The logistics of compliance: Two-midnight rule demands process change

Hospitals are educating their staff and reworking their processes to comply with Medicare’s two-midnight rule, which will likely reduce hospital revenue by shifting patients from inpatient to outpatient status.

The rule says patients must pass two midnights in the hospital for their stay to be billed as inpatient.

Brian Contos, executive director of the Advisory Board Co., a technology, consulting and research firm, estimated that 8 percent to 10 percent of short-stay cases could shift to being billed on an outpatient rather than an inpatient basis as a result of the new rule.

“That’s about a million discharges that could shift,” he said, and noted that Medicare pays hospitals more for inpatient than outpatient treatment, as much as three times more depending on the diagnosis and treatment.

“We think there will be a net negative economic impact for hospitals,” Contos said.

Reevaluate and standardize
Timothy Blanchard, a partner in the law firm Blanchard Manning LLP, said hospitals’ preparations include educating the medical staff about the new rule. “You’re trying to get physicians to think about things in a different way, ” he said.

Some hospitals have revised their admitting order sets, Blanchard said, to give physicians several options to choose from as a way of guiding their decision-making.

Peter Watson, MD, division head for hospital medicine at Henry Ford Hospital in Detroit, said the rule requires “a lot more definition around what types of patients require inpatient care and much better efforts at documentation in the emergency department,” where most of the decisions in question occur.

“What some hospitals are doing is they’ve deployed hospitalists much closer to the emergency department to document much more aggressively, so patients who meet the inpatient requirements have the justification to be in the hospital,” Watson said.

[See also: Two-midnight rule a double-edged sword.]

Emergency room physicians are trained to focus on the initial hours of a patient’s stay, rather than on providing ongoing care or predicting the length of time that will require, Watson said. “That’s why you need other providers involved.”

The two-midnight rule has also pushed hospitals to adopt more robust electronic medical records (EMR) systems, he said. Henry Ford Hospital had decided prior to the two-midnight rule to move all of its inpatient and outpatient facilities to a single EMR, and that has proved helpful.

“Now our documentation is unified, and we have created some standardized documentation to help guide our clinicians in documenting the inpatient decision,” he said.

The documentation includes a list of questions the physician must answer, Watson said. “It has standardized the thought process for any physician who thinks a patient should be admitted.”

Henry Ford also undertook a 90-day educational effort “where we tried either in person, online, with modules or via email to continually reinforce with providers this rule change,” he said. “We even had people who went out to the floor, physician educator staff, to work one-on-one with physicians.”

Contos said hospitals could analyze their data to find the average length of stay for different diagnoses and use that to aid in decision-making. “We’ve heard of hospitals that went through and created almost cheat sheets: the top 20 diagnoses through the emergency room and what’s the average length of stay,” he said. “That can serve as a guidepost when the physician is making the decision about the length of stay.”

Although the two-midnight rule took effect in October, the Centers for Medicare & Medicaid Services put a moratorium on audits of inpatient status, which it recently extended through March 2015.

“That has been appreciated by hospitals, not to get audited on that right out of the gate,” Watson said. “We’re still learning on this, learning how to make our clinical practices more efficient.”