For-profit health system CFOs cautiously optimistic on 2-midnight rule

The CFOs of two of the largest for-profit hospital systems said it is too early to see the effect of CMS' two-midnight rule, but they expressed optimism on their most recent earnings calls. 

In 2024, Medicare Advantage plans must provide coverage for an inpatient admission when the admitting physician expects the patient to require hospital care for at least two midnights, otherwise known as the two-midnight rule. The rule was included in the 2014 Medicare inpatient prospective payment system final rule. In 2023, CMS clarified in its final rule that MA plans must also follow the two-midnight rule, its case-by-case exception and the inpatient-only list beginning in 2024.

On Nashville, Tenn.-based HCA Healthcare's Jan. 30 earnings call, CFO Bill Rutherford said the rule ultimately will benefit the system's patients and "we think, over time, there could be some moderate positive results for us." 

Mr. Rutherford said the rule is "really early" in its progression but added it should be "positive for us if it plays out as expected." 

"It's a notable change for the payers," he said. "So we're working with them very closely on the administration of those plans and making sure it's operating as described on there. And if it does, we should see it equally throughout the year. We're working closely on it, but it's a pretty big change for the payers. There might be some administrative differences as it gets implemented through the year. But we hope, very quickly, we'll be able to work our way through that and begin to see some benefit as we go through 2024." 

Kevin Hammons, CFO of Franklin, Tenn.-based Community Health Systems, similarly said on the system's Feb. 21 earnings call that it is too early to see the effects, "but there certainly should be some benefit from the new guidance."

Mr. Hammons said Medicare Advantage payers began denying and downgrading "significantly more claims" in the post-pandemic period, but he believes those have hit a peak. He said those denials have gotten more attention from the government, which "resulted in some movement by CMS to come out with additional guidance around their expectations." Those include the two-midnight rule and prior authorization reforms

"We have yet to see any real change that's meaningful or measurable, but having said that, we do expect there to be some favorable movement into 2024," he said.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars