More than 100 House members ask CMS to delay 'two midnight' rule

Just days before a controversial rule on outpatient observation care goes into effect, more than 100 members of the U.S. House have signed a letter asking CMS Administrator Marilyn Tavenner to put the brakes on the policy.

Led by U.S. Rep. Allyson Schwartz (D-Pa.), the bipartisan group of lawmakers say the so-called “two midnight” rule will subject many Medicare patients to higher out-of-pocket costs for hospitalization and post-acute skilled-nursing care because the rule presumes that patients expected to be in the hospital for fewer than two days should have been admitted to observation, not inpatient care. Unlike full-fledged hospitalization, Medicare observation care requires 20% per-service co-payments and does not cover post-acute care.

Likewise, the hospitals themselves stand to lose money on short hospitalizations because observation care is paid under Medicare physician rates, not the higher hospital rates, even though in some cases the services to the patients are virtually indistinguishable.

The reverse is that hospitalizations expected to last more than two days—defined as a visit spanning two midnights—are presumed to be appropriate for inpatient care. CMS officials have said the policy is intended to cut the number of long observation stays, but that overall hospitals were expected to earn more revenue in the larger picture because of the uptick in inpatient stays that would have been observation under the existing rule.

The rule, set to take effect Oct. 1, was finalized a month ago.

The legislators urge Tavenner to delay the policy for six months to give the CMS a chance to consider changes to the criteria Medicare hospitals are supposed to use when deciding whether to admit a patient.

The request reflects concerns the hospital industry and other stakeholders have expressed regarding the policy.

The American Hospital Association last week sent a letter to the CMS embracing the clarity promised by the two-midnight rule but asking for detailed guidance on the admission and review criteria. The AHA asked for a three-month delay of those provisions in light of the short window before the rule goes into effect.

“Many questions remain related to the application of the benchmark and other requirements, and clear guidance is essential so that providers and contractors are abiding by the same rules,” the hospital association said in the letter.

The hospital association is also questioning a 0.2% payment cut for certain “intense, inpatient-level services provided by hospitals to Medicare beneficiaries that are reasonable and necessary but do not appear on the inpatient-only list and are not expected to span two midnights.”

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