Critical Access Hospital Soothsayers and the 96-Hour Physician Certification Requirement

Faegre Drinker Biddle & Reath LLP

"Son, I think you need hospital care."

"But Dr. Wellbeing, will I need to be in the hospital for at least two midnights?"

"Yes Johnny, I believe that given the severity of your illness, and the intensity of services required by your condition, you'll need inpatient hospital care for at least two midnights."

"One more thing Dr. Wellbeing, will you certify that I'll be discharged or transferred from the hospital within 96 hours?"

"Yes Johnny, I absolutely believe that the medicine we'll give you will kick in after a day or so, and we'll start to see substantial improvements in your pneumonia after two midnights to the point that we can discharge you within 96 hours."

"Wow, that's amazing that you can predict stuff like that, you sure know your medicine."

"And you, my friend, have a freaky awareness of Medicare's inpatient admission criteria."

Is this the conversation that rural physicians are having with critical access hospital patients these days? Or is this the conversation that physicians are having with their hospital's utilization review nurses? 

This year critical access hospitals (CAH) have struggled to implement procedures to comply with both the "two-midnight" rule and the 96-hour physician certification requirement. The combination of both puts physicians in a difficult spot of trying to predict whether the patient will need inpatient care for at least two midnights, and in critical access hospitals, to certify that the patient will be discharged or transferred within 96 hours.

This article will focus on the 96-hour physician certification requirement. Unlike the two-midnight rule, it is not a new idea created by the Centers for Medicare and Medicaid Services (CMS). It is based on a statute that has been on the books for several years.1 What is new is that CMS actually intends to enforce the rule through audits and recoupments, which is very controversial.


The controversial CMS position on the 96-hour physician certification requirement traces its origins back to the RAC Demonstration Program. Between 2005 and 2008, CMS conducted a demonstration program and contracted with private companies, called Recovery Audit Contractors (RAC), to identify payment errors. The RAC contractors were paid a contingency fee and were allowed to keep a percentage of the value of the overpayments identified. During the three year period, RAC contractors recovered $992.7 million for CMS. Of that amount, 85 percent of the recoveries were from inpatient hospitals, and the vast majority of those recoveries were related to the medical necessity of inpatient admissions. Given the success of the demonstration program, CMS enacted the RAC "permanent program." The RAC contractors have continued to recover millions of dollars from inpatient hospitals related to short stays that were not medically necessary.

The success of the RAC program has not only resulted in return of millions of dollars to the Medicare fisc, but has also created an incredible backlog of appeals. Hospitals in large numbers continue to appeal medical necessity denials and the system is overwhelmed. It now takes years to get appeals in front of an administrative law judge to debate the medical necessity of an inpatient admission.2 In April of this year, Congress attempted to remedy this situation by enacting the Protecting Access to Medicare Act of 2014, which put a freeze on RAC inpatient hospital patient status reviews with dates of service between October 1, 2013, and March 15, 2015.

To address the mounting denials and appeals, CMS published the two-midnight rule in August of 2013 in an attempt to clarify to providers what constitutes a valid inpatient admission.3 Since then it published clarifying communications on September 5, 2013, and January 30, 2014. 

Critical access hospitals have gotten caught up, perhaps unintentionally, in this wave of "clarifications" from CMS regarding inpatient admissions. In its January communication to hospitals, when talking about physician certifications, CMS noted that for critical access hospitals, the physician must certify that the beneficiary may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the critical access hospital.

However, if a physician cannot in good faith certify that an individual may reasonably be expected to be discharged or transferred within 96 hours after admission to the CAH, the CAH will not receive Medicare reimbursement for any portion of that individual's inpatient stay.4

This communication shocked critical access hospitals. Apparently some critical access hospitals had been treating the 96-hour physician certification requirement as a condition of participation, which it also happens to be,5 rather than a condition of payment, which it definitely is and has been for quite some time.

Shortly thereafter a bill was introduced in Congress to amend the statutory 96-hour physician certification requirement. On February 4, 2014, the Critical Access Hospital Relief Act of 2014 (H.R. 3991) was introduced in the House. A companion bill was introduced in the Senate later in the year.6 The statutes would make simple revisions to the Social Security Act to delete the 96-hour physician certification requirement as a condition of payment, but it would still be a condition of participation. Both bills have been referred to committee and have not moved forward. The legislation is not expected to pass any time soon.

Previous CMS Clarifications

The "clarification" regarding the 96-hour physician certification requirement is reminiscent of some past memorable CMS clarifications. 

