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

    View Author July 2015

    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!