CMS Issues Guidance On "Two Midnights" Hospital Payment Rule

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CMS has released answers to frequently asked questions about its new regulation that generally considers inpatient admissions spanning two midnights as qualifying for payment under Medicare Part A.

HospitalCMS included the new regulation in its final rule on 2014 Medicare inpatient prospective payment system rates. Under the policy, inpatient admissions are considered reasonable and necessary for Medicare beneficiaries who require more than a one-day stay or who need treatment specified as inpatient only. The rule determines that stays lasting less than two midnights should have been treated and billed as outpatient services.

According to the CMS FAQ document, CMS will instruct Medicare administrative contractors and recovery auditors not to review claims that involve stays spanning two midnights after admission to see if the inpatient hospital admission and patient status was appropriate. Furthermore, for 90 days, Medicare auditors won't be allowed to review inpatient admissions lasting one midnight or less that begin on or after Oct. 1.

Second, CMS' longstanding guidance specifying that auditors should evaluate physicians' expectations of medically necessary care based on the information available to the practitioner at the time of admission will apply to stays surpassing two midnights, according to CMS.

In terms of providing guidance to ensure hospital compliance with the new rule, CMS plans to have MACs review a small sample of inpatient hospital claims for stays that lasted less than two midnights during the time period from Oct. 1 to Dec. 31, with samples limited to 10 to 25 claims per hospital.

The sample will determine each hospital's compliance with the new regulation, and CMS will use the findings to develop further education efforts and guidance for hospitals. Furthermore, the MACs will review the sample claims on a prepayment basis, so hospitals can rebill denied inpatient hospital admissions claims.

If a MAC doesn't find any compliance issues for a particular hospital, the MAC will stop conducting inpatient claim reviews for that provider from Oct. 1 to Dec. 31, unless there are significant changes in billing patterns for admissions, according to CMS. If a MAC does identify issues, the contractor will work to educate that hospital about the regulation.

Additionally, from October to the end of December, MACs and RACs won't review claims spanning more than two midnights for appropriateness of patient status, and they won't review any critical access hospital claims.

Although medical reviews won't focus on claims for stays lasting two midnights or more after formal inpatient admission, physicians should still make decisions about admissions in line with the "two midnights" provision, according to CMS. Evidence of providers delaying the provision of care to get stays to qualify as two midnights could result in medical review.

More Articles on Medicare Hospital Payments:
House Lawmakers: Delay Medicare "Two Midnights" Rule for Hospital Stays
CMS Releases Final Rule on 2014 Inpatient Payments
AHA Advocates for 3 Changes to RAC Program 

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