Is the two-midnight rule much ado about nothing?
2014 IPPS final rule emphasizes documentation, physician orders
When Deborah Hale, CCS, CCDS, asks audiences of case managers and other clinicians if they think the new two-midnight rule is a good thing, a bad thing, or they aren’t sure, she usually gets about an equal number of answers in each category.
"There’s still a tremendous amount of confusion about what the rule means," says Hale, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK.
The Centers for Medicare & Medicaid Services (CMS) has stated that the two-midnight rule is intended to simplify the process of determining if patients should be admitted as inpatients or receive observation services as outpatients, but instead it’s raised more questions, Hale says.
In the Inpatient Prospective Payment System (IPPS) final rule for fiscal 2014, CMS established a benchmark of two midnights for an appropriate inpatient admission and set out a series of documentation requirements to support the admission. Admissions on or after Oct. 1, 2013, are affected by the rule. CMS says the final rule is intended to provide additional guidance as to when patients are appropriately admitted and how hospitals are reimbursed for inpatient care as well as helping patients who in recent years have been receiving lengthy observation services when an inpatient admission may have been medically justifiable.
"There are still a lot of questions about inpatient versus observation. In some ways, CMS has made it more difficult when they issued the clarification," says Linda Sallee, MS, RN, CMAC, ACM, IQCI, a director at Huron Healthcare with headquarters in Chicago.
Confusion abounds about what the two-midnight presumption actually means for case managers, she adds.
Some people have surmised that the rule means case managers no longer need to use InterQual or Milliman criteria to screen for medical necessity or that a physician advisor is no longer needed, but that couldn’t be further from the truth, Hale says.
Case managers still need to make sure admissions meet medical necessity criteria, says Ralph Wuebker, MD, MBA, chief medical officer for Executive Health Resources, a Newton Square, PA, healthcare consulting firm. "Case managers should continue to use medical necessity criteria the same way they did on Sept. 30, before the rule went into effect. InterQual and Milliman are guides that case managers should use to help establish medical necessity, and if a physician wants to admit a patient and the patient doesn’t meet criteria, there needs to be a second-level physician review, just like in the past," he says.
Wuebker emphasizes that the two-midnight rule should in no way substitute for the utilization review process. "Case managers still need to review the cases and ensure that the order and documentation establish medical necessity and support the physician’s judgment to admit the patient or order observation services," he says.
The final rule does require physician certification of medical necessity, but contrary to what some people think, that doesn’t mean hospitals have to create a special form for physician certification, Sallee says. "However, there does have to be clear documentation as to whether the patient is an inpatient or an outpatient, what is going on medically with the patient, and how long the physician expects the patient to be in the hospital," she adds.
A few physicians have erroneously assumed that the rule means that every patient should stay two midnights, Hale adds. "I have heard physicians complain that last year case managers were telling them they were keeping patients too long and now they’re telling them to keep them a little longer. The case managers are not necessarily saying that, but it is the physicians’ perception that is what they mean," Hale says. She emphasizes that hospitals should not be telling physicians to keep patients an extra night to qualify for an inpatient stay. In fact, CMS has said that if hospitals try to game the system by keeping patients longer than necessary, they are opening themselves up for more scrutiny.
"Even with the two-midnight rule, if the hospital is dragging its feet and not getting the services provided in a timely manner it can lose the presumption that the stay is appropriate for inpatient admission. It’s all very arbitrary," Hale says.
Case managers should make sure patients still meet medical necessity criteria on the second day. "There is nothing in the CMS rule that indicates that patients don’t have to meet screening criteria on the second day, but they must have the severity of illness to need hospital services that cannot be provided in another setting," she says.
CMS has made it clear that the Benefit Policy Manual’s medical necessity requirements for an inpatient stay are still the same, Hale says. "Patients still must meet medical necessity criteria for admission and for a continuing stay. CMS will never pay for custodial care. If the treatment is complete as the patient approaches the second midnight and the patient is just waiting for a discharge plan or a convenient time to leave, an inpatient stay is not justified," Hale says.
