Health Information Management

Provision in 2016 OPPS final rule on 2-midnight rule is positive for providers

APCs Insider, November 13, 2015

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By Steven Andrews
Most policies in the OPPS final rule are not effective until the following January, but providers should be pleased with one that was finalized before the rule was even published.
In addition to finalizing the rest of its proposals regarding the 2-midnight rule, CMS moved responsibility for rule enforcement and education from Recovery Auditors to Quality Improvement Organizations (QIO) effective October 1, 2015.
For stays in which the physician expects the patient will need less than two midnights of hospital care, inpatient admission may be allowed on a case-by-case basis determined by the judgment of the admitting physician. The documentation must support the admission and will be subject to review by a QIO. CMS expects inpatient admission for minor surgical procedures to be unlikely and will prioritize those cases for medical review. For hospital stays expected to last two midnights or longer, CMS policy remains unchanged.
Finalizing the 2-midnight rule proposal doesn’t come as much of a surprise, says Jugna Shah, MPH, president and founder of Nimitt Consulting, based in Washington, D.C., and Spicer, Minnesota, but what remains to be seen is how the QIOs handle the review process compared to Recovery Auditors. For providers who worked with the physician staff and currently see good documentation, this change is likely to have little or no impact, she says.
Providers submitted vastly divergent comments on how CMS should handle the 2-midnight rule. CMS noted that some providers asked for no changes at all. Other providers suggested a 1-midnight rule, in which any Medicare beneficiary who required an overnight hospital stay, other than a patient in the ED or routine recovery following a procedure, would be paid under Medicare Part A.
To facilitate this, providers suggested CMS create an “extended outpatient evaluation” APC to replace outpatient observation. Admission orders would become effective at midnight the day the order was given, except for late ED arrivals. Commenters also suggested changes to order authentication and how inpatient deductibles would be paid.
However, CMS thought this change would present new challenges, including low-acuity patients being held longer in order to quality for Part A payment. CMS also said the proposal could lead to additional costs that might require a greater negative payment adjustment than the 0.2 already deducted when the rule was introduced. The American Hospital Association and other hospital groups have been fighting that deduction for years, leading to a lengthy legal battle against CMS.


To read more about the final rule, see For in-depth coverage of the rule, see upcoming issues of Briefings on APCs. To learn more, including information about packaging expansion, join Shah and Valerie Rinkle, MPA, for HCPro’s annual OPPS final rule webcast Tuesday, December 8. The 2016 OPPS final rule will appear in the November 13 issue of the Federal Register.  

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