2-Midnight Rule: Where Are We Now?
Christy D. Jordan
Southeast Georgia Health System
6327044
How Did We Get Here? - CMS “Pressures”
Resulting in 2-Midnight Rule
• (1) Beneficiary Concern Regarding Duration of Care Provided
in Observation Status
– “Long stay” observation cases increased from 3% in 2006 to
8% in 2011
– Part B, rather than Part A, classification results in higher outof-pocket expenses for patient and does not count toward
three-day eligibility requirement for SNF coverage
• (2) Purported High Error Rate for Inpatient vs. Observation
Audit Reviews
• (3)
Rapid Increase in RAC Reviews for Inpatient vs.
Observation Status
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2-Midnight Rule – What Is It?
• Presumption that hospital stays spanning 2 or more
midnights after beneficiary is formally admitted as inpatient
reasonable and necessary as long as the stay at the
hospital is medically necessary.
–Applies to surgical procedures, diagnostic tests and other
treatments.
–Does not apply to “inpatient only” procedures even if
physician expectation is less than two midnights.
–Does not apply in specific circumstances approved by CMS
even if physician expectation is less than two midnights.
•Ex – New Onset Mechanical Ventilation
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2-Midnight Rule – What Is It?
• Inverse also true: patient expected to be in hospital
less than two midnights, presumption that payment
under Part A not appropriate.
• Expectation of short term treatment in intensive
setting NOT an exception unless outlined in
regulatory guidance.
• Solely based on physician expectation not what
actually happened.
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2-Midnight Rule – What Is It?
• “Unforeseen circumstances” may result in a shorter
than expected stay:
• Death
• Transfer
• Patient leaving AMA
• Unforeseen recovery
• Election of hospice care
• These cases are appropriate for inpatient
classification and payment under Part A.
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2-Midnight Rule – What Time Counts?
• Generally, clock starts ticking when hospital care
begins.
– Excludes wait time, registration time and triage time.
– Can include observation care, ED care, OR care or
care in other treatment areas.
• Time for delays because of “convenience” to be
excluded.
– Example - certain services not available on weekends.
– Challenge for community hospitals.
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2-Midnight Rule – Medical Necessity
• CMS claims shift from whether or not “intensity” of
care provided dictates observation vs. inpatient
classification, to simpler rule that if patient requires
medically necessary services for 2 or more
midnights, inpatient admission is appropriate.
• CMS specifically provides that it will not look to
InterQual and Milliman for 2-midnight determination.
“That will not be a factor any longer.”
– Jennifer Dupee, CMS Nurse Consultant, Transcript of
CMS National Provider Call, Jan. 14, 2014.
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2-Midnight Rule – What Claims Are Subject
to Medical Review?
• MACs directed by CMS not to focus medical reviews
on stays spanning more than 1 midnight after formal
admission.
– Exception:
• Evidence of systemic gaming, abuse or delays in care to
attempt to qualify for two midnight presumption.
– Patients converted from observation to inpatient during
admission still subject to review.
• Code 72 can be used to identify these claims.
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The “Probe & Educate” Period
• Implementation originally planned for October 1, 2013.
• Based on provider feedback, CMS indicated that no
claims submitted for services provided between October
1, 2013 and December 31, 2013 would be subject to
review by RAC for inpatient vs. observation determination.
– Instead, MACs to select 10 claims for most hospitals and 25
claims for very large hospitals to evaluate implementation of
the rule and educate providers. Called the “probe and
educate” period.
• Subsequent further delay to September 30 for
enforcement to allow more probing and educating.
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The “Probe & Educate” Period
• April 1, 2014, President signed Protecting Access to
Medicare Act of 2014
– Medical Reviews through Probe & Educate process continue
until March 31, 2015
– Prohibits CMS from allowing RACs to conduct hospital
patient status reviews with dates of admission from October
1, 2013 to March 31, 2015
• CMS reports that as of May 12, 2014, MACs have
completed most first probe reviews and are beginning
to provide educational information based on findings.
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Reimbursement Impact
- CMS expects implementation to increase IPPS
expenditures by $220 million.
- CMS actuary analysis expects increase of 40,000
inpatient admissions annually
- 2-day stays expected to be significant
- CMS finalized a 0.2% hospital payment reduction to
offset the expected increased expenditures.
- Moody’s predicts most hospitals will see reduction in
revenue.
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Legal Challenges
•
•
Challenges filed in District Court of District of Columbia
– Challengers include AHA, Banner Health, Wake Forest Baptist
Medical Center and Greater New York Hospital Association, among
others
Challenges Relate To:
– 2-Midnight Rule Challenge
• Usurping Physician Determination. New rule focuses on
length of time in the hospital rather than a physician
determination as required by longstanding Medicare statutes,
regulations and manual guidance.
• One-Year Post Date of Service Claims Filing Deadline for
Part B Claims Submitted After Denial of Part A Claim.
Challenged because initial RAC denial occurs more than one
year past the date of service, so rule not practical.
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Legal Challenges
•
•
2-Midnight Rule Challenges, cont’d
• Requirement for Written Physician Order for Medicare
Payment.
Claim that this requirement is contrary to Medicare
statute and that it is only required for extended hospital stays, not
short hospital stays.
0.2% Payment Reduction Challenge
– Among other things, claims implementation of 2-Midnight rule
violates APA, particularly meaningful participation in notice and
comment process
– Alleges CMS’ assertion that policy change will increase
reimbursement to hospitals is a fiction
• “CMS cannot cut reimbursement to hospitals while hiding
behind faulty assumptions and violating federal law.”
Complaint, 1:14-cv-00607, at ¶ 8.
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Discussion of Collateral Consequences
• Medical Malpractice claims for “failure to admit”
• Pending RAC Appeals for Inpatient vs. Observation
prior to implementation of the 2-Midnight Rule
• 3-Day Inpatient Requirement for SNF Coverage
Unchanged
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Resources
•
CMS Special Open Door Forum, Sept. 26, 2013. Transcript available at
http://www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/Medicare-FFS-Compliance-Programs/MedicalReview/Downloads/SpeciaOpenDoorForumTranscriptThursdaySeptember09262013.p
df
•
CMS FAQs on 2-Midnight Rule, available at http://www.cms.gov/Research-StatisticsData-and-Systems/Monitoring-Programs/MedicalReview/Downloads/QAsforWebsitePosting_110413-v2-CLEAN.pdf
•
Reviewing Hospital Claims for Patient Status: Admissions On or After October 1,
2013, available at http://www.cms.gov/Research-Statistics-Data-andSystems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/MedicalReview/Downloads/ReviewingHospitalClaimsforAdmissionforPosting03122014.pdf
•
American Hospital Association vs. Sebelius, 1:14-cv-00607 (Complaint available at
http://www.kslaw.com/library/pdf/amicus-2percent-cut-comp.pdf) Case No. 1:14-cv00609; (Complaint available at http://www.kslaw.com/library/pdf/complaint2midnight.pdf) District Court, District of Columbia (filed April 14, 2014).
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Questions & Answers
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