in meeting the needs of Medicare beneficiaries.

How long do you have to wait to adjust a claim to the MAC?

Finally, CMS will require recovery auditors to wait 30 days before sending a claim to the MAC for adjustment. This 30-day period allows the provider to submit a discussion period request before the MAC makes any payment adjustments.

When did the 2 midnight rule start?

To provide greater clarity to hospital and physician stakeholders, and address the higher frequency of beneficiaries being treated as hospital outpatients, CMS adopted the Two-Midnight rule for admissions beginning on or after October 1, 2013. This rule established Medicare payment policy regarding the benchmark criteria ...

Do days spent in a hospital count as inpatient?

Hospitals and other stakeholders expressed concern about this trend, especially since days spent as a hospital outpatient do not count towards the three-day inpatient hospital stay that is required before a beneficiary is eligible for Medicare coverage of skilled nursing facility services.

How many midnights do you have to be in a hospital for Medicare?

Meet Medicare requirements when a provider expects a patient to be admitted for an inpatient stay of at least two midnights. If you report hospital inpatient services for Medicare patients, you need to know about the two-midnight rule. If you haven’t heard of it, or could use a reminder, here are the facts.

When did the 2 midnight rule start?

The two-midnight rule was effective beginning Oct. 1, 2013. Per CMS’ “Fact Sheet: Two-Midnight Rule,” the original rule established: Inpatient admissions would generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supported ...

Why is the 2 minute rule important?

The Centers for Medicare & Medicaid Services (CMS) instituted the two-midnight rule, in part, to reduce what it considers to be medically unnecessary inpatient admissions — thereby, reducing costs, as well.#N#Not all care provided in a hospital requires inpatient admission. Generally, if a procedure can be performed safely and effectively on an outpatient basis, doing so is preferred. One reason for this is because the cost of providing inpatient hospital care is comparatively higher for a given service. The higher cost of inpatient care is reflected in different Medicare payment rates for inpatient (Part A) and outpatient (Part B) hospital services. Whether services are provided on an inpatient or outpatient basis also affects patient cost sharing.#N#The two-midnight rule was effective beginning Oct. 1, 2013. Per CMS’ “Fact Sheet: Two-Midnight Rule,” the original rule established:

When is an inpatient admission appropriate?

But if the provider treats the patient on Monday and believes the patient will require continued care until at least Wednesday, an inpatient admission is appropriate because the patient will stay in the hospital past two midnights (Monday/Tuesday and Tuesday/Wednesday).

Is there a 2 midnight rule for hospital admission?

In other words, there are two exceptions to the two-midnight rule: The provider performs a procedure that is on CMS’ “ inpatient only” list. In this case, the length of the hospital stay isn’t a factor because inpatient admission is mandatory if the provider is to receive Medicare payment for an “inpatient only” procedure.

Is the 2 midnight rule absolute?

The Rule Isn’t Absolute. The two-midnight rule has always allowed for exceptions. And as part of the 2016 Hospital Outpatient Prospective Payment System (OPPS) final rule (following extensive feedback from providers and other stakeholders), CMS revised the two-midnight rule to allow flexibility “for determining when an admission ...

Does the length of an inpatient stay matter?

This means that if the provider believes the patient’s condition requires inpatient care and a supporting explanation is provided in the documentation, the length of the inpatient stay doesn’t matter.

How long has the 2 minute rule been in effect?

It’s hard to believe, but CMS’s controversial ‘Two-Midnight’ rule (2MN rule) has been in effect for more than five years. The rule was initially intended to provide a clear, time-based method to help determine whether patients should be placed in observation or inpatient status.

How many midnights is a hospital admission?

The 2MN rule states that a hospital inpatient admission is generally considered reasonable and necessary if the physician (or other qualified practitioner) orders an inpatient admission based on the expectation that the patient will require at least two midnights of medically necessary hospital care.

Who enforces the 2MN rule?

Enforcement of the 2MN rule continues to be delegated to the two national Beneficiary and Family Centered Care-Quality Improvement Organizations (BFCC-QIOs), Livanta and KEPRO. These auditing organizations are charged with evaluating the appropriateness of inpatient claims for hospital stays of less than 2MNs.

Is medical necessity a time based metric?

When CMS first introduced the rule, some organizations mistakenly believed that the shift to a time-based metric meant that medical necessity was no longer important. In fact, documented medical necessity is even more critical now, as the expected length of stay and the justification for the patient’s hospitalization must be articulated ...

Is InterQual easier than 2MN?

Using InterQual to support optimal adherence to the 2MN rule is now even easier. In mid-2018, Change Healthcare streamlined the InterQual review process and implemented content changes that build on the solution’s solid alignment with the 2MN rule requirements.

When did CMS implement the 2 midnight rule?

To reduce inpatient admission errors, CMS implemented the Two-Midnight Rule in fiscal year 2014. Under the Two-Midnight Rule, CMS generally considered it inappropriate to receive payment under the inpatient prospective payment system for stays not expected to span at least two midnights.

What is the 2 midnight rule?

To reduce inpatient admission errors, CMS implemented the Two-Midnight Rule in fiscal year 2014. Under the Two-Midnight Rule, CMS generally considered it inappropriate to receive payment under the inpatient prospective payment system for stays not expected to span at least two midnights. The only procedures excluded from the rule were newly initiated mechanical ventilation and any procedures appearing on the Inpatient Only List. Revisions were made to the Two-Midnight Rule after its implementation. We plan to audit hospital inpatient claims after the implementation of and revisions to the Two-Midnight Rule to determine whether inpatient claims with short lengths of stay were incorrectly billed as inpatient and should have been billed as outpatient or outpatient with observation. We also plan to review policies and procedures for enforcing the Two-Midnight Rule at the administrative level and contractor level. While OIG previously stated that it would not audit short stays after October 1, 2013, this serves as notification that the OIG will begin auditing short stay claims again, and when appropriate, recommend overpayment collections.

Is a short stay inpatient under Medicare?

CMS is proposing that physicians be able to make case-by-case exceptions to the rule, classifying certain short stays as inpatient so that they would be paid under Medicare Part A . The Centers for Medicare and Medicaid Services on Wednesday proposed changes to the controversial “two-midnight” rule that determines whether it pays ...

Does Medicare pay for inpatient and outpatient visits?

CMS pays differently for inpatient and outpatient stays. Inpatient visits are paid under Medicare Part A while outpatient visits are paid under Medicare Part B, which uses a different fee structure. The agency also proposed new Hospital Outpatient Prospective Payment System rates that would result in facilities losing $43 million in payments in ...

Will Medicare recover audit contractors handle repeat offenders?

Medicare recovery audit contractors would still handle repeat offenders. While the American Hospital Association has pushed for the paring back of the two-midnight policy for some time, Executive Vice President Rick Pollack said there are still more changes needed.

When did CMS drop the 2 midnight payment?

In April, CMS took the industry by surprise by proposing to drop the estimated $220 million payment cut related to the "two-midnight" policy. The payment adjustment caused quite the stir when it hit the scene in 2014.

How long is a hospital stay considered an outpatient?

Under the two-midnight rule, hospital stays spanning less than two evenings are considered outpatient visits and paid accordingly. Those lasting two nights or longer are compensated as inpatient care.

Does CMS update payment rates for IPPS hospitals?

Other provisions. By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the costs of goods and services used by these hospitals in treating Medicare patients, as well as for other factors.

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The Rule Isn’T Absolute

Meet The Expectation of A Two-Midnight Stay