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TEACHING HOSPITALS AND ACADEMIC
MEDICAL CENTERS, HOSPITALS AND
HEALTH SYSTEMS, AND REGULATION
ACCREDITATION, AND PAYMENT PRACTICE
GROUPSThe “Two-Midnight” Rule (CMS’ New Requirements for Part A Payment and When it is Appropriate to Admit a Beneficiary as an Inpatient) and the Impact on Teaching Hospitals
AUTHORAllison Cohen, JD, LLM* Association of American Medical Colleges Washington, DC
Background Because of concerns about the number of RAC rejections of short stays and increases in the length of time Medicare beneficiaries spend as hospital outpatients receiving observations services, CMS sought to establish guidelines for when a physician should 1 order an inpatient admission. CMS solicited broad input on potential policy changes to address these trends in the calendar year (CY) 2013 Outpatient Prospective Payment System (OPPS) Proposed Rule1 and summarized public input in the CY 2013 OPPS Final Rule.2 In the fiscal year (FY 2014 Inpatient Prospective Payment System (IPPS) Proposed Rule, CMS proposed to change the criteria for short inpatient hospital admissions that could be billed under Part A.3 Specifically, CMS proposed presumptions to use in medical necessity reviews based on the physician’s expectation of the length of the beneficiary’s stay. Although many commenters objected to these policy changes, CMS finalized new “Admission and Medical Review Criteria for Hospital Inpatient Services Under Medicare Part A” (also known as the Two-Midnight Rule) in the FY 2014 IPPS Final Rule.4 Explanation of the Two Midnights Benchmark and Presumption The Two-Midnight Rule applies to surgical procedures, diagnostic tests, and other treatments (in addition to services designated as inpatient-only) provided in acute care inpatient hospital facilities, long term care hospitals (LTCHs), critical access hospitals 1 Medicare and Medicaid Programs, Hospital Outpatient Prospective and Ambulatory Surgical Center Payments Systems and Quality Reporting Programs; Electronic Reporting Pilot; Inpatient Rehabilitation Facilities Quality Reporting Program; Quality Improvement Organization Regulations, 77 Fed. Reg.
45061, 45155-45157 (proposed July 30, 2012).
2 Medicare and Medicaid Programs, Hospital Outpatient Prospective and Ambulatory Surgical Center Payments Systems and Quality Reporting Programs; Electronic Reporting Pilot; Inpatient Rehabilitation Facilities Quality Reporting Program; Revision to Quality Improvement Organization Regulations, 77 Fed.
Reg. 68210, 68426-68430 (Nov. 15, 2012).
3 Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Proposed Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Medicare Program;
FY 2014 Hospice Wage Index and Payment Rate Update; Hospice Quality Reporting Requirements; and Updates on Payment Reform; Proposed Rules, 78 Fed. Reg. 27486, 27644-27650 (proposed May 10, 2013).
4 Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care; Hospital Prospective Payment System and Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Payment Policies Related to Patient Status, 78 Fed. Reg. 50496, 50938-50954 (Aug. 19, 2013).
2 (CAHs), and inpatient psychiatric facilities (IPFs), and is effective for dates of admission on or after October 1, 2013.5 This Rule establishes both a benchmark for physicians to determine when an inpatient admission will likely be viewed as appropriate for Part A payment, and a presumption for reviewers to guide which claims will generally be considered to be appropriate for payment under Medicare Part A.
The Two-Midnight Rule benchmark specifies that inpatient admission and Part A payment are generally appropriate if at the time of admission the physician expects the patient stay will cross two midnights or require services that are on the inpatient-only list. This benchmark applies regardless of a patient’s severity of illness or the intensity of care required.
The Rule also establishes a presumption that inpatient claims for lengths of stay greater than two midnights after a formal inpatient order for admission are appropriate for Part A payment.
There are limited exceptions to the Two-Midnight Rule. Stays shorter than two midnights may still be billed as inpatient stays if there was an expectation that the beneficiary’s stay would cross two midnights, but unforeseen circumstances resulted in a shorter length of stay. This includes unforeseen deaths, transfers, departures against medical advice, and clinical improvement.6 CMS also makes an exception for procedures defined as “inpatient-only,” which may be appropriately provided on an inpatient basis irrespective of the length of the patient’s stay. Otherwise, CMS explains that only “rare and unusual circumstances” could be considered appropriate for short inpatient stays.7 5 CMS will direct Medicare Administrative Contractors (MACs) not to apply these instructions to IRFs, which are specifically excluded from the two-midnight inpatient admission and medical review guidelines per CMS-1599-F.
6 Inpatient Hospital Reviews, CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS), www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/ InpatientHospitalReviews.html.
