CMS delays 'two midnight' rule to after Sept. 30

Under growing pressure from hospitals and physicians, the CMS is delaying the most punitive aspects of the new “two midnight” rule for Medicare hospital admissions until after Sept. 30.

The two-midnight rule, included in Medicare's inpatient payment rule for 2014, directs the agency's auditors to assume that hospital admissions with proper documentation are reasonable and necessary in cases where the patient stays in the hospital for more than a day—defined legally as spanning two midnights in a hospital bed.

The change was intended to address widespread complaints that Medicare's rules are too vague about when a moderately sick patient should be admitted for expensive inpatient care instead of outpatient observation. Hospitals have faced aggressive auditing over short inpatient stays, even though they say the rules didn't set clear standards.

But hospitals aren't happy with the new rules, either. That's because they are presumed to have made an error and provided medically unneeded care if an inpatient doesn't spend two midnights in a hospital bed.

Medicare's recovery auditors were set to begin enforcing the rule Oct. 1, 2013, but that was pushed back to March 31 after providers complained. On Friday, the agency punted again and said recovery auditors—who employ sophisticated data-mining to locate questionable claims—will now have to wait until after Sept. 30 to start auditing claims under the two-midnight rule.

The agency will still allow Medicare's administrative contractors, who process claims for payment, to review short stays and deny payment if the patient record doesn't support medical necessity. But those reviews are intended to be instructional and will be limited to a sample of between 10 and 25 claims per hospital.

“This is welcome news,” said Ken Raske, president and CEO of the Greater New York Hospital Association, in a letter to members. “The concerns expressed by all of you and our staunch collective advocacy on this issue have clearly influenced this delay.”

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