Physicians brace for two-midnight rule’s enforcement

However, some physicians have been disappointed by the so-called educational phase. Dr. Ann M. Sheehy, head of the hospital medicine division at the University of Wisconsin Hospital in Madison, said her hospital did not receive clarification on several claims that were questioned by CMS. Of nine recent inpatient cases at the University of Wisconsin, CMS said three inpatient cases did not support the need for two midnights of care, Dr. Sheehy noted. The hospital challenged the determinations and requested a meeting for more information, but did not receive further feedback. The claim denials were later overturned without explanation, she said.

“It is frustrating,” Dr. Sheehy said in an interview. “We still feel like we’re kind of in the dark as far as the application of the rule. We’re doing the best we can, but we still don’t know how it’s going to be enforced by the RACs come April 1.”

On the other hand, Dr. Sheehy noted that the hospital has seen a reduction in long observation stays under the two-midnight rule, which is positive.

“However, we are concerned, based on our probe and educate results, that if the RACs start to question the two-midnight mark, we will see these long observation stays return because of RAC pressure and denials of these inpatient claims,” she said.

At this article’s deadline, CMS had not responded to a request for comment.

Supporters of the two-midnight rule say the policy clarifies the prior confusion over when hospital patients should be designated inpatients. The rule makes physicians’ decisions easier, not more difficult, said Dr. Michael A. Ross, an emergency physician and medical director of observation medicine for Emory University Hospital’s emergency medicine department in Atlanta. He notes that his hospital is well prepared for the rule’s enforcement and has been managing patients consistent with the policy for more than a year.

“Previously, the whole definition of an inpatient was complicated, especially for emergency physicians,” Dr. Ross said in an interview. “As a friend of mine said, ‘Previously to know who an inpatient was you needed a book, now you just need one line, which is whether a patient is expected to cross two midnights.’ What could be simpler than that?”

Dr. Ross adds that myths about the two-midnight rule and its effect continue to spread through mainstream media, such as that observation outpatient status means higher out-of-pocket costs for Medicare patients than inpatient status. He pointed to a 2013 study by the U.S. Health & Human Service’s Office of Inspector General that found Medicare patients paid nearly two times more out-of-pocket expenses as inpatients than as observation patients*.

“The best thing a physician can do to control a patient’s outpatient observation costs is to manage them in a protocol-driven observation unit,” said Dr. Ross, former chair of the CMS Advisory Panel on Ambulatory Payment Classification Group’s Visits and Observation Subcommittee. “These units have consistently been shown to decrease health care costs safely, which impacts a patient’s out of pocket costs.”

While the two-midnight rule is fast approaching, Dr. Flansbaum believes there is still time for CMS to change or delay the policy. He does not foresee the rule going into effect April 1.