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CMS postpones enforcement of the

Two Midnight Rule

The CMS postpones enforcement of the Two Midnight Rule
until Jan. 1, 2016


  • An enforcement delay, passed by Congress was set to expire on Sept. 30; but the CMS said Wednesday that to reflect recently proposed changes to the policy, the delay would be extended through December 31, 2015.

  • The rule was intended to provide clarity in response to a spike in observation claims (assumed to be a defensive tactic by hospitals tired of auditors challenging their admissions).

  • If a hospital stay spans two midnights, Medicare contractors are instructed to assume an inpatient admission was legitimate. Stays of less than two midnights should be billed as outpatient observation care.

  • Arguing that it undermines their clinical judgment, hospitals and physicians have intensely opposed the policy,

  • In July the CMS proposed that the rule be modified to allow physicians to exercise judgment to admit patients for short stays on a case-by-case basis.
  • QIOs (quality improvement organizations) would now be responsible for initial reviews of short inpatient hospital stays, replacing Medicare Administrative Contractors in that capacity.

  • RACs (recovery audit contractors) would be limited to conducting reviews of patient-status for hospitals that violate Medicare payment policies on a regular basis.
  • Administrative contractors are now educating hospitals and probing their current claims for errors related to the policy. Enforcement of the two-midnight rule will now begin Jan. 1, 2016.

  • The Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare spending, has previously suggested that lawmakers push for repealing the two-midnight rule in its entirety, but since the group didn't offer any alternative policy, and the CMS says public comment has not produced any viable alternatives to the rule, it will go into effect next year.


For more information, contact Medical Recovery Services

(816) 229-4887

Medical Recovery Services is a full-service revenue cycle company assisting

hospitals and surgical centers in achieving their full earning potential since 2004.

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