two-midnight ruleThe Centers for Medicare and Medicaid Services (CMS) has just issued a proposed rule that would soften, but not eliminate, the Two-Midnight Rule for short hospital inpatient stays.

The current version of the Two-Midnight Rule, which was first issued in 2003, provides that inpatient admissions will generally be payable under Medicare Part A if the admitting physician expected the patient to require a hospital stay that crossed two midnights and the medical record supports that reasonable expectation. Patients who are not expected to remain in the hospital across two midnights should be treated as outpatients, except for services that can only be performed on an inpatient basis.

CMS proposes two key changes to the current rule. First, when a physician expects a patient to need less than two midnights of inpatient care, an inpatient admission would be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician. Documentation in the medical record must support that an inpatient admission is necessary.  The CMS policy regarding hospital stays that are expected to be two midnights or longer will be unchanged.

Second, CMS is removing oversight of inpatient admission claims from its recovery audit contractors (RACs). Instead, quality improvement organizations (QIOs) will enforce the Two-Midnight Rule, conducting the first line medical reviews of providers who submit claims for inpatient admissions. RACs will be directed to focus only on hospitals with unusually high rates of denied claims.

CMS is accepting comments on the proposed rule until August 31, 2015, and expects to issue a final rule around November 1.