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House Ways & Means Health Subcommittee Holds Hearing on Two-Midnight Rule and Short Inpatient Stays

Posted on 5/21/2014 by NTOCC ® in Public Policy Updates

Yesterday, the House Ways & Means Subcommittee on Health held a hearing that focused on the current incentives around short inpatient stays, including CMS’s two-midnight rule, and the unintended consequences of those incentives which include a massive backlog of Medicare appeals, and excessive growth of outpatient observation stays. In particular, the Committee heard testimony from government officials including Sean Cavanaugh, Deputy Administrator and Director for the Center of Medicare at the Centers for Medicare and Medicaid Services (CMS), Jodi Nudelman with the Office of the Inspector General, and from a panel of hospitalists, medical directors, a patient advocate, and a RAC representative.

Many Committee members inquired about CMS’s two-midnight policy – a rule that was put in place that requires an admitting physician to document reasons for believing, at the time of admission, that a patient will need two nights in the hospital in order to justify full inpatient rates. There has been growing opposition to the rule from the provider community which claims that if a beneficiary stays less than two-midnights, the providers are presumed to have provided medically unnecessary care. The two-midnight policy also has had consequences for Medicare patients who do not qualify for Skilled Nursing Facility coverage when hospitalized under “observation status” rather than admitted as an inpatient for multiple nights, which results in higher out-of-pocket costs for this post-acute care. 

 During the hearing, there was broad bipartisan support for reforming the two-midnight policy, which Congress recently forced CMS to delay the recovery auditing of short-stays until March of 2015. 

 As you know, NTOCC has previously expressed concern to both CMS and Congress regarding the challenges faced by Medicare beneficiaries who are hospitalized under “observation status”, rather than formally admitted as an inpatient. NTOCC continues to support Congressman Joe Courtney (D-CT) and Senator Sherrod Brown’s (D- OH) bill, Improving Access to Medicare Coverage Act of 2013 (H.R. 1179/ S. 569), which would ensure that time spent in an observation stay could be counted toward meeting the three-day prior inpatient stay requirement to qualify for Medicare SNF coverage.