Healthcare Business News
Richard Umbdenstock, president and CEO of the AHA

AHA goes after 'two-midnight' rule in court

By John N. Frank
Posted: April 14, 2014 - 6:45 pm ET

The controversial “two-midnight” rule just got a little more controversial; the American Hospital Association Monday filed two lawsuits against the rule and was joined in its suit by several state hospital associations and individual hospitals.

“The two-midnight rule undermines medical judgment and disregards the level of care needed to safely treat patients,” said Richard Umbdenstock, president and CEO of the AHA, in a release announcing the lawsuits. “Hospitals stand by a physician's decision on what care is appropriate for each patient. The two-midnight rule is misguided and we feel confident the court will agree.”

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The suits were filed against HHS, contending that several provisions of the rule “burden hospitals with unlawful arbitrary standards and documentation requirements and deprive hospitals of proper Medicare reimbursement for caring for patients,” the release stated.

“The hospitals take issue with the wholly arbitrary requirement that a physician must certify at the time of admission that a Medicare patient is expected to need care in the hospital for a period spanning two midnights to be considered an inpatient,” the release also said.

The so-called doc-fix bill recently approved by Congress included a six-month extension before compliance would be enforced for the two-midnight rule. AHA apparently plans to use that time contesting it in court.

The existing two-midnight rule says admitting physicians must have good reason to believe that a patient will need two nights in the hospital before Medicare will pay full inpatient rates under Part A for the stay. Lacking such documentation, Medicare auditors will generally classify the stay as outpatient observation, which pays hospitals much less under Part B and sticks the patient with a 20% copayment. That rule went into effect Oct. 1. But it was modified so that Medicare's aggressive recovery audit contractors could not overturn claims under the new policy until Sept. 30, 2014.

The enacted legislation requires Medicare to extend that recovery-auditing moratorium until March 31, 2015. It also gives Medicare officials the discretion to extend what's known as the “probe and educate” process until the same date next year. Under that process, a different set of companies, known as Medicare administrative contractors, can audit a small number of short-stay inpatient claims and train hospitals on how to submit more accurate bills.

Joining AHA in its suits are the Greater New York Hospital Association, Healthcare Association of New York State, New Jersey Hospital Association and Hospital & Healthsystem Association of Pennsylvania. The hospital plaintiffs are Wake Forest Baptist Medical Center, Winston-Salem, N.C.; Mount Sinai Hospital, New York; and hospitals that are part of Phoenix-based Banner Health and Einstein Healthcare Network, Philadelphia, the AHA release detailed. The lawsuits were filed in the U.S. District Court for the District of Columbia.

Follow John N. Frank on Twitter: @MHJFrank

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