CMS Proposes Significant Changes to the Two Midnight Rule in the 2016 OPPS Proposed Rule

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On July 1, 2015, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year 2016 Outpatient Prospective Payment System (OPPS) Proposed Rule (CMS 1633 P). In response to stakeholder concern, CMS proposes to expand a current, but limited, exception to the controversial Two Midnight Rule. The scope of the expansion is unclear at this point, but as described below, the proposal allows for Part A coverage of one-day stays under standards similar to the pre-Two Midnight Rule standards for evaluating patient status. In addition, CMS announced significant changes regarding contractor review of patient status claims, as discussed in detail below.

Genesis of the Two Midnight Rule -

Almost two years ago, on August 2, 2013, CMS issued final rule CMS-1599-F, containing the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS), in which CMS implemented what is commonly known as the Two Midnight Rule. The Two Midnight Rule represented a significant and rapid departure from past practice. In many respects, CMS abandoned longstanding policies regarding the determination of patient status.

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