In 2009, CMS clarified the physician supervision requirement for therapeutic services provided in a hospital setting. For years providers had believed that physician supervision in the hospital was "assumed," until CMS clarified that a physician must be physically present on the hospital campus and "immediately available to furnish assistance and direction throughout the performance of the procedure." "Immediately available" requires that the physician be close enough to intervene "without interval of time."7 This clarification led to operational changes at hospitals across the country to comply with the clarified physician supervision requirement.

Several years ago, in 2002, CMS "relaxed" the requirements for hospitals to obtain Medicare Secondary Payer (MSP) information from reference lab patients. CMS noted that such information didn't have to be collected from patients if it had been collected by the hospital within the past 90 days. Somebody forgot to tell CMS that most of the time, a hospital reference lab never sees a reference lab patient, and had never been collecting MSP information from them. Hospitals weren't about to call patients over the phone to obtain MSP information. Congress stepped in, and in 2003 passed a law to exempt hospital reference labs from the MSP requirement if they had no face-to-face encounter with the patient.8 It is possible that some hospital reference labs never even attempted to collect MSP information in 2002 and just waited for a fix to come along.

For the time being, critical access hospitals will need to take the physician certification requirement seriously and take steps to ensure its effective implementation. A fix is not likely to come along anytime soon.

Current Requirements

The final rule contains the following requirements.


The certifying physician must note in the medical record that there is a good faith belief that the patient may reasonably be expected to be discharged or transferred from the critical access hospital in 96 hours. CMS noted in its January communication that if unforeseen circumstances cause the individual to stay longer than 96 hours, "there would be no problem with the CAH designation" as long as the CAH meets its 96-hour annual average requirement.

Some rural physicians are reluctant to sign such a certification. The Minnesota Hospital Association assembled data on the percent of discharges, by diagnosis-related group (DRG), that extend beyond 96 hours in Minnesota critical access hospitals. Below is a chart of the five DRGs with the highest percent of discharges later than 96 hours.

Minnesota Critical Access Hospitals: Percent of Discharges Beyond 96 hours




% of Total





Simple Pneumonia w/CC/MCC




Rehab w/CC/MCC




Simple Pneumonia w/o CC/MCC




Rehab w/o CC/MCC




The table suggests that for all but four DRGs, less than 3 percent of critical access hospital patients remain in the hospital more than 96 hours. So, in the vast majority of cases, physicians should have a good faith belief that their patient will be discharged from a critical access hospital within 96 hours. Although there may be some discomfort with the certification process, it shouldn't be hard to sign it given the facts and statistical probability.

Certifying Physician

The certification must be made by a practitioner who has sufficient knowledge of the patient's hospital course, medical plan of care and current condition. CMS recognizes that the following individuals would be in a position to have sufficient knowledge to sign the certification:

  • The admitting physician of record, or a physician on call for him or her
  • The primary or covering hospitalist
  • The beneficiary's primary care practitioner
  • A surgeon on call for him or her
  • Emergency or clinic practitioners caring for the patient at the point of inpatient admission

CMS rejected the idea of having a physician who serves on the utilization review committee sign the certification, claiming that such a physician does not have direct responsibility for the care of the patient and therefore is not considered to be sufficiently knowledgeable to order the inpatient admission.9


CMS tightened the timing of the certification requirement. The old rule required that the certification be signed before the claim was submitted to Medicare. The current rule requires that the certification be signed prior to the patient's discharge. Critical access hospitals should strive to get the physician certification in the record and documented at the same time that a physician orders a patient to be admitted.


Critical access hospitals should not ignore the physician certification requirement and hope that it gets fixed by Congress before the end of March 2015, when RAC and other contractors begin auditing for compliance with the physician certification requirement. Hospitals should implement procedures for satisfying the certification requirement in a timely manner, by a physician who is directly involved in the patient's care.

For more information, watch a video on the 96-hour physician certification requirement.

1 42 U.S.C. § 1395f(a).

2 In fact, on August 29, 2014, CMS made a blanket offer to all hospitals with pending patient-status appeals to settle for 68 cents on the dollar. 

3 Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care; Hospital Prospective Payment System and Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Payment Policies Related to Patient Status; Final Rule, 78 Fed. Reg. 50496, 50906 (August 19, 2013).

4 Posted on the CMS website at: (emphasis added).

5 See 42 C.F.R. § 485.620.

6 The Craig Thomas Rural Hospital and Provider Equity Act of 2014.

7 Changes to the Hospital Outpatient Prospective Payment System and CY 2010 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2010 Payment Rates, 74 Fed. Reg. 60316, 60578 (November 20, 2009).

8 Medicare Prescription Drug, Improvement & Modernization Act of 2003, Section 943; see also Medicare Secondary Payer Manual, CMS Pub. 100-05, Ch. 3, § 20.

9 CMS January 30, 2014 communication to providers, supra n. 4.

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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