The reality is that many patients need complex discharge plans and there are shortages of post-hospital services, Hale adds. It may be a challenge to get post-acute arrangements made and the patient out the door in less than two midnights, but if the patient doesn’t meet inpatient criteria, the stay won’t count as an inpatient stay even if it spans two midnights, she says.
The IPPS final rule may seem brand new, but when the dust settles, it’s really more of the same, says Kathleen Miodonski, RN, BSN, CMAC, manager for The Camden Group, a national healthcare consulting firm based in Los Angeles.
"The key requirements are still the same. The patients still must meet inpatient criteria, the physician must sign, date, and time the admission, and physicians still have to document every day," she says. Documentation must be complete, detailed, and support medical necessity, level of care, and services the patient receives, she adds.
The only thing that has changed is that CMS has gotten serious about requiring physicians to certify that the stay is medically necessary at admission, the anticipated length of stay, and the discharge plan, she adds.
In the final rule, CMS has essentially escalated its requirements and what is important for an inpatient admission, Wuebker says. In the past, for an inpatient admission, CMS required that the physician expected the patient to spend at least one night in the hospital. In the post-October 1 world, one-night inpatient admissions should be rare, he says.
CMS now requires that for an inpatient stay to be billed to Medicare, the documentation has to include medical necessity and the physician’s expectation that the patient’s stay will span two midnights, he says. "If the documentation doesn’t include medical necessity and the physician’s statement that the patient is expected to stay over two midnights, the case should not be billed as an inpatient stay (barring a few exceptions)," he says.
When physicians order an inpatient admission, the final rule’s two-midnight benchmark allows them to take into account the time a patient has already received services, such as the time they were treated in the emergency department or receiving observation services, Hale points out. "The admission order cannot be made retroactive, but the physician can consider the time the patient has already been evaluated or treated. The case can be billed as a one-day stay. It can be audited, but supposedly the Recovery Auditors and the Medicare Administrative Contractors will be educated not to deny a stay because the physician factored in the time the patient spent in the emergency department and observation in making the decision," she says.
Medicare has clearly stated that the admission order must be signed by the physician who is familiar with the patient’s course, the plan of care, and the current condition and who has admitting privileges at the hospital, Wuebker points out. If emergency department physicians have admitting privileges, they can sign the admission order. If not, the hospitalist, or the attending physician or specialist who will be treating the patient must sign the order. Orders are not valid if they are signed by a mid-level provider or a medical resident. In addition, patients no longer can be admitted under case management protocol, he says.
The requirement that physicians certify medical necessity for an acute Medicare inpatient stay is nothing new. It’s been in the Medicare Conditions of Participation manual for years, but it’s been largely disregarded, Hale says. "We’ve reviewed thousands of records and never seen a certifications statement, but it’s been in the regulations and CMS no longer is going to ignore it when the certification statement is missing from the record," she says. In fact, on September 5, CMS posted a five-page guideline for Hospital Inpatient Admission Order and Certification. (To see the letter, visit: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order-09-05-13.pdf.)
The certification statement must include the clinical rationale for an inpatient admission, including the reason for inpatient services, the signed, timed, and dated admission order, the estimated time the patient is expected to require hospital services, and the post-hospital care, if appropriate.
The requirement for physical certification for medical necessity helps physicians take responsibility for thinking through whether a patient should be admitted as an inpatient or receive observation services as an outpatient, Hale says. "In the past, many physicians have just blown off inpatient versus observation, saying it was a billing issue. Clearly the final rule precludes them from doing that," she adds.
"Case managers must work with the physicians and guide them through the certification statement and convince them that it’s not just a billing issue," Hale says.
- Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, Shawnee, OK. email: email@example.com.
- Kathleen Miodonski, RN, BSN, CMAC, Manager for The Camden Group, Los Angeles. email: firstname.lastname@example.org.
- Linda Sallee, MS, RN, CMAC, ACM, IQCI, Director, Huron Healthcare with headquarters, Chicago. email: email@example.com
- Ralph Wuebker, MD, MBA, Chief Medical Officer, Executive Health Resources, Newton Square, PA. email: firstname.lastname@example.org