‘Two midnight’ rule draws lawsuit – enforcement currently delayed

August 5th, 2014 - Scott Kraft
Categories:   Billing   Claims   Coding  
0 Votes - Sign in to vote or comment.

The American Hospital Association is leading the charge in a lawsuit against CMS’s controversial “two-midnight rule,” instituted last year to attempt to slow down the expanded use of observation status by hospitals by presuming that any stay intended to cover two or more midnights would be classified as an inpatient stay, rather than observation.

The rule took effect Oct. 1, 2013, but enforcement by Recovery Audit Contractors (RACs) and Medicare itself was delayed until March 2015 as part of the recently passed Medicare payment fix bill that also delayed ICD-10 implementation until 2015.

The AHA, joining with major hospitals in suing HHS, claim the two-midnight rule is arbitrary and compromises physician judgment and patient care.

The two-midnight rule does put physicians working in the hospital in an interesting position – the rule essentially presumes that a hospital stay of fewer than two midnights is an observation stay, with the claims billed as outpatient claims. A stay of longer than two midnights is presumed to be an inpatient stay.

It’s the patient’s physician, at the point of admission, that is asked to certify in the patient’s documentation that a hospital stay of two nights or more is anticipated for the patient’s case. A visit that lasts fewer than two days can still be considered an inpatient stay with physician’s certification, but these are the type of claims that CMS plans to scrutinize closely.

Fueling the hospital lawsuit is the belief that hospital profits will suffer due to the change. For starters, CMS cut hospital pay by 0.2% to fund it, an estimated $200 million annual reduction in pay. Second, observation cases pay less to the hospital, with the patient responsible for a larger portion of the cost of the care.

Observation stays had been on the rise, including instances where hospitals had pressured physicians to switch a patient from inpatient to observation due to CMS audit pressures, among other factors.

Stories have abounded of a patient being switched to observation without clear communication about the change to the physician, which resulted in denied claims that were billed as inpatient encounters to a patient who appeared to Medicare to be an observation patient.

The increase in use of observation, in turn, drew fire from Medicare patient advocacy groups, who also have sued HHS over observation policies because the observation stay costs the patient more in out-of-pocket costs and impedes patient access to other benefits, such as covered skilled nursing facility stays.

The two-midnight rule became, in effect, a CMS attempt to add clarity to an area of care that had started to confuse everyone. It appears that, at least for a little bit longer, the uncertainty will continue.

###

Questions, comments?

If you have questions or comments about this article please contact us.  Comments that provide additional related information may be added here by our Editors.


Latest articles:  (any category)

A Step by Step Guide to Medical Billing
August 20th, 2019 - Christine Taxin
The next 4 weeks we will be providing you with a step by step guide to why medical billing is now part of our Dental future. Dental surgery is performed to treat various conditions of the teeth, jaws, and gums. Surgical procedures that dentists perform include dental implants, treatment for temporomandibular ...
Are You Aware of Medicare Advantage Plans Timely Filing Rules?
August 20th, 2019 - Aimee Wilcox
The Medicare Fee for Service (FFS) program (Traditional or Original Medicare) has a timely filing requirement; a clean claim for services rendered must be received within one year of the date of service or risk payment denial. As any company who has billed Medicare services can attest, the one-year timely filing ...
Understanding Payment Indicators
August 19th, 2019 - Chris Woolstenhulme, QCC, CMCS, CPC, CMRS
Understanding how payment works with Medicare payment indicators and the impact a modifier has on payment is vital to pricing. Even if you are not billing Medicare, most carriers follow Medicare's policies for participating and non-participating rules.  Here is an article from Regence on their policy statement, describing the rules ...
Medical ID Theft
August 16th, 2019 - Namas
Medical ID Theft "So, do you guys think you can do something with that?" John asked angrily at our first meeting with him in August 2017 as he slammed a stack of medical bills, EOBs and collection letters - three inches high - down in front of my partner and I. ...
Healthcare Common Procedure Coding System (HCPCS)
August 13th, 2019 - Chris Woolstenhulme, QCC, CMCS, CPC, CMRS
There are three main code sets and Healthcare Common Procedure Coding System (HCPCS), is the third most common code set used. They are often called Level II codes and are used to report non-physician products supplies and procedures not found in CPT, such as ambulance services, DME, drugs, orthotics, supplies, ...
Q/A: I Billed 2 Units of L3020 and Claim was Denied. Why?
August 13th, 2019 - Brandy Brimhall, CPC, CMCO, CCCPC, CPCO, CPMA
Question: We billed 2 units of L3020 but were denied for not using the right modifiers. What should we do? Answer: Rather than submitting two units of the L3020 to indicate that the patient one orthotic for each foot, you would need to use modifiers identifying left foot and right foot. Appropriate coding ...
Will Medicare Change Their Rules Regarding Coverage of Services Provided by a Chiropractor?
August 13th, 2019 - Wyn Staheli, Director of Research
Two separate pieces of legislation introduced in the House of Representatives (H.R. 2883 and H.R. 3654) have the potential to change some of Medicare’s policies regarding doctors of chiropractic. Find out what these two bills are all about and how they could affect Medicare policies.



About Codapedia by InnoviHealth Systems Contact Us Terms of Use Privacy Policy Advertise with Us

Codapedia™ by InnoviHealth Systems™ - 62 E 300 North, Spanish Fork, UT 84660 - Phone 801-770-4203 (9-5 Mountain) - Fax (801) 770-4428

Copyright © 2009-2019 Find A Code, LLC - CPT® copyright American Medical Association