How To Best Prepare for Two-Midnight Rule Changes

By Lula Jensen, MBA, RHIA, CCS, MRO
Twitter: @MROCorp

CMS recently announced some adjustments to the Two-Midnight Rule, including clarifications on exceptions. Here’s what you need to know.

On June 13, 2017, the Centers for Medicare and Medicaid Services (CMS) issued clarification regarding the medical review requirements for Part A payment of short-stay hospital claims, more commonly referred to as the “Two-Midnight Rule.” For providers submitting institutional claims to Medicare Administrative Contractors (MACs) for inpatient hospital services provided to Medicare beneficiaries, Medicare Part A payment is generally not appropriate for hospital stays expected to span less than two midnights.

Hospital stays generally are payable under Part A if the physician expects the patient to stay two midnights and rationale is fully documented in the patient’s medical record. Rationale must be supported by clinical documentation. Medicare reviewers will take a look at all medical record documentation in these cases.

A Medicare contractor who performs reviews for the appropriateness of the Two-Midnight Rule will follow two distinctive policies:

  1. Two-Midnight Presumption: Per the Two-Midnight presumption, Medicare contractors will presume hospital stays spanning two or more midnights after the patient is formally admitted as an inpatient are reasonable and necessary for Part A payment.
  2. Two-Midnight Benchmark: Hospital stays are generally payable under Part A if the admitting provider expects the patient to require medically necessary hospital care spanning two or more midnights and such reasonable expectation is supported by the medical record documentation.

Exceptions to the Two-Midnight Rule
Anything that falls into an exception category must be thoroughly documented in the medical records. The documentation of medical necessity for the stay should extend beyond the physician. Every care team member involved with the patient should include documentation to justify the stay. Unless the patient meets one of the following three exceptions, it is very rare that claims will be paid under Part A:

  1. Medicare’s Inpatient-Only List: Inpatient admissions where a medically necessary inpatient-only procedure is performed are generally appropriate for Part A payment, regardless of expected or actual length of stay. These cases are designated to be performed as an inpatient, so no further justification is needed. They should be identified by Current Procedural Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS) codes falling under the IP-only procedure category.
  2. Nationally Identified Rare and Unusual Exceptions to the Two-Midnight Rule: In these cases, Medicare reviews the record and considers it appropriate. A common example is mechanical ventilation initiated during an episode. If a patient is on life support, a length of stay (LOS) of at least two midnights would certainly be warranted. CMS believes newly initiated mechanical ventilation to be rarely provided in hospital stays less than two midnights, and that it embodies the same characteristics as those procedures included in Medicare’s inpatient-only list.
  3. Physician-Identified Case-by-Case Exceptions to the Two-Midnight Rule: Hospital stays that span less than two midnights can still qualify for Part A payment. These cases can be reviewed individually and may be accepted for Part A payment if the medical record supports the physician’s assessment of inpatient status, including medical history, severity, comorbidities, current medical needs and risk of adverse events.

Tips for providers: It’s all about documentation.
Here are four ways providers can best prepare for the Two-Midnight Rule changes:

  1. Document, document, document. The Two-Midnight Rule is heavily based on medical record documentation. We have all heard the old saying, “If it is not documented, it did not happen.” For that reason, all providers of healthcare are responsible for documenting factors of a patient’s admission and consequent stay in a hospital facility. This includes ancillary care providers as mentioned above. Everything must be carefully and thoroughly documented at all times.
  2. Keep up to date with CMS changes. Ensuring teams are up to date with the latest CMS publications, rules and regulations, as well as these most recent Two-Midnight Rule stipulations, will help hospitals maintain the upper hand. Auditors don’t always keep abreast of CMS changes, and standards may vary. If the hospital is in compliance with the latest CMS publications, there is no risk of liability for the stay.
  3. Use hospital appeal rights. Hold payer contractors to those standards put forth by CMS.
  4. Form patient-status review committees. These committees span disciplines within a hospital to ensure the status applied to patient stay is accurate and documented as such. Patient-status reviews don’t involve changing patient status, but rather check to see if a claim has been properly paid under Medicare Part A. These proactive reviews are conducted retrospectively, across the entire care team from admission through discharge.

Department teams must collaborate during the entire documentation process. Most patients have a multidisciplinary care team in place—PT, OT, dietary, RNs, specialists and the attending MD. All must be aligned with reasons why the patient needs to stay in the hospital at least two midnights, and document such in their respective systems and notes.