“It’s still possible the rules will be changed or CMS will push (the enforcement date) to a later point in the calendar,” he said. “There’s too many loose ends. All the complications and difficulties that forced [CMS] to put the rule into freeze way back when – they’re not solved. How can they flip the switch?”
Dr. Michael A. Ross
In a proposed rule issued in 2014, CMS raised the possibility of creating a new payment method under Medicare for short, but intensive inpatient hospital stays. But a final rule governing payment policies for general acute care hospitals and long-term care hospitals for fiscal year 2015 did not yield any new policies. The Association of American Medical Colleges has called on CMS to issue supplemental guidance that would allow hospitals to bill certain short stays as inpatient, under Medicare Part A, when the physician determines that the stay is medically necessary. A lawsuit by the American Hospital Association against CMS over the policy continues. In April 2014, the AHA filed two federal lawsuits challenging the rule and its reduction in payments to hospitals. At this article’s deadline, the U.S. District Court for the District of Columbia has not decided whether to grant the AHA’s requests for oral argument.
“With regard to the two-midnight rule, we would like to see the partial enforcement delay extended,” AHA spokeswoman Carly Moore said in an interview. “We are urging both CMS and Congress to extend. Hospitals are doing their best to comply with the two-midnight policy, but CMS has not provided any update on its probe and educate audits.”
Meanwhile, draft legislation that aims to reform Medicare’s hospital admissions policies, including the two-midnight rule, is in the works. The Hospitals Improvements for Payment (HIP) Act addresses short inpatient stays, outpatient observation stays, auditing, and appeals. The draft legislation offers reforms for a new hospital prospective payment system, a new per diem rate for short lengths of stay, repeal of the two-midnights payment reduction, and improvements to the RAC program. The House Ways and Means Committee is currently accepting public comment on the draft HIP Act. Doctors expect the bill to be introduced by March. Several other bills addressing short inpatient stays and the recovery audit process stalled during the last congressional session.
The Medicare Payment Advisory Commission (MedPAC) is also considering alternative policy options to improve short inpatient stays. The group has emphasized the need to balance oversight of proper billing with administrative burden on Medicare providers. MedPAC’s proposed options include creating new Medicare severity diagnosis-related groups (MS-DRGs) for short-stay cases, targeting RAC reviews to those hospitals with the highest rate of short-stay admissions, and revising the RAC contracts to take into consideration the percentage of denials that are overturned on appeal.
But Dr. Flansbaum stressed that the issues surrounding the two-midnight rule and admissions designations are not easy problems to solve.
“While a lot of the solutions sound good at the macro level, [they] are still difficult to implement at the micro level,” he said.
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*Correction, 3/3/2015: An earlier version of this article misstated the findings of the study by the U.S. Health & Human Service’s Office of Inspector General.