Two-midnight rule means complications for hospitals, patients

The controversial "two-midnight rule" puts both hospitals and patients in a tight spot, USA Today reports.

Under the rule, doctors must assess a patient's condition as serious enough to require at least two overnight stays to qualify for Medicare reimbursement under inpatient rates. Patients may remain under outpatient or "observation" status without being formally admitted as an inpatient; this status doesn't include often-costly post-release treatment, according to Alice Bers, an attorney with the Center for Medicare Advocacy. Outpatient visits typically include higher cost-sharing and separate billing for medications, leaving patients to pay out-of-pocket or look to other insurance plans for repayment.

The Centers for Medicare & Medicaid Services told USA Today early data indicate the rule is effective in reducing lengthy outpatient stays, but the Senate Special Committee on Aging slated a hearing on the rule later in July over concerns about the fallout for Medicare patients, according to the article.

"Hospitals are between a rock and a hard place," Joanna Hiatt Kim, the American Hospital Association's (AHA) vice president of payment policy, told USA Today. "If they admit someone, there's the potential risk of not being paid for that admission if [auditors] deny it as inappropriate. ... But if they put that person under observation, they risk their patient being upset with Medicare's cost-sharing rules."

In April, the AHA joined several hospital systems in a lawsuit against CMS over the rule, claiming it is overly arbitrary and curtails physician autonomy.

The rule aligns with efforts to cut healthcare costs, a major aim of the Affordable Care Act, Robert Wood Johnson Foundation Senior Program Director Andy Hyman said. "Hospitals do need to better balance the use of inpatient vs. outpatient care and ultimately reduce unnecessary utilization," he told USA Today. "The goal can't be to fill hospital beds."

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