April 21, 2016

If at First You Don’t Succeed, Drop What Ails You

For many of you who have not heard of the Two Midnight Rule that CMS revealed in late 2013, don’t fret. It is only the beginning of the end.

In order to emanate simplicity for hospitals and provider shareholders alike and to “address the higher frequency of beneficiaries being treated as hospital outpatients” (CMS.gov), a system was set to reverse unnecessary spending and decode what is payable under Medicare Part A. In elemental fashion, the Two Midnight Rule stated that:

  1. In-patient admissions will usually be payable under Part A if the admitting doctor expected the patient to require a hospital stay that passed two midnights and the medical record supports the reasonable justification.
  2. Medicare Part A payment is usually not appropriate for hospital stays that are not expected to span at least two midnights.

In detailed form, the TMR (Two Midnight Rule) does not and should not prevent the doctor from providing any care or service at any medical center, disregarding the foreseeable duration of the service provided.

Following the approval of the TMR, CMS received a slew of negative critics and even a lawsuit. Since then, CMS decided to drop TMR’s inpatient payment cuts as it would increase Medicare spending by at least $220 million after the influx of patient admissions. The final determining factor that paved the way for the drop was the September ruling in Shands Jacksonville Medical Center v. Burwell. A federal judge partially sided with the multitude of hospitals around the country stating that such policies should be open to renegotiation. Hospitals will finally see an impermanent increase of 0.6% in fiscal year 2017 due to the removal of the 0.2% reduction. This is a huge plus as this could make up for the loss hospitals experienced in the last three years. A net increase of $539 million to hospital inpatient prospective payments for physicians in 2017 is expected.

After all the ongoing railroaded attempts at achieving the perfect balance in doctor-mandated in-patient stays, CMS decided to forgo the 0.2% reduction in 2017 completely. What started out as a promising ingenious take on hospital issues quickly fizzled out into a flounder that should be quickly forgotten as quickly as it was dropped.

If you have any further questions or would like to discuss how the Two Midnight Rule could affect your practice and/or your privileges, please do not hesitate to contact us!

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About Kate G
Kate is a multi-hyphenated billing and coding fanatic and a highly caffeinated cycle revenue dreamer.