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CMS Reverses Two-Midnight Rule Payment Reduction

April 21, 2016 - 10:46am

By way of background, in 2013, the Academy submitted comments in support of Centers for Medicare & Medicaid Services (CMS) establishing a “bright line rule regarding when a patient is an ‘inpatient’ that is clear and understandable by physicians, staff, and beneficiaries.” In response to comments, CMS established the “two-midnight rule,’ which defines a patient as inpatient if the patient requires a hospital stay that crosses two midnights and the medical record supports that reasonable expectation. Read the comment letter here.

Members can access a CMS Fact Sheet on the “two-midnight rule” here

In 2014, in response to rising Medicare Part A costs associated with the “two-midnight rule,” CMS proposed a .2% payment reduction for inpatient services. On Tuesday, April 19, 2016, CMS reversed the payment reduction and proposed increasing in-patient prospective payment (IPPS) rates by .6% for CY 2017. CMS also proposed creating a notice form for patients receiving observation services as an outpatient for more than 24 hours. Members can access a CMS Fact Sheet with details on the payment rate increase and patient notice form here.