3 Conn. hospitals join legal battle over two-midnight rule

Three Connecticut hospitals have sued HHS over its decision to reduce Medicare payments for inpatient treatment to account for the adoption of the two-midnight rule, joining several hundred other hospitals across the nation that have already challenged the payment cut.

Under the two-midnight rule, which was introduced in the 2014 Inpatient Prospective Payment System rule, CMS generally considers hospital stays of less than two midnights to be outpatient cases, while hospital admissions for stays spanning two midnights or longer are deemed appropriate.

Expecting a decline in the number of long observation stays and an increase in the number of inpatient admissions, CMS proposed offsetting the cost through a 0.2 percent reduction in inpatient payments.

The payment reduction was strongly opposed by hospitals and sparked many lawsuits challenging the payment cut. Now, three hospitals in Connecticut have joined the legal battle.

The three hospitals — Danbury (Conn.) Hospital, New Milford (Conn.) Hospital and Norwalk (Conn.) Hospital — filed their lawsuit on Tuesday. The action raises the issue of whether HHS' adjustment to the Medicare IPPS standardized amount to account for the adoption of the two-midnight rule was lawful.

The hospitals argue the adjustment exceeds HHS' statutory authority, and that the amount of the downward adjustment is unsupported by data. Like other hospitals that have filed suit against HHS over the two-midnight rule, the three Connecticut hospitals argue HHS violated the Administrative Procedure Act by not providing adequate notice or a meaningful opportunity to comment on the payment reduction.

The hospitals are seeking a court order that would force HHS to reverse its decision to cut reimbursement for inpatient care.

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