Take Steps to Insure Two Midnight Rule Compliance

The two midnight rule affects both outpatient/observation and inpatient status. It is designed to limit the use of observation status for Medicare patients, which results in higher out-of-pocket costs for Medicare beneficiaries. The 2014 Inpatient Prospective Payment System (IPPS) final rule, published August 2, 2013, established new requirements for coverage of Medicare Part A inpatient hospital claims, such as the type of documentation needed to support an admission that lasts at least two midnights. The rule also outlined actions hospitals must undertake to determine medical necessity before admitting Medicare Part A patients. CMS issued sub regulatory guidance on September 5, 2013 that further specified the steps hospitals need to take to admit a patient under Medicare’s inpatient admission rules. This guidance addressed issues related to the two midnight provisions of the IPPS final rule, including what details to include in an admission order, the timing of that order, and how to handle verbal orders. The physician role in determining whether hospital inpatient services are “reasonable and necessary” includes estimating the length of hospitalization that beneficiaries will require.

Compliance will take a team effort. These are the top three steps to help prepare for compliance with the two midnight rule:

1)      Provide tools for certification either electronically or manually

2)      Educate the physicians on the specific requirements spelled out by CMS

3)      Empower the facilities utilization review (UR) team with assistance in compliance of these rules.

Critical to this effort is the use of a manual optional certification form or embedding questions from this form within electronic orders. This can be initiated at the beginning of care and reviewed after the first midnight to help physicians and UR answer two key questions: what is the reason for the admission and can the physician attest that the patient needs two medically appropriate midnights, as an inpatient, to resolve the condition?

The certification tool is a gift in this regard since it queues the physician to provide the needed information all in the same document necessary for compliance of the first question.

The second question is satisfied with the physician certifying or attesting to his estimated length of stay required to complete care of the beneficiary. This can be accomplished all at once if the physician knows that the patient’s care will require more than two midnights at the beginning of the hospitalization, or in stages as the patient’s course of care unfolds.

Utilization review staff should be empowered by the facility to guide the physician through this relatively new process. UR must realize that  Interqual and Milliman guidelines are great reference guides for quality care but have never been mandated or required for inpatient status of a Medicare beneficiary. Now more than ever the physician’s declaration of the two midnight criteria trumps those guidelines. In fact, the Interqual and Milliman guidelines are not in any way associated with the two midnight benchmark guidance. CMS has never endorsed or followed Interqual or Milliman guidelines. The two midnight rule is based solely on the documented, clinically necessary reason that the patient needs hospital care, and that care requires, in the physician’s opinion, that the patient stays two midnights.

Know where the risks of abuse are the greatest and educate, audit internally and re-educate as needed. Outpatient procedures in a Cardiac Cath. Lab or outpatient surgeries where patients stay longer than the routine 6-hour recovery period need particular attention from the UR staff, and perhaps additional education for the physicians involved.

An average of 60 percent of all facility inpatient and outpatient (observation) admissions, nationwide, are initiated in the emergency room. In most hospitals, ED physicians do not have admitting privileges; instead, they have bridge or transition privileges, meaning they must get the attending physician to agree to the patient status they recommend. The certification form can be a valuable tool in helping to document the decisions the ED physician made after speaking with the attending physician.

Many hospitals are realizing the benefits of having internal physician advisers. These advisers need to become experts on this two midnight rule and all its components. They can help support the UR staff and educate other physicians to help them understand what must be included on the certification form, in the medical record, and in the discharge summary to support the physician’s rationale that a patient requires two midnights in the hospital.

Planning is great, compliance greater. Be sure to check the CMS website frequently for updates and open forum calls on the two midnight rule.


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