2-Midnight Inpatient Admission Policy

by King & Spalding
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Under CMS’s modified inpatient admission guidelines adopted in the IPPS Final Rule, Part A payment is “generally inappropriate” unless the patient is admitted based on the physician’s expectation that the patient will require a hospital stay that crosses at least 2 midnights (or the planned procedure is on the inpatient-only list).  During the ODF, CMS emphasized that for purposes of this rule, “the clock starts when the patient begins to receive hospital services” including outpatient services such as emergency room and observation services.  In response to this policy, one questioner presented the following scenario:  A patient is admitted for observation for one day, and on the second or third day the patient’s condition deteriorates and the patient is then admitted as an inpatient.  The patient is subsequently discharged one day after admission.  The questioner stated that currently many RACs would view this is a one-day inpatient stay even though the patient was actually in the hospital for three days and asked how this scenario would be treated under CMS’s new 2-midnight policy. 

CMS responded that as soon as a physician believes that a second day of observation will be needed, an inpatient admission order should be issued.  One CMS representative stated that, under this application of the two-midnight rule, there should be no observation stays of more than one day.  In response to questions, CMS representatives also discussed how other inpatient admission criteria, such as those established by InterQual or Milliman, relate to the 2-midnight rule.  CMS stated that the 2-midnight rule would apply even if an admission failed InterQual or Milliman; the only question is whether there was a medical reason that required the patient to be in the hospital for at least two midnights, even if that reason is that the patient must remain under observation for at least two days.  One ODF participant asked more directly whether  the fact that the patient is staying another 24 hours is sufficient to justify an inpatient admission.  The CMS representative replied that as long as the patient medically needed to be in the hospital for another 24 hours, it would be a valid inpatient admission. 

CMS stated that it generally will not look behind the determination to keep a patient for two midnights unless there was a pattern of abuse or delay.  One participant specifically asked what type of data CMS would look at to determine a pattern of abuse.  The CMS representative replied that it will take some time to establish average and outlier behavior under the new policy, but indicated that CMS would generally look to the data contained in a provider’s PEPPER reports. Another participant followed up

this line of inquiry by asking what happens if a death, transfer, or discharge against medical advice interrupts the expectation of a 2-midnight stay.  CMS acknowledged that the rule requires only a legitimate “expectation” of a 2-midnight stay and that there will be times when there are legitimate reasons as to why that expectation is not met.  CMS stated that such unexpected events should be thoroughly documented by providers and would be “taken into consideration by reviewers.”   

Inpatient Admission OrdersUnder CMS’s finalized policy, which CMS categorizes as a “clarification,” an inpatient admission order signed by a qualified, licensed practitioner with admitting privileges who is responsible for the patient’s care must be documented in the patient’s medical record (at or before the time of inpatient admission) and must be supported by the physician admission and progress notes.  One participant on the ODF asked whether there were any circumstances in which a resident or other “physician extender” such as a physician assistant, could issue an admission order.  CMS suggested that the answer would vary somewhat based on whether the particular hospital granted residents or other physician extenders “admitting privileges” and indicated that further guidance on this issue would be forthcoming.      

Part B RebillingDuring the ODF, CMS stated that because the 2-midnight rule represented a significant simplification of the inpatient admission criteria, it expected there to be fewer rejections of inpatient status and less need to rebill under Part B for services initially billed under Part A.  Therefore, beginning with inpatient admissions on or after October 1, 2013, the one-year timely billing requirement under Part B would be reinstated for services denied under Part A.  If a patient was admitted as an inpatient prior to October 1, 2013, however, and that admission was later determined not to be medically necessary under the old inpatient admission parameters, the more expansive Part B rebilling rights under CMS Ruling 1455-R (March 13, 2013) would continue to apply.

A recurring theme from CMS on the ODF was that providers should email questions, concerns, or comments to a mailbox established by CMS for that purpose:  IPPSadmissions@cms.hhs.gov.  The CMS representatives stated repeatedly that CMS is actively monitoring that mailbox and replying to provider questions, and that it is an important resource for CMS to understand industry concerns and the full implications of its policy.  The CMS representatives suggested that it would also be an important source for the development of a Frequently Asked Questions section on CMS’s new policies. 

Reporter, Daniel J. Hettich, Washington, D.C., +1 202 626 9128, dhettich@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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