3 In sub-regulatory guidance, CMS states that beneficiaries admitted for telemetry and beneficiaries admitted to an intensive care unit (ICU) are “[e]xamples of situations that do not represent instances in which inpatient admission would be appropriate without an expectation of a 2 midnight hospital stay.”8 CMS explains that the agency does not view either of these situations on their own as “rare and unusual” circumstances. Further, CMS states that “[a]n ICU label is applied to a wide variety of services,9 therefore CMS “does not believe that a patient assignment to a specific hospital location, such as a certain unit or location, would justify an inpatient admission in the absence of a 2midnight expectation.”10 CMS also has agreed to work with the hospital industry and Medicare administrative contractors (MACs) to determine if there are other circumstances or types of patients that should be considered appropriate for inpatient admission regardless of the twomidnight expectation. CMS is accepting suggestions for additional exceptions via email at the following address: IPPSAdmissions@cms.hhs.gov. Emails should include the subject line “Suggested Exceptions to the 2-Midnight Benchmark.”
What Counts Toward the Benchmark
The clock for the two-midnight benchmark starts when the beneficiary begins receiving hospital services. While a formal inpatient admission order is required to begin inpatient status, hospital care provided in another treatment area of the hospital such as the emergency room (ER), an operating room, or observation services provided on an outpatient basis may count toward the benchmark when the physician determines whether or not the patient will require hospital care crossing two midnights.
8 Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013, CMS (Nov. 1, 2013), www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/MedicalReview/Downloads/ReviewingHospitalClaimsforAdmissionFINAL.pdf.
4 CMS will not count the following when determining if the two-midnight benchmark was met: wait times before the initiation of care, including triaging activities, and inpatient admissions to prevent inconvenience to the patient, family, physician, or hospital.
All services counted toward the two-midnight benchmark must be medically necessary, which must be supported by documentation in the medical record. If the beneficiary’s admission lasts less than two midnights due to unforeseen circumstances, clear documentation in the medical record is required for an exception to the Two-Midnight Rule to apply. For purposes of medical review, contractors will evaluate the medical record to determine whether the “expected length of stay and the determination of the need for medical or surgical care are supported by complex medical factors such as history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event, which review contractors will expect to be documented in the physician assessment and plan of care.”11
Part B Rebilling
In general, CMS requires that claims for stays of less than two midnights must be billed under Part B. Also in the FY 2014 IPPS Final Rule, CMS finalized a policy allowing hospitals to rebill an expanded list of services under Part B after a Part A claim is denied for lack of medical necessity, or to self-audit by submitting a no pay/provider liable Part A claim before submitting Part B claims.12 In both cases, the Part B billing must occur within one year of the date of service.13 This means that if a hospital submits a short stay claim under Part A that is rejected, the hospital appeals the rejection, and the appeal is denied, the hospital will be unable to rebill if the appeals process lasts longer than one year from the date of service.
11 2 Midnight Admission Guidance & Patient Status Reviews for Admissions On or After Oct. 1, 2013, CMS FREQUENTLY ASKED QUESTIONS, www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/Medical-Review/Downloads/QAsforWebsitePosting_110413-v2-CLEAN.pdf.
12 Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care; Hospital Prospective Payment System and Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Payment Policies Related to Patient Status, 78 Fed. Reg. at 50908–50914.
5Delay of Post-Payment Status Reviews
Soon after the FY 2014 IPPS Final Rule was released, the hospital community raised many questions about how the Two-Midnight Rule would be operationalized. On September 5, 2013, CMS issued guidance clarifying inpatient order and certification requirements. Subsequently, on September 27, CMS released a Frequently Asked Questions (FAQ) document that delayed for 90 days RAC review of stays less than two midnights. This limited delay has since been extended to March 31, 2014, by guidance issued on November 1, 2013, explaining how “patient status reviews” should be conducted by MACs to evaluate hospitals’ compliance with the Two-Midnight Rule.14 CMS has directed MACs and Recovery Audit Contractors (RACs) to no longer review claims spanning more than two midnights. CMS will also delay post-payment patient status reviews for claims with dates of admission October 1, 2013 through March 31,
2014.15 RACs, MACs, and Supplemental Medical Review contractors can still conduct other types of inpatient hospital reviews including: “Coding reviews, Reviews for the medical necessity of a surgical procedure provided to a hospitalized beneficiary, Inpatient hospital patient status reviews for dates of admission prior to October 1, 2013 (based on the applicable policy at the time of admission).”16 As required by statute, RACs will limit prepayment reviews to therapy services until further notice.17 The “Probe-and-Educate” Program CMS established a “probe and educate” period, which was initially three months (through December 31), and was subsequently extended to six months (through March 14 Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013, CMS (Nov. 1, 2013), www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/MedicalReview/Downloads/ReviewingHospitalClaimsforAdmissionFINAL.pdf.
15 2 Midnight Admission Guidance & Patient Status Reviews for Admissions On or After Oct. 1, 2013, CMS FREQUENTLY ASKED QUESTIONS, www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/Medical-Review/Downloads/QAsforWebsitePosting_110413-v2-CLEAN.pdf.
16 Inpatient Hospital Reviews, CMS, www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/Medical-Review/InpatientHospitalReviews.html.
6 2014).18 During this period, MACs will do a prepayment review of a sample of ten claims of less than two midnights for most hospitals (25 claims for large hospitals).19 MACs will educate providers that are having trouble complying with the Two-Midnight Rule based on the sample and hospitals will be able to rebill denied inpatient claims under Part B. CMS indicated that agency staff will also review the data collected from these samples to evaluate this new payment policy and consider the possibility of further delaying enforcement.