Senate bill would revamp 2-midnight rule for hospital inpatient admissions

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Providers' complaints about the so-called “two-midnight rule” for determining hospital inpatient status have led to a new bipartisan bill in the U.S. Senate, which would create less rigid guidelines.

Sens. Robert Menendez (D-NJ) and Deb Fischer (R-NE) introduced the “Two-Midnight Rule Coordination and Improvement Act of 2014” on Wednesday. The measure would revise a final rule implemented by the Centers for Medicare & Medicaid Services in August, which calls for Medicare beneficiaries to be given inpatient status after they are in the hospital for longer than two midnights.

The rule was intended to address the growing problem of observation status. Hospitals increasingly are placing patients in this outpatient category even if their stays last several days. By doing so, hospitals can avoid the financial repercussions of having auditors determine that inpatient status was granted unnecessarily. However, seniors kept in observation status do not meet the minimum inpatient threshold to qualify for follow-up skilled nursing care, so they can be saddled with enormous out-of-pocket expenses.

Hospitals and physicians blasted the two-midnight rule, saying they need the freedom to place patients in the category that will allow them to receive the most appropriate care.

The Senate bill would establish “criteria and payment methodologies” to ensure that short inpatient hospital stays are viable if the medical necessity exists. It also would “codify” current auditing freezes that CMS has put in place as the current regulation is implemented, according to a news release from Menendez and Fisher.

The American Hospital Association and the Association of American Medical Colleges said they supported the bill.

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