The Hits Keep On Coming for CMS – MedPAC Supports Rescission of the Two-Midnight Rule

The Medicare Payment Advisory Commission (MedPAC) recently issued its June Report to Congress. Echoing the comments of the healthcare community, MedPAC recommended that CMS rescinds its Two-Midnight Rule.

As a reminder, CMS implemented the Two-Midnight Rule in the FY 2014 IPPS Rulemaking. There are three main elements to the Rule:

1. Amended the definition of “inpatient” to mean an admitted patient who is expected to require a minimum stay spanning two midnights;   
2. Implemented a new policy on when a hospital can request – and receive – payment if a patient is improperly classified under the Rule as an inpatient, versus an outpatient; and
3. Implemented a requirement that there be a written physician order for every inpatient admission.

Not surprisingly, the Two-Midnight Rule has been controversial and its enforcement has been delayed several times by both CMS and Congress. Multiple pending cases are also challenging aspects of the Two-Midnight Rule. As a result, MedPAC’s recommendation may be the final straw to pressure CMS to rescind the Rule.

Even if CMS rescinds the Two-Midnight Rule, providers should, at a minimum, remember to protest the 0.2% reduction to the standardized amount that CMS instituted in FY 2014 to finance the implementation of the Rule. (In addition to the 0.2% reduction, we recommend that providers also protest the reimbursement amount lost as a result of complying with the Rule.) A refresher on the cost report appeals process for both self-disallowance and late NPRs is available on our website.

It’s not too late to challenge the 0.2% reduction for FY 2014!