Noteworthy News

Observation Status, the “Two-Midnight Rule,” and Continuing Controversy

Amid continuing complaints from hospitals, the Centers for Medicare & Medicaid Services (CMS) has delayed implementation of its so-called Medicare two-midnight rule for another six months.  Implementation of the rule, originally scheduled for October 1, 2013 and delayed for six months, is now slated for October 1, 2014.

With hospitals calling for greater guidance on how to determine whether to classify patients as inpatient admissions or on observation status, CMS proposed using a two-midnight standard:  hospitals could safely classify patients who spent two midnights in the hospital as inpatient admissions.

iStock_000015640638XSmallBut when hospitals objected to the standard, sued to prevent its implementation, and enlisted support from Congress, CMS relented, delaying implementation of the rule for six months and then extending that delay another six months.

The challenges posed by the inpatient admission/observation status issue are considerable and complex.  At stake for hospitals is accurate accounting, Medicare inpatient revenue, and concern about readmissions affecting future Medicare payments.  The issue can be especially difficult for urban safety-net hospitals because they serve so many patients with limited access to primary care and follow-up services after being discharged from the hospital.

Patients, too, have a considerable stake in the issue.  Many who believed they had been admitted to the hospital find themselves with unexpected hospital bills and, in some cases, they also are ineligible for Medicare-covered, post-discharge skilled nursing care.

The publication Georgia Health News has taken a broad look at the many questions this issue raises.  Read its report here.

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