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Delays, Controversy Muddle CMS’ Two-Midnight Rule for Hospital Patient Admissions

The Hospitalist. 2014 April;2014(04):

Although medical needs can be quantified, there are often other, nonmedical factors that put patients at risk and influence when and whether a patient is admitted. Physicians routinely weigh these factors on behalf of their patients.

“Risk isn’t necessarily implied by just a dangerous blood value,” Dr. Flansbaum says. “If something is not right in the transition zone or in the community, I think those [factors] need to be taken into account.”

Physicians are being given “a lot of latitude” in CMS’ new rule, he notes.

Clarification

In recent clarification, CMS highlighted exceptions to the rule. If “unforeseen circumstances” shorten the anticipated stay of someone initially deemed inpatient—transfer to another hospital, death, or clinical improvement in fewer than two midnights, for example—CMS can advise auditors to approve the inpatient claim.

Additionally, CMS will maintain a list of services considered “inpatient only,” regardless of stay duration.

But creating a list of every medically necessary service is an “administrative black hole,” says Dr. Flansbaum, though he believes that with enough time and clarity, compliance with the two-midnight rule is possible.


Kelly April Tyrrell is a freelance writer in Wilmington, Del.

Two-Midnight Rule Primer

The two-midnight rule was an effort by CMS to protect patients from the hidden costs of observation stays while also reducing improper payments made to hospitals for care inappropriately delivered as inpatient. Aggressive auditing by RACs recovered over $2 billion a year from hospitals over the last two fiscal years as of June 2013, according to the AHA. Of this, $200 million has gone to the auditors.

According to an AHA survey last year, 40% of hospital RAC denials are appealed, and roughly 70% of these appeals are decided in the hospital’s favor. Several bills in Congress are seeking changes to RACs, including requiring these independent contractors to pay hospitals when audits are appealed and overturned.—KAT