Lots of people have ideas about how to change Medicare's unpopular two-midnight rule for short patient stays. But based on the public comments the CMS solicited in May, there's no consensus on what a new policy should look like.
Experts mostly agree the two-midnight rule is unlikely to be scrapped, but it may take a new form with more flexibility. Ted Doolittle, who worked as deputy director of the CMS' fraud and abuse unit from 2011 to early 2014, said the agency has to find a happy medium from its current all-or-nothing payment approach. “Let's turn it to a ski slope instead of a cliff,” said Doolittle, who now works as an attorney for LeClairRyan.
The two-midnight rule was part of Medicare's fiscal 2014 inpatient rule. It attempts to define a medically necessary Medicare inpatient admission. It says when an admitting physician reasonably expects a patient will need a hospital stay that spans at least two midnights, the hospital is eligible for Part A reimbursement. But if a patient stays in a hospital for fewer than two nights, hospitals should list the encounter as observation and bill Medicare for the lower Part B payment, which also imposes higher cost-sharing on patients. Another issue is that patients under observation care are not eligible for Medicare-covered nursing and rehabilitation services, which require three nights as a hospital inpatient.
In light of the rule's unpopularity, the CMS asked for public comment on how to improve payments for short stays, but there was no consensus on a new policy, CMS spokesman Alper Ozinal said.
One proposed solution involves removing the criteria that patients spend two consecutive midnights in the hospital. The Medicare Payment Advisory Commission said that requirement creates a “timing inequity, whereby cases are paid differently depending upon whether they were admitted just before or just after midnight.”
Instead, observers say the CMS could establish a sliding payment scale that prioritizes specific hours of care and services provided. For example, if a patient is admitted and stays in the hospital for 32 hours, the hospital could break down what services were provided in four eight-hour periods. If the most expensive care was delivered in the first 16 hours, Medicare could pay hospitals inpatient rates for that timeframe and lower rates for the latter half of the stay.