CMS to soften two-midnight rule, allow for exceptions
The rule has come under much criticism from healthcare providers for its rigid guidelines and potential costs.
CMS is proposing that physicians be able to make case-by-case exceptions to the rule, classifying certain short stays as inpatient so that they would be paid under Medicare Part A.
The Centers for Medicare and Medicaid Services on Wednesday proposed changes to the controversial “two-midnight” rule that determines whether it pays hospital stays as inpatient or outpatient visits, making it more flexible for healthcare providers and changing the review process so it is less stringent.
The rule has come under much criticism from healthcare providers for its rigid guidelines and potential costs associated with classifying short observation stays as inpatient visits. It was never enforced, but a moratorium on the rule is set to lift on Sept. 30.
[Also: Two-midnight rule delayed until September in SGR repeal bill]
CMS is proposing that physicians be able to make case-by-case exceptions to the rule, classifying certain short stays as inpatient so that they would be paid under Medicare Part A. The agency said it expects these cases to be rare, since it’s unusual that a patient having undergone a minor surgery or a treatment require a lengthy hospital stay.
That said, CMS will not change the heart of the rule that pays any visit that stretches beyond two midnights as inpatient.
CMS pays differently for inpatient and outpatient stays. Inpatient visits are paid under Medicare Part A while outpatient visits are paid under Medicare Part B, which uses a different fee structure.
The agency also proposed new Hospital Outpatient Prospective Payment System rates that would result in facilities losing $43 million in payments in 2016.
[Also: Two-midnight rule targeted by GOP lawmakers wanting Medicare overhaul]
It has also proposed a 0.2 percent cut to the Hospital Inpatient Prospective Payment System.
In addition to the proposed exceptions, CMS also said it would change how violations to the two-midnight rule are handled. The proposal would put quality improvement organizations in charge of addressing errors instead of Medicare recovery audit contractors. The quality improvement organizations take a softer tack, aiming to educate rather than punish facilities. Medicare recovery audit contractors would still handle repeat offenders.
While the American Hospital Association has pushed for the paring back of the two-midnight policy for some time, Executive Vice President Rick Pollack said there are still more changes needed.
Follow Healthcare Finance on Twitter and LinkedIn.
“We await further clarification on how changes to the RAC program interface with these proposed changes. Significant fundamental RAC reform is still needed,” he said in a statement. “CMS also must extend the partial enforcement delay of the two-midnight policy beyond September 30.”
CMS said it will take comments on the two-midnight rule until Aug. 31 and will issue a final rule on Nov. 1, after the moratorium is expected to lift.
Here's the full proposal:
Twitter: @HenryPowderly
