Published by the Centers for Medicare and Medicaid Services (CMS) in August 2013, the Inpatient Prospective Payment System/Long-Term Care Hospital Final Rule (CMS-1599-F) – known as the two-midnight rule – poses a bureaucratic headache for hospitals and treating physicians.
The two-midnight rule sets standards for inpatient admissions vs. keeping a patient under observation care. CMS’s stated goal is to prevent prolonged hospital stays in outpatient status and to improve program integrity. If the treating physician does not expect the patient to be in the hospital for at least two midnights, then barring some exceptions for certain surgeries, the patient must remain under observation.
Importantly, while the two-midnight rule currently applies only to Medicare Part A payment, it likely will become the standard for all payers in Maryland. The intention clearly is to improve the system by addressing perceived inadequacies, but practically the two-midnight rule presents hospitals with another regulatory hurdle in treating patients and seeking fair compensation for patient care.
Hospitals already are dealing with pressures to provide quality care more efficiently amid cost-cutting and tight budgets; now this rule presents payers with another opportunity to deny hospital claims.
One of the rule’s most obvious deficiencies is when the treating physician uses wording other than “admit to inpatient” on the admission order, Medicare contractors auditing the claim can deny payment without any further review – that’s right, no appeals. So if the aide scribing the physician’s order writes, “admit to ICU,” for moving a patient to the intensive-care unit, the payer can deny the claim for the patient’s stay with impunity.
How ironic: Medical records are supposed to be specific and accurate, yet using the correct word now can result in denial of payment.
The rule also presents myriad ethical dilemmas for attending physicians, particularly those who treat patients in emergency rooms. These ER doctors have taken the Hippocratic Oath to treat their patients scrupulously, giving top priority to their care.
The dilemma for ER doctors dealing with difficult cases: Keep the patient under observation, knowing it is not the best treatment option, so that the insurance claim is paid. Or admit the patient, ensuring the optimal course of treatment, but risking auditors’ retrospectively labeling the stay as “not medically necessary” and denying payment.
The underlying question is: Should a hospital have to choose between the best course of patient treatment and safeguarding the bottom-line? Rather than threaten to withhold payment to a hospital for a physician’s inability to predict the future, payers should reimburse for the course of treatment because the hospital served the patient’s needs.
Barring any regulatory changes, going forward hospitals need to protect themselves financially by monitoring their medical-record language and, when applicable, eliminating any wording other than “admit to inpatient.” Hospital administrators may also need to consider supplementary staff training regarding the revised inpatient admissions procedure. Making a small short-term investment now could pay dividends over the long-term in fewer denied claims.
Anderson & Quinn, LLC is a renowned law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
