Public Policy

CMS Releases Updated Two-Midnight Rule for 2016


On November 13, the Centers for Medicare & Medicaid Services (CMS) is scheduled to publish its final OPPS rule for 2016. One of the biggest impacts for hospitalists is the update to the two-midnight rule. Here are six areas of interest to hospitalists:

1. The two-midnight rule became effective just over two years ago, on October 1, 2013. The purpose of the rule is to define which Medicare beneficiary hospital stays are appropriate for Medicare Part A payment.

2. The original rule stated that if the physician (or other practitioner) expects the patient to stay for fewer than two midnights, then the services should be billed as outpatient (Medicare Part B), and not inpatient.

3. In the first two years of this rule, the only exception was for those diagnoses that CMS designates as “inpatient only.”

4. The new rule modifies the exceptions to the two-midnight rule. Under the new rule, the exception can now be determined by the physician (or other practitioner) on a “case-by-case basis.” Every case can still be subjected to medical review.

5. Another change is that short stays will no longer be reviewed by Medicare administrative contractors or recovery audit contractors, which are usually funded on a contingency basis. Under the updated rule, the quality improvement organization contractors will review short inpatient stays. This went into effect on October 1, 2015.

6. Additionally, the new rule does state “we [CMS] continue to expect that stays under 24 hours would rarely qualify for an exception to the two-midnight benchmark.”

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