The Two-Midnight Rule: What Hospitals and Health Systems Need to Know About Compliance

During a recent webinar, industry experts discussed what hospitals and health systems need to know about the Medicare two-midnight rule.

With observation patient volume, observation-only care units and care models that approach inpatients and outpatients differently all on the rise, it's crucial hospitals take a proactive approach to planning for a patient's care from admission to discharge, according to Nanne Finis, RN, MS,  vice president of consulting services for TeleTracking Technologies.

Along with those industry trends, hospitals must contend with the two-midnight rule, a new regulation included in the 2014 Medicare inpatient prospective payment system final rule. The regulation generally considers inpatient admissions spanning two midnights as qualifying for payment under Medicare Part A.

In a Dec. 3 webinar hosted by Becker's Hospital Review, Ms. Finis; Rodger Fletcher, senior product manager of TeleTracking; Stephanie Kitt, director of clinical documentation, utilization and coding at Northwestern Memorial Hospital in Chicago; and Becker's Editor Bob Herman discussed what hospitals and health systems need to know about the two-midnight rule, how it will affect them and best practices for compliance.

The two-midnight basics
Under the new rule, stays lasting less than two midnights must be treated and billed as outpatient services. To assess compliance, Medicare administrative contractors and recovery auditors — better known as MACs and RACs — will carry out prepayment patient status reviews for claims that span less than two midnights and have dates of admission on or after Oct. 1, 2013, and before March 31, 2014. They won't conduct post-payment patient status reviews for claims during that same period.

Depending on the hospital, MACs will review 10 to 25 claims per hospital. They will base their review of a physician's expectation of medically necessary care spanning two or more midnights on the information available to the admitting physician at the time. Therefore, physicians need to document information such as comorbidities, patient history, the risk of an adverse event and other key facts, Mr. Herman said.

"They'll be looking to see if a physician expected medically necessary care at the time they admitted the patient," he said. "Physician documentation is crucial."

Additionally, providers should note that reviewers will consider time the beneficiary spent receiving outpatient care when evaluating two-midnight compliance. This time when, for instance, the patient was receiving outpatient ER services won't count as inpatient care, but it will count in terms of whether their stay met the two-midnight criteria, according to CMS.

If hospitals' Part A claims are denied based on the fact the inpatient admission wasn't reasonable and necessary, they can rebill for medically reasonable and necessary Part B inpatient services.

CMS will conduct educational outreach efforts later in 2014 based on the results of the initial reviews. Hospitals will receive reasons for claim denials under the rule via letter and individual phone calls will be made to providers with moderate, significant or major compliance concerns. 

Physician engagement
Northwestern Memorial Hospital officials are in the midst of figuring out the best approaches to two-midnight rule compliance, according to Ms. Kitt. She said they concluded it all boils down to three critical elements, the first of which is engaging physicians.

In September and October, Northwestern's chief of staff sent a brief message to physician leaders to get them involved and raise awareness, she said.

"Focusing the communication and making sure it's coming from a credible source within the organization is really important," she said. "We've provided updates focused on what we know and how it changes the practice."

The organization has also engaged other physicians beyond those in leadership positions, and they have proved instrumental in forming plans for moving forward, she said. They have helped determine approaches for meeting the requirements, improving overall processes and providing feedback, among other aspects of compliance. 

Keeping it simple
Ms. Kitt said Northwestern has also found it's best not to make compliance too complicated.

"If we really look at the fundamental elements of the rule, there are a few new twists, like anticipated length of stay, but really the other elements of the certification…the order, the medical necessity, documentation of how sick the patient is and what you're doing for them…these are all part of the thinking that goes into whether or not the patient really needs to be hospitalized," she said. "And we really try to incorporate that into our thinking and not make this more complicated than it needs to be."

She said the hospital is trying to incorporate two-midnight rule adherence into utilization work that's already underway, so it's more of an enhancement applied to ongoing thought processes and determinations.

Making use of technology
Additionally, Ms. Kitt said Northwestern seeks to take advantage of any technical capabilities that will make the "right thing to do the easiest thing to do." For instance, the capability to determine when care services began will be crucial.

"Providers are used to thinking of length of stay as starting from the time the order was written for the inpatient admission," she said.

Ms. Finis of TeleTracking said providing real-time information access to key information about a patient's care to all care providers through a patient-tracking portal can help hospitals and health systems.

"Real-time information is giving information rapidly at the intervals you need to drive improvement and action," she said.

For instance, Mr. Fletcher of TeleTracking described how a patient portal implemented at LewisGale Regional Health System in Salem, Va., will make two-midnight rule compliance easier. The portal identifies cases that might need two-midnight scrutiny based on information entered into the ADT and electronic health record systems, he says.

"We suggested simply examining payer information, and if the code for traditional Medicare is detected, applying a two-midnight rule attribute to those patients," he said.

He explained this sort of system allows providers to identify two-midnight cases with just a glance at the patient portal, which is "effectively an electronic nursing whiteboard." 

Establishing solid communication and feedback plans
Based on her experience with Northwestern, Ms. Kitt advised other hospitals and health systems to develop solid communication and feedback plans regarding compliance.

Northwestern has developed an education plan for clinicians that involves support from utilization specialists and physician advisors, she said. They also employ broader communication methods; for instance, she said their EHR system has a mechanism that allows them to "post messages to the masses."

Additionally, she said the hospital is incorporating documentation requirements on the two-midnight rule into ongoing utilization  work that involves educating and communication with physicians. To monitor their progress, they're developing reports that draw on information from the organization's electronic data warehouse.

"Those reports will help us to follow up with groups, follow up with individuals and target our strategies going forward so we can improve our performance," she said. "Those are the key elements that we have developed and have been operating by."

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