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Hospitals file lawsuits against the two-midnight rule

AHA President: The rule 'undermines medical judgment'

A coalition of hospitals and hospital associations, led by the American Hospital Association (AHA), has filed a pair of lawsuits against the controversial "two-midnight rule," which governs Medicare inpatient claims, Modern Healthcare's John Frank reports.

Hospitals plan three-pronged attack on the 'two-midnight rule'

Understanding the two-midnight rule

The controversial two-midnight policy—included in Medicare's inpatient payment rule for 2014—assumes a hospital admission to be admissible for payment if a physician expects a beneficiary's treatment to require a two-night hospital stay and admits the patient under that assumption. Shorter inpatient stays are deemed legitimate if they are coded as outpatient observation stays.

The rule aims to limit the growth in extended observation stays at hospitals, which have skyrocketed in recent years. After significant pushback from hospitals, CMS created a "probe and educate" period, which limited how recovery audit contractors may use the rule for fund recovery.

The 'two-midnight' rule: What you need to know

Details of the suit

The hospitals argue that several provisions of the rule "burden hospitals with unlawful arbitrary standards and documentation requirements and deprive hospitals of proper Medicare reimbursement for caring for patients," according to a release announcing the lawsuit.

The plaintiffs signaled out the "wholly arbitrary requirement that a physician must certify at the time of admission that a Medicare patient is expected to need care in the hospital for a period spanning two midnights to be considered an inpatient," the release noted.

AHA President and CEO Richard Umbdenstock added that the rule "undermines medical judgment and disregards the level of care needed to safely treat patients." He said hospitals "stand by a physician's decision on what care is appropriate for each patient" (Frank, Modern Healthcare, 4/14 [subscription required]).

Two-Midnight Rule Impact Assessment

Which of your cases are most at risk of moving to outpatient under the "two-midnight" rule?

Download an institution-specific report that details your inpatient Medicare cases potentially at risk for payment denial and your observation cases that may be eligible for inpatient admission.

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