The AHA Lawsuit Against HHS Over Two-Midnight Rule

April 24, 2014

Postponed ruling requires two-night hospital stay to qualify for inpatient reimbursement. Practices could experience hit to revenue and patient care.

According to a recent press release, the American Hospital Association filed two connected lawsuits against the HHS "challenging the ill-advised 'two-midnight' rule for inpatient admissions that imposes regulatory burdens that could compromise care for seniors." At the crux of the cases is the requirement that a physician provide certification upon admission that the patient will need hospital care for at least two nights to be qualified as an inpatient under Medicare Part A and receive the correlating reimbursement. In this instance, physicians would also feel the impact of CMS' 0.2 percent payment reduction in 2014. According to Rick Umbdenstock, AHA's president and CEO, "[t]he two-midnight rule undermines medical judgment and disregards the level of care needed to safely treat patients." Hence it is a prudent move to understand the potential reimbursement impact for both physicians and hospitals.

A good starting point is to do an analysis of those services that are at risk of moving from inpatient reimbursement to outpatient reimbursement under the new rule. Those cases that would have previously qualified as "observation status" must also be considered, as they may move into the inpatient status. This can help determine utilization needs, as well as revenue cycle impact.

For physicians, this means documenting medical necessity now more than ever. Even though the "probe and educate" period is still in effect and recovery contract auditors are limited as to what they can use in their audits, in relation to the two-midnight rule, documenting specifically can reduce the risks of adverse audits, avoid non-reimbursement of hospital acquired conditions, and increase the accuracy for coders. These are two cases to watch because of the impact on providers.