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Providers push for further delay of two-midnight policy


By Jessica Zigmond
Posted: January 28, 2014 - 4:15 pm ET
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Clinicians and hospital advocates want more time to adjust to the CMS' unpopular two-midnight policy for inpatient stays, which they say undermines the medical judgment of physicians when treating patients.

The contentious policy—which the CMS made final last August in its rule for 2014 inpatient services—directs Medicare's contractors to assume hospital admissions are reasonable and necessary for patients who stay in a hospital through two midnights.

The CMS conceived the policy as a fix for a sharp rise in extended hospital stays billed as outpatient observation, a trend attributed in part to hospitals' efforts to avoid having their admission decisions challenged by the government's auditors.

Since then, however, the policy has confused patients, clinicians, hospital administrators and compliance officers, and the CMS has delayed enforcement through March 31 of this year. But even that extra time is not adequate for clinicians and hospitals to establish systems and procedures to comply, a panel of experts said Tuesday in a briefing organized by the American Hospital Association on Capitol Hill.

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That's why they're pushing legislation from Rep. Jim Gerlach (R-Pa.) that would delay enforcement of the two-midnight policy until Oct. 1, 2014, and also require the CMS to implement a new payment methodology for short inpatient stays in fiscal 2015.

Erik Rasmussen, senior associate director of legislative affairs at the American Hospital Association, said hospitals are “drowning” under the requirements of the new policy and a six-month delay would help “keep our heads above water.” Meanwhile, Amy Deutschendorf, a nurse at the Johns Hopkins Hospital, highlighted the unintended consequences that have developed for patients under the policy.

“What it means is they are now responsible for Part B deductibles and copayments, which could be 20% of the hospital bill,” Deutschendorf said. “CMS has not informed the beneficiaries that they are no longer covered under Part A for hospital services that are less than two midnights. They don't know this, and their advocacy groups—AARP—have not have done a good job of telling them as well.”

As a result, Deutschendorf said this has led to patients leaving the hospital against medical advice, or foregoing diagnostic tests and medications if they learn they are an outpatient in an inpatient bed because those services are not covered under their Medicare part B benefits. It has also strained the physician-patient relationship because patients think their doctors can admit them, when really the physicians are bound by Medicare's rules.

And it's not only patients who are puzzled by the two-midnight rule. Deutschendorf said the clinicians at Johns Hopkins are “beyond confused” to the point where one physician leader suggested—not in jest—that the hospital require patients to wear different colored gowns to identify who qualifies as an outpatient in an inpatient bed.

“It's a very confusing rule, said Ashton Schatz, an attorney who serves as the Medicare regulatory and reimbursement process manager at the Mayo Clinic . “Time is not intuitive,” she said, adding that often patients will enter an emergency room or another level of care in the hospital and be discharged the next day. “It's very difficult to have a conversation with a physician and to explain that while the inpatient level of service was medically necessary from a physician perspective, it's not under CMS' perspective of requiring two midnights, and this is also placing the patient into having a greater financial responsibility.”

And the rule's complex requirements have caused the clinic's physicians, compliance officer and IT experts to devote a lot of time trying to understand the rule, without the promised guidance that has yet to come from the CMS.

“This bill provides us with the time to get the education out there to our clinicians so that they fully understand what this rule means and how to operate within it,” Schatz said.

Introduced last month, Gerlach's bill has more than 50 cosponsors. A representative for Gerlach's office said at the briefing that the most important thing now is to increase that number and reminded attendees that the next “vehicle leaving the station is probably the SGR bill,” hinting that Gerlach's legislation could be added there.

“We're very hopeful that this can get into the SGR package, and that's what we'll be advocating for,” Rasmussen said.

Follow Jessica Zigmond on Twitter: @MHjzigmond


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