Blog Post

Waving the white flag? CMS offers hospitals amnesty for 'two-midnight' rule

September 26, 2013

    Hanna Jaquith, Daily Briefing

    controversial rule on Medicare inpatient admissions set to take effect on Oct. 1 will proceed as planned, with one notable exception: For the next three months, hospitals will not face financial penalties after mistakenly admitting patients for care that could have been provided in an outpatient setting.

    In an Open Door Forum on Thursday, CMS announced the three-month "probe and educate" program, which was intended to assuage the concerns of hospitals transitioning to the regulatory framework called for under the fiscal year 2014 Inpatient Prospective Payment System.

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    Providers had sought a delay (or simply a little leg room) from the agency to integrate the guidance on admission and review criteria.

    During the call, Melanie Combs-Dyer—acting director of the provider compliance group at CMS—walked through the nuts-and-bolts of the new probe-and-educate program:

    • Medicare Audit Contractors (MACs) will focus their reviews on claims that are less than "two midnights" after admission. They will continue to conduct coding reviews, or reviews to ensure coverage guidelines are met for a certain surgeries, but for the purpose of verifying inpatient, outpatient, and observation status, only claims marked as one inpatient midnight will be used.
    • RACs will not be conducting medical necessity reviews during the three-month "amnesty" period.
    • Ten claims will be gathered from most hospitals, while a larger sample—about 25 claims—will be taken for larger facilities.
    • MACs will review the results of the claims to provide education back to providers, and inform hospitals how well they're doing in terms of compliance.
    • At the end of the three-month period, CMS will review the results to gauge the need for more guidance and "go from there," Combs-Dyer said.

    "We felt, and we still feel today, that it is important for us to move forward with the policy, … but at the same time to give some comfort to hospitals that they're not going to be in jeopardy while they put in place these changes," said CMS's Jonathan Blum. He stressed the agency's dedication to monitoring the situation, and hinted at "possible longer periods to this transition period if the data warrant."

    The American Hospital Association, for one, appeared nonplussed. In a statement, the group wrote, "Today, CMS tried but failed to provide the hospital field with much needed information on the two-midnight policy. Unfortunately, the agency’s guidance only raises new questions and lacks clarity."

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