CMS Issues FAQs for Inpatient "2 Midnight" Rule

by Baker Donelson

CMS issued its first set of FAQs on the new 2 midnight inpatient admission standards [PDF] on September 26. In those FAQs, CMS stated:

  • Medicare Administrative Contractors (MACs) and Recovery Auditors are not to review claims spanning more than two midnights after admission for a determination of whether the inpatient admission was appropriate.
    Ober|Kaler's Comments: Expect audit of inpatient admissions for one night stays. If a patient is in outpatient status, e.g., receiving observation services, over one midnight and then is admitted as an inpatient for one night, the 2-midnight standard would be met, as CMS has indicated that time receiving outpatient observation services counts for determining a 2 midnight stay. So it is important that the medical record clearly document the outpatient observation services over the first midnight. In addition, despite this statement of instruction, MACs and Recovery Auditors are authorized to audit providers where there are two documented midnights, if the auditor believes there is an intent to game the system. 
  • For a period of 90 days, Recover Auditors are not permitted to review inpatient admissions of one midnight or less that begin on or after October 1, 2013. 

    Ober|Kaler's Comments: This doesn’t mean the Recover Auditors won’t eventually be auditing dates of service beginning October 1. It just means they won’t be doing so in the next 90 days. 
  • Review contractors should evaluate the physician’s expectation that care will include at least two midnights in the hospital, based on the information available to the practitioner at the time of the admission decision. 

    Ober|Kaler's Comments: Although CMS expresses this as a confirmation of its existing policy, anyone who has defended disallowances of inpatient admissions knows that the contractors often look to subsequent patient developments to defend their disallowance of an inpatient stay. CMS’s clear statement of its policy should be helpful to providers going forward. 
  • In the furtherance of education to providers, MACs are instructed to audit a probe sample of 10-25 inpatient claims that span less than two midnights with dates of admission from October 1, 2013 through December 31, 2013. Since the review is on a prepayment basis, CMS instructs that hospitals can rebill any denied inpatient admissions. 

    Ober|Kaler's Comments: These reviews will encompass only patients who have been discharged so there will be no opportunity to rebill for services that can be performed only on an outpatient basis, such as observation services, since the Code 44 rules that would allow such billing cannot be met post-discharge. 
  • If the MAC audit identifies no issues in the probe audit, the MAC is instructed not to further audit this period unless there is a change in billing patterns. If the MAC identifies issues, it is to conduct education for that hospital and follow-up as necessary. 

    Ober|Kaler's Comments: As of the publication of this article, the new rule applies. Providers have not been given much time to put in place major systemic changes and education of their physicians and utilization review staff of the new rules, many aspects of which are still not clear as CMS continues to advise the industry that it will issue guidance “some time this fall.” Providers should document their efforts to bring their organizations into compliance, so that any shortcomings that may be found by Medicare auditors cannot be attributed to legitimate assertions that it was due to a culture of being insensitive to complying with the new rules. 

See our earlier related Payment Matters articles: “CMS Issues Inpatient Admission Order and Certification Guidance” and “CMS Adopts Final Rules for Inpatient Admissions and Inpatient Part B Billing.”

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.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.