Chicago, Illinois – When a Medicare beneficiary is admitted for inpatient care, clinicians often consider the two-midnight rule set forth by the Centers for Medicare and Medicaid Services, a standard that impacts reimbursement decisions.
The two-midnight rule comes into play when a clinician determines that a Medicare beneficiary will likely require hospital care for more than two midnights, making inpatient care necessary over cheaper outpatient options, explained Regan Tankersley, an attorney at the law firm Hall Render who advises healthcare systems.
Implemented by CMS in 2013, the rule serves as a guideline for hospitals regarding which types of care qualify for Part A coverage, where the insurer covers treatment costs in full. Conversely, under Part B coverage for outpatient services, the insurer only pays a percentage of the costs, typically around 80%, according to Medicare.
Mischaracterizing care under Part A could lead to overcharging by healthcare providers, resulting in CMS identifying high error rates and inconsistency in medical claims submitted by hospitals. This ultimately prompted the need for clarification on which services could qualify for Part A coverage.
According to a report by the Office of the Inspector General for the Department of Health and Human Services (HHS-OIG), in 2014, Medicare might have paid nearly $3 billion for short inpatient stays incorrectly categorized under Part A. On the other hand, categorizing care under Part B could restrict patient access to coverage for services like skilled nursing facility admission.
The two-midnight rule brought much-needed clarity for hospitals, reducing the fear of making wrong admission decisions that could later result in payment recoupments by Medicare or auditors. This rule aimed to streamline the admission process and ensure that patients receive appropriate care based on the expected length of their hospital stay.
Enrollment in Medicare Advantage has surged to over 30 million members since the two-midnight rule was introduced, spurring CMS and HHS to enforce a new rule in the Federal Register. This rule mandates that MA plan providers must adhere to the two-midnight payment structure, aligning reimbursement practices across various Medicare coverage options.
The implementation of the two-midnight rule has had significant implications for both healthcare providers and Medicare beneficiaries, reshaping the decision-making process surrounding inpatient care and outpatient services. As the healthcare landscape continues to evolve, adherence to regulatory standards like the two-midnight rule becomes crucial for maintaining transparency and efficiency in healthcare delivery.