Physicians Critical of Proposed Changes to Medicare’s Two-Midnight Rule

In fact, with the changes, “CMS had all but abandoned the term ‘inpatient hospital care’ in favor of simply ‘hospital care.’ Now it is back,” says Dr. Engel, who is also a professor of medicine at Huntsman Cancer Institute. “The two-midnight rule was a payment policy, not a ‘care policy.’ Now we may be back to debating what constitutes ‘inpatient care’ versus what could have been ‘safely delivered in a different/lower status such as observation.’”

Dr. Engel and Dr. Locke recently published a study of RAs and the two-midnight rule in the Journal of Hospital Medicine, with University of Wisconsin-Madison School of Medicine and Public Health hospitalist Ann Sheehy, MD.²

The AHA-CMS Quarrel

In addition to SHM, other organizations are heartened by CMS’s responsiveness. Priya Bathija, senior associate director of policy at the American Hospital Association, called them a “step in the right direction,” but also highlighted some of the group’s lingering concerns.

“We think it’s a good thing they’re using QIOs as first-line medical review as opposed to RAs, but we still want to make sure RAs will not make inappropriate denials of claims,” Bathija says.

The AHA is fighting a legal battle against the U.S. Department of Health and Human Services over a 0.2% reduction in inpatient payments through the two-midnight rule, maintained in the proposed changes, which CMS says are warranted based on a projected increase in inpatient service claims.³ The AHA disputes these actuarial values, Bathija says.

The AHA is calling upon CMS to make changes to short stay payments and submitted a letter to CMS outlining six models.⁴ The agency accepted comment on the proposed changes through August 30.

The fundamental issue, however, is that the Medicare payment system is vastly out of date, Dr. Locke says. “What I have advocated is to get rid of Part A and Part B distinction, just like private insurance,” he says, “so when you’re hospitalized, you’re hospitalized, and there is no distinction except inpatient extended, recovery outpatient, or extended outpatient observation.”

If the proposed rule changes are finalized, hospitals are going to have to learn to live with them, despite ambiguous guidance, and adjust their workflow, Dr. Locke says.

“It costs a lot of money and time, and hospitals don’t want to do something thinking they’re doing it in good faith but then the Inspector General says you owe $10 million,” he says. “In general, I and others don’t see this fixing any fundamental problems.”

Kelly April Tyrrell is a freelance writer in Madison, Wis.

References

1. U.S. Department of Health and Human Services. Medicare program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center payment systems and quality reporting programs; short inpatient hospital stays; transition for certain Medicare-dependent, small rural hospitals under the Hospital Inpatient Prospective Payment System. July 1, 2015. Accessed July 29, 2015.
2. Sheehy AM, Locke C, Engel JZ, et al. Recovery audit contractor audits and appeals at three academic medical centers. J Hosp Med. 2015;10(4):212-219. doi: 10.1002/jhm.2332.
3. American Hospital Association. Associations, hospitals challenge two-midnight rule in federal court. April 14, 2014. Accessed July 29, 2015.
4. Fishman LE. RE: Two-midnight policy and potential short stay payment solutions [letter]. American Hospital Association. February 13, 2015. Accessed July 29, 2015.