'2-midnight rule' is increasing observation stays, not decreasing them as hoped, Johns Hopkins director tells Congressional panel

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A Medicare policy change meant to reduce the number of hospital observation stays actually is having the opposite effect, a senior Johns Hopkins Medical System executive told a Congressional panel this week.

The so-called two-midnight rule directed hospitals to admit patients expected to stay for at least two midnights, rather than place them in observation status. A drastic increase in observation stays has created an outcry among seniors and long-term care providers, because a beneficiary needs to be classified as an inpatient for three days to qualify for Medicare coverage of post-acute services.

The two-midnight rule actually has exacerbated this problem by making doctors more hesitant to classify someone as an inpatient right off the bat, said Amy Deutschendorf, senior director of clinical resource management at the Johns Hopkins Medical System, during an appearance Tuesday before the House Committee on Ways and Means Subcommittee on Health.

"Since Oct. 1, 2013, we have seen a threefold increase in the number of patients our physicians cautiously predicted would only stay only one midnight, and thus began as outpatients, but later had to admit for longer stays, demonstrating the complexity of anticipating length of stay based on a patient's initial presenting symptoms," she said, according to news reports.

Hospitals have protested the rule since it was announced and successfully lobbied to have enforcement delayed, saying it creates an arbitrary guideline that disregards clinical realities. The American Hospital Association sued the government over the rule in April.