Despite Delay, Two-midnight Rule Implementation Should Not Be Ignored

March 6, 2014

When admitting patients to the hospital, knowing Medicare rules and making use of diligent charting can make all the difference.

Despite the six-month extension period for implementation of the controversial Medicare Part A "two-midnight" rule, providers should not put this on the back burner. The reason is that the potential for lower in-patient volume can significantly impact the revenue cycle. And, with more physicians entering into Accountable Care Organizations (ACOs) or other joint venture arrangements, they can be affected in multiple ways, too.

As a recap, in August 2013, CMS issued the 2014 Inpatient Prospective Payment System Final Rule, giving the terms for reimbursable inpatient admissions. According to the final rule, when a physician admits a patient based upon the premise that the length of stay will span two-midnights at a minimum, then Medicare Part A payment is deemed appropriate. In turn, this impacts a Recovery Audit Contractor's (RAC) review of medical necessity.

A recent HFMA article, "8 Critical Steps for 2-Midnight Compliance," sets forth action steps "that providers can take to ensure their organization is ready for, and abiding by, the two-midnight rule." The highlights of the eight action steps include:

1. Use of the optional certification form - which can be embedded in electronic orders and serves as a screening tool;

2. Utilization review (UR) staff compliance - just as the medical home puts the primary-care provider as the "go to physician" for the point of care, so the UR staff should "own" the optional certification process;

3. Evaluation of risky procedures - knowing what procedures are risky and should require an inpatient admission versus those which are safer and can be done on an outpatient basis is critical;

4. Focusing on emergency department (ED) physicians - because 65 percent of patients come through the ED, it is important to educate ED physicians to gain attending "buy-in" on the recommended patient status;

5. Consulting internal physician advisers - having a physician available for education on the two-midnight rule may assist other physicians with communication and accuracy;

6. Understanding patient-transfer implications - other laws may be triggered and the "two-midnight" clock restarts if a patient is transferred to another hospital;

7. Utilizing internal audits - an internal audit process can save time in the event of a RAC audit and assist with compliance; and

8. Listening to the Medicare Administrative Contractors (MACs) - for the past three months, MACs have been conducting samplings of patient records to "probe and review." Upon receiving the results, hospitals should incorporate the findings into their processes and educate all involved.

In short, this is one area not to overlook. The impact on the revenue cycle and audit outcome can be critical.