Centers for Medicare and Medicaid Services (CMS) finalized a new rule, effective October 1, 2013, under which hospital inpatient admissions are considered reasonable and medically necessary if the physician expects a patient’s stay to cross two midnights.  Conversely, under the new 2-midnight standard, an inpatient admission is generally deemed inappropriate if the admitted physician expects the patient will need care for only a limited amount of time that does not cross 2 midnights. Additionally, CMS established “two distinct, though related” policies under which hospital inpatient admissions are reviewed: a 2-midnight presumption and a 2-midnight benchmark. 
Two-Midnight PresumptionUnder the 2-midnight presumption, hospital inpatient admissions are entitled to a presumption that the admission was reasonable and necessary if a beneficiary receiving medically necessary services requires more than one Medicare utilization day (an encounter crossing 2 “midnights”) as an inpatient.  Thus, medical reviewers, such as Medicare Administrative Contractors (MACs) and Recovery Auditors, should presume that inpatient hospital claims with lengths of stay greater than two midnights after the time of the admission order are appropriate. Stays crossing two midnights “will not be the focus of medical review efforts absent evidence of systematic gaming, abuse or delays in the provision of care in an attempt to qualify for the 2-midnight presumption.” 
The Two-Midnight BenchmarkUnder the 2-midnight benchmark, inpatient admissions are considered reasonable and necessary if it was reasonable for the admitting physician to expect, at the time of admission, that the patient’s stay in the hospital would cross two midnights.  CMS has instructed contractors to evaluate whether the medical documentation supports that the physician reasonably expected, at the time of inpatient admission, that the patient’s total stay in the hospital would cross two midnights, including time spent receiving services in the emergency department or in observation based only on information available to the admitting physician at the time of admission. 
New GuidanceOn November 1, 2013, CMS updated its Frequently Asked Questions and issued new guidance on this standard.  Notably, CMS extended the time period during which Recovery Auditors are not permitted to review inpatient admissions crossing zero to one midnight. This period now extends through March 31, 2014.  CMS explained that until the grace period ending on April 1, 2014, MACs will conduct a prepayment review of Medicare Part A claims that span zero to one midnight to determine hospitals’ compliance with the new rule and provide feedback to CMS for education and guidance purposes. CMS is limiting these prepayment record reviews to 10 claim samples for most hospitals to 25 claim samples for large hospitals. Non-compliant claims will be denied and MACs are directed to call providers with “moderate to significant or major concerns” regarding inpatient admission billing patterns to discuss the denial, answer questions, and provide education and pertinent reference material.
CMS also made the following clarifications:
Notes: CMS, Medicare Program Hospital IPPS FY 2014 Final Rule, 78 Fed. Reg. 50495 (August 19, 2013); 42 C.F.R. § 412.3(e)(1).
 78 Fed. Reg. at 50949.
 78 Fed. Reg. at 50949-50.
 78 Fed. Reg. at 50946, 50949-52.
 CMS, Frequently Asked Questions, 2 Midnight Inpatient Admission Guidance & Patient Status Review for Admission on or after October 1, 2013.
 Id. Initially, CMS stated that Recovery Auditors were prohibited from reviewing such admissions for 90 days after the October 1, 2013 effective date.
 CMS, Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013.
 78 Fed. Reg. at 50946.
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