CMS rule tightens hospital guidelines on granting inpatient status

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The Centers for Medicare & Medicaid Services has issued a final rule on hospital inpatient status, which is likely to boost the number of seniors receiving Medicare coverage for skilled nursing services.

Medicare beneficiaries must have inpatient status at a hospital for three consecutive days to qualify for coverage of subsequent skilled nursing care. Currently, many beneficiaries spend extended periods of time in a hospital under observation stay status, which does not count toward that three-day threshold. The final CMS rule clarifies when inpatient status should be conferred, triggering Medicare Part A coverage.

“We are specifying that for those hospital stays in which the physician expects the beneficiary to require care that crosses two midnights and admits the beneficiary based upon that expectation, Medicare Part A payment is generally appropriate,” the rule states. “Conversely, we are specifying that hospital stays in which the physician expects the patient to require care less than two midnights, payment under Medicare Part A is generally inappropriate.”

This rule, published in yesterday's Federal Register, should increase Medicare reimbursements to hospitals for inpatient stays by $220 million annually, CMS estimated.

Although the rule is designed to increase the number of inpatient stays, it is not comprehensive enough to close the “observation stay loophole,” according to the Department of Health and Human Services Office of Inspector General. For example, beneficiaries who are treated in certain outpatient areas of a hospital still may not be granted inpatient status, the OIG noted in a recent report.

The OIG joined many provider groups, senior advocates and lawmakers in calling for more specific action on the observation stay issue.

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