How Do Hospitals Operationalize the Two Midnight Rule?

Patient status is not new, the Medicare defined outpatient, observation and inpatient status has been in place for many years. This rule is to help practitioners and facilities identify and document the physician’s decision to have the patient treated in an outpatient (observation) or inpatient status.

Operationally, the provider takes into account the patient’s history, comorbidities, the severity of the signs and symptoms, current medical needs and the risk of an adverse event when determining the clinical course of care and the patient’s status placement in the facility. The need for inpatient care over two midnights must be documented as clearly as clinical orders. If the patient requires medically necessary hospital care that is expected to transcend two midnights, then inpatient admission is generally appropriate. However, if the physician at the time the patient presents, is unable to determine how long the patient will require medically necessary care in the hospital, then the physician may order observation services and delay the order to inpatient admission until the following day if and when it becomes clear that medically necessary care will be required beyond the second midnight.

Patient and family convenience should not be a factor in determining the need for two midnight stays, nor should waiting for services not available on weekends or holidays.

The physician is in charge of the patient’s care and status. The two midnight rule takes into account all the time the patient is in the hospital. For example a patient is in the emergency room waiting room at 2300 and is seen by a provider at 0030; because the patient was not receiving active care, this midnight would not apply to the two midnight rule. However, should the patient receive care at 2345, then this time would apply to the two midnight rule. The same is true for observation hours. A patient may arrive in the emergency room, begin care and the physician determine that the patient can receive appropriate care in the outpatient setting (observation) for a time of less than two midnights; the patients condition does not improve and the physician determines that the patient requires an inpatient level of care, proper documentation and orders are written and all the time the patient received care in the facility will be counted and the payment for inpatient from Medicare Part A is appropriate. The change in status that will show two midnight requirement (one as an outpatient and one as an inpatient) in this instance must be on the UB04 occurrence code 72.

The best practice of determining a patient’s status is in a written or verbal order (that is later endorsed by the provider) in which the physician attests to the reason for the admission, and what he or she expects the anticipated length of stay will be.

Utilization Review and Case Management will play an essential role assuring the patient status is address appropriately.

CMS final rule 1599-F clarifies that for purposes of payment under Medicare Part A, a Medicare beneficiary is considered an inpatient of a hospital, including a critical access hospital, if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner. The final rule provides instruction on when an inpatient hospital admission should be ordered and certified, and clarifies for the practitioner and facility when inpatient hospital admissions are generally appropriate for Medicare Part A payment. The new rules are intended to address concerns about some Medicare beneficiaries having long stays in the hospital as outpatients and improve program integrity. Under the rule, if the ordering practitioner expects a beneficiary’s surgical procedure, diagnostic test or other treatment to require a stay in the hospital lasting at least two midnights, and admits the beneficiary as an inpatient based on that expectation, it is generally appropriate that the hospital receive Medicare Part A payment. Also as a condition of Part A payment, the order must also be documented in the medical record in accordance with the regulations, and a physician must certify the medical necessity of hospital inpatient services. The final rule emphasizes the need for a formal order of inpatient admission to begin inpatient status, but permits the ordering practitioner to consider all time a patient has already spent in the hospital as an outpatient receiving observation services, or receiving care in the Emergency Department, operating room, or other treatment area in guiding their two-midnight expectation.

You can find the final rule by going to:

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