The postponement allows Congress time to pass the package repealing Medicare's sustainable growth-rate formula when it reconvenes on April 13. That legislation includes a six-month delay in enforcement of the payment rule, which hospitals argue is unfair and undermines their clinical decisions.
Hospitals are asking the CMS to issue additional guidance on payments for short hospital stays when it issues proposed payment rules for fiscal 2016. Those would take effect on Oct. 1.
The two-midnight policy essentially assumes that an admission was appropriate if a patient's stay spanned two midnights and that outpatient observation status was appropriate if it did not. The policy was conceived to address a spike in observation stays believed to be inspired by hospitals' fear that Medicare's audit contractors would challenge their admissions.
The CMS originally announced the two-midnight policy in 2013. But enforcement of the rule has been repeatedly delayed through legislative and regulatory action. The last delay expired at the end of March.