Christopher Cheney | March 3, 2014
A top policy official at the American Hospital Association says last week’s Two Midnight Rule guidance letter from federal officials provides welcomed clarifications but leaves the policy fundamentally flawed.
“This is guidance that hospitals have been waiting for,” said Priya Bathija, senior associate director of policy at the AHA. “It’s been very hard for hospitals to operationalize Two Midnights without the guidance.”
She praised the directive in the Feb. 24 guidance letter calling on Medicare Administrative Contractors to “re-review” all claim denials under the Two Midnight Rule’s probe and educate process prior to Jan. 30. The Centers for Medicare & Medicaid Services says the MAC claim denial re-reviews are supposed “to ensure the claim decision and subsequent education is consistent with the most recent clarifications. The MAC may reverse their decision and issue payment outside of the appeals process if the MAC determines that a claim is payable upon re-review.”
Last week’s guidance letter from CMS is the second is less than a month. On Jan. 30, CMS issued a guidance letter that included an update on physician certification of short-term hospital stays.
“The probe and educate review will be beneficial to find out whether hospitals are complying,” Bathija said. “It requires the MACs to be consistent. All of the MACs across the country will use the guidance from Jan. 30 to evaluate claims.”
Under the rule, which CMS issued last year on Aug. 2, hospitals that admit patients for less than two nights will receive reimbursement at Medicare B outpatient rates. The rule states that hospital admissions shorter than two midnights in length are “generally inappropriate for payment under Medicare Part A, regardless of the hours the patient came to the hospital or whether the patient used a bed.”
CMS made its case for the so-called “Two-Midnight” policy in a prepared statement released with the final rule on Aug. 2. “The rule improves value and quality in hospital care and provides clarification about when a patient should be admitted to the hospital and responds to recent concerns about extended Medicare beneficiary stays in the hospital outpatient department,” CMS officials said.
“The rule also moves forward with health care delivery system reforms made possible by the Affordable Care Act. These include a new program aimed at improving safety in hospitals and refining the Hospital Readmissions Reduction program.”
CMS’s prepared statement includes this comment from Administrator Marilyn Tavenner: “This rule helps improve hospital care and establishes clearer guidance to hospitals for when we will consider inpatient care to be appropriate so the system works better for patients and providers.”
Rule Resistance
From the AHA’s perspective, “This Two Midnights standard is just arbitrary,” Bathija said, adding the policy penalizes hospitals for being efficient in patient care or providing treatments that involve a short-term hospital stay.
Bathija said the AHA is asking CMS to either develop a better payment methodology within the Two Midnight policy or to replace the rule with a better method to pay for short-term hospital stays.
The American Medical Association, which has also been an outspoken critic of the new policy, expressed an even more skeptical view following the release of last week’s guidance letter.
“The new policy does not solve the problem of unanticipated financial liabilities for patients, and increases documentation burdens for physicians,” AMA President Ardis Dee Hoven, MD, told HealthLeaders on Thursday. “Recent guidance from… CMS on the order and certification requirements for physicians leaves many questions unanswered, and has not alleviated confusion. While we are encouraged by CMS’s recent delay in enforcement and the decision to have Medicare Administrative Contractors review their application of the new policy, these issues continue to cause tremendous difficulties for physicians and patients.”
Hoven said CMS needs to cut its losses and move in another direction. “We will continue to work with stakeholders to rescind the Two Midnight policy and pursue alternative workable solutions,” she said.
On Feb. 20, the AMA and seven other medical societies filed an amicus brief in a case before the Second Circuit of the US Court of Appeals pitting a half dozen Medicare beneficiaries against HHS Secretary Kathleen Sebelius.
In the filing, the medical societies assert that they are “concerned that those patients covered under the Medicare Program should receive the benefits to which they are legally entitled and that those patients do not suffer financial hardship on account of arbitrary administrative decisions.”
The legal brief claims that the Two-Midnight Rule imposes an unfair burden on Medicare beneficiaries. “The refusal by HHS to afford the plaintiffs the benefits that come with inpatient status led many of them to substantial medical and financial hardships,” the medical societies state. “The financial losses for each of the [Medicare beneficiaries] ranged from $4,000 to $30,000.”
‘Ill-conceived and Poorly Drafted’
Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital in Oceanside, NY, offered a scathing assessment of the Two Midnight Rule via email Thursday:
“The Two-Midnight Rule came out as a way by CMS to deal with the RAC process that they created, which resulted in a huge backlog of unadjudicated appeals and the mounting threat of lawsuits from the AHA and other interested parties on behalf of the hospital industry. It was ill-conceived and poorly drafted and it is why the ‘enforcement’ has been delayed until October 1, 2014, for now…
“I believe that instead of measuring/defining inpatient status based on the ‘clock’ they would have been better served to create a system, which they ultimately did do for the Transfer Issue back in 2002, whereby these short stays would be paid using the [diagnosis-related group] methodology but would be reduced for the fact that the stay was short.
The ability to have to monitor this at the Hospital level has added untold burden and cost and does not lead at all to the triple aim (Patient Satisfaction, Quality Outcomes and Lower Cost) as well as it in fact shifts the financing cost between Part A (Medicare tax component of FICA) and Part B (basically a premium-based financing) and shifts cost to the Medicare Beneficiary…
Bogen, echoing the AMA and AHA, said “the Two-Midnight rule needs to be repealed and a more thoughtful process needs to be contemplated.”
Source: Health Leaders Media