CMS delays 'two-midnight' policy until April 30

With the Senate waiting to vote on the Medicare sustainable growth rate bill until it reconvenes on April 13, the Centers for Medicare & Medicaid Services (CMS) has decided to delay enforcement of the “two-midnight” policy until April 30.

CMS issued a final rule on the policy on Aug. 2, 2013. It stated that surgical procedures, diagnostic tests and other inpatient treatments were appropriate for inpatient Medicare Part A payments if patients stayed in the hospital for at least two midnights.

Under that rule, any time a patient spends in an inpatient setting is not considered for outpatient payment.

The two-midnight policy has been delayed several times. Before CMS issued its most recent delay, it was supposed to enforce the rule starting March 31.

Hospitals and providers are allowed to file appeals with CMS if they do not agree with the ruling on whether a patients’ stay is classified as outpatient or inpatient. CMS pays different rates for inpatient and outpatient care.

According to CMS, the two-midnight rule will decrease improper Medicare Part A payments and reduce the administrative costs of appeals for hospitals and the Medicare program.

To calculate payments for inpatient stays, CMS uses the inpatient prospective payment system, in which cases are categorized into diagnosis-related groups and assigned a payment weight.  Hospitals treating a high percentage of low-income patients are given a disproportionate share hospital adjustment.