Health Information Management

News: CMS invites comments on 2-midnight rule payment calculation

CDI Strategies, January 14, 2016

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CMS has to explain its calculation for a negative 0.2% reduction in inpatient payment rates as a result of implementing the 2-midnight rule, according to a recent court ruling. The court also said providers should have an opportunity to comment on the calculation. 

In early December, CMS released a notice with comment period to meet the court’s requirement, but providers might not be pleased with forcing the agency’s hand. CMS notes that when originally estimating the number of outpatient cases that should shift to inpatient as a result of the rule, it looked at 2011 claims containing HCPCS codes G0378 (hospital observation service, per hour) and G0379 (direct admission of patient for hospital observation care). 

Using this data, CMS identified approximately 350,000 observation stays that lasted two or more midnights. The agency combined that with approximately 50,000 claims that contained major procedures based on Ambulatory Payment Classifications (APCs) that resulted in stays lasting more than two midnights. CMS also analyzed data from the inpatient side by looking at inpatient claims containing surgical MS-DRGs with stays that lasted less than two midnights and found approximately 360,000. 

The agency used this data to determine a net increase of 40,000 inpatient discharges as a result of the rule to calculate $220 million in increased expenditures on the inpatient side, leading to the reduction.

However, CMS now says that in light of new regulations and by using different metrics to estimate the shift, as many as 570,000 cases could move to the inpatient side, resulting in an even larger payment shift. 

Providers can comment on the notice at and all submissions must be received by February 2, 2016. 

Editor’s Note: This article was originally published in JustCoding

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