American Hospital Association applauds proposed changes to two-midnight rule

In a sign that hospitals and the Centers for Medicare & Medicaid Services are moving closer to an agreement over the controversial two-midnight rule regarding inpatient admissions, the American Hospital Association (AHA) has praised changes that have been proposed by the agency--but it still wants more time before those changes go into effect.

Short inpatient stays only qualify for inpatient coverage under Medicare if they span more than two midnights. But CMS' July proposal, part of the Outpatient Prospective Payment System (OPPS) rule for fiscal 2016, would modify the two-midnight rule to allow physicians to have some discretion on a case-by-case basis, allowing them to occasionally bypass the rules so hospitals could collect a payment from Medicare on an inpatient basis.

The AHA had filed suit against the CMS over the two-midnight rule last year, claiming it had interefered with the ability of physicians to render judgment as to which patients should be admitted to the hospital and which ones should remain under observation care. Hospitals are paid at a much lower outpatient rate for observation care cases.

"We believe that CMS' proposed changes are a good first step towards resolving some of the problems created by this policy," wrote AHA Executive Vice President Rick Pollack in an Aug. 27 letter to acting CMS Administrator Andrew Slavitt. "We are pleased that CMS' proposal is more reflective of the agency's longstanding policy that recognizes the important role of physician judgment and individual patient needs in the hospital admission decision-making process. In addition, we appreciate that this proposal maintains the certainty that patient stays of two midnights or longer are appropriate as inpatient cases."

However, the AHA has also asked that the CMS delay implementation of the revised two-midnight rule until March 31, 2016 "to allow hospitals sufficient time to not only implement the policy changes but also to ensure that CMS has the time necessary to issue detailed guidance." A partial moratorium on enforcing the two-midnight rule is currently in effect until the end of this year.

The AHA also expressed concern about a proposed 2.0 percent payment cut tied to the OPPS conversion factor. "The agency's proposed cut is ill-conceived and founded on questionable assumptions, a poorly described methodology and data that are not publicly available," the letter said. 

To learn more:
- read the AHA's letter (.pdf)