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“Crossing Two Midnights:” The Final Rule

August 23, 2013

Definition of “Inpatient Admission” Clarified

CMS has now finalized the definition of an inpatient admission as well as its “two midnight” rule. Following the publication of the proposed rule on April 23rd, CMS has now taken the final step in ending the controversy over when an “inpatient admission” is justified and when it actually occurs.  

A patient is considered an inpatient and entitled to services paid for under Medicare Part A when:

(i) he/she is formally admitted as an inpatient pursuant to an order for an inpatient admission by a physician or other qualified practitioner; and

(ii) the order is present in the medical record and supported by the physician admission and progress notes.

Medicare Part A pays for inpatient hospital services only if a physician certifies and recertifies:

(i)  that the services were provided in accordance with 42 C.F.R. § 412.3 (meaning in compliance with the order); and

(ii) the reasons for hospitalization of the patient for inpatient medical treatment or an inpatient diagnostic study, or special or unusual services for cost outlier cases. 

The Final Rule also finalizes two separate, though related, medical review policies – the 2-midnight presumption and the 2-midnight benchmark

The 2-Midnight Presumption

Under the 2-Midnight Presumption, inpatient claims with lengths of stays greater than 2 midnights after the formal admission will generally be presumed appropriate for Part A payment and will not be the focus of medical review efforts unless there is evidence of systematic gaming, abuse or delays in the provision of care in an effort to qualify for the 2-midnight presumption. This means that CMS’ medical review efforts will focus on inpatient hospital admissions with lengths of stay crossing only 1 midnight. If a physician admits a beneficiary but the beneficiary is in the hospital for less than 2 midnights after the order is written, CMS and its medical review contractors will not presume that the inpatient hospital status was reasonable and necessary for payment purposes.  Instead, CMS may evaluate the claim pursuant to the 2-Midnight Benchmark. 

The 2-Midnight Benchmark

To determine whether Part A payment is appropriate, CMS contractors will evaluate:

(i)  the physician inpatient admission order and the other required elements of the certification;

(ii)  documentation supporting the expectation of a 2 midnight stay; and

(iii) documentation supporting the medical necessity of an inpatient stay.

Contractors will consider the medical factors that support the expected duration of the stay. In essence, under the 2-Midnight Benchmark, if it was reasonable for the physician to expect the beneficiary to require an inpatient hospital stay lasting 2 midnights, admission is generally appropriate and payment may be made under Part A (regardless of whether the anticipated length of stay did not occur due to death or transfer), so long as thephysician’s order and certification requirements are met. (This is Medicare,so document everything!) In addition, inpatient admission is appropriate and Part A payment may be made for procedures that are on Medicare’s“inpatient-only” list, regardless of the expected length of stay. 

Consideration of Outpatient Time

Additionally, the Final Rule specifies that the ordering physician may consider time the beneficiary spent receiving outpatient services (including observation services, treatments in the emergency department and procedures provided in the operating room) for purposes of determining whether the 2-Midnight Benchmark is expected to be met and thus whether inpatient admission is appropriate. This time is not considered inpatient time but may be considered by a physician in determining whether a patient should be admitted as an inpatient. Medicare review contractors will thus take into account all time spent within the hospital receiving medically necessary services as a factor in determining whether the physician’s 2-midnight expectation was reasonable. 

If you have any questions about this topic, or any other matters involving Health Care Law, please contact your usual Murtha Cullina attorney or Stephanie Sprague Sobkowiak at 203.772.7782 / ssobkowiak@murthalaw.com; Kennedy Hudner at 860.240.6029 / khudner@murthalaw.com or Paul Knag at 203.653.5407 / pknag@murthalaw.com.

 

 

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