Providers and policy experts are split on the Obama administration's proposal to salvage the controversial two-midnight rule with a series of modifications intended to mollify its many critics.
In a proposed payment rule posted in July, the CMS said it plans to allow physicians to exercise judgment to admit patients for short hospital stays on a case-by-case basis. The CMS also said it would remove oversight of those decisions from its administrative contractors and instead ask quality improvement organizations to enforce the policy. Recovery audit contractors, meanwhile, would be directed to focus only on hospitals with unusually high rates of denied claims.
The CMS received nearly 600 comments on the proposed changes by its Aug. 31 deadline for feedback on the 2016 proposed payment rule for the hospital outpatient prospective payment system and ambulatory surgical center payment system. A final version of the rule is expected to be released in November.
The American Medical Association still argues the CMS should scrap the policy because of the considerable administrative burden of documenting a physician's judgment about whether a patient needs to be admitted to the hospital. The policy, the AMA says, “remains an artificial construct reflecting a flawed approach that gets in the way of the physician-patient relationship.”
Under the current policy, the two-midnight rule directs its payment contractors to assume a hospital admission was appropriate if a patient's stay spanned two midnights and otherwise should have been billed as an outpatient observation visit.
The rule was conceived to address a spike in observation stays attributed to hospitals' fear that Medicare audit contractors would challenge their admissions. Many patients, as a result, found themselves ineligible for skilled nursing after spending days in the hospital because they weren't admitted.
The American Hospital Association generally praised the modifications to the policy but asked the CMS to issue clear guidance for hospitals and wait another three months before enforcing it. The agency recently announced it would push the date from Sept. 1 to Jan. 1, 2016, but the AHA said hospitals need more time.
“Given that this outpatient rule will be finalized in early November, hospitals will have only two months before the rule's effective date of Jan. 1 to implement the revised policy,” the group says. “Therefore, we urge CMS to consider extending further the partial enforcement delay until March 31, 2016, to allow hospitals sufficient time to not only implement the policy changes but also to ensure that CMS has the time necessary to issue detailed guidance.”
America's Essential Hospitals, which represents safety net hospitals, also expressed support for the changes for acknowledging “there may be circumstances that warrant a short inpatient stay.” But the group also criticized the 0.2% reduction in inpatient payment that the CMS adopted based on the assumption that that there would be an increase in inpatient stays under the two-midnight policy. The association asserts that such a shift has not materialized.
The influential Medicare Payment Advisory Commission, which advises Congress on Medicare spending, argues that making a series of changes to the government's audit policies would completely eliminate the need for the two-midnight rule.
“In our view, the audit relief provided through the two-midnight rule is unnecessary if steps to hold RACs more accountable and target their audits are implemented, as the commission has recommended,” the panel said in a comment letter. “The commission is concerned that the two-midnight rule provides hospitals with an incentive to lengthen hospital stays in order to avoid audit scrutiny. Longer stays generally increase costs and expose beneficiaries to greater physical risk.”
