The Two Midnight Rule

A year ago, with well over a billion dollars of what CMS considered potentially improperly paid Medicare inpatient payments on the line, CMS issued the Two Midnight Rule (CMS 1599-F) effective October 1, 2013.  From the moment it was introduced, there were many questions regarding the guidelines as well as the potential financial impact for hospitals and Medicare beneficiaries. 

CMS continues to issue clarifications and provide ongoing education through the Probe and Educate Reviews being conducted by the Medicare Administrative Contractors (MACs). But, the bottom line is that the rule is in effect even if it is not being employed for payment purposes.....YET!  So, how does a hospital comply? 

One place to start is to review the Probe and Educate Review findings for your hospital. Some of the top errors identified by CMS as published in Feb 2014 include the following:

  • Missing or flawed Order for Inpatient Admission.
  • Short Stay procedures, normally not requiring inpatient admission, billed as inpatient.
  • Short Stays, for medical conditions where documentation indicated a short stay was expected, billed as inpatient.
  • Physician certification through use of a check box on admission order; documentation within the record indicated a short stay, or overnight stay was expected.

We believe attention should also be given to the following components of the guidelines. 

  • CMS clarified that an admission order is necessary.  This means gone are the days of "Admit to Dr. Jones" replacing with language such as "Admit to Inpatient".  Admissions order sets should be evaluated to assure compliance with Medicare's guidance.
  • CMS has been clear, with the exception of procedures on the "Inpatient Only" list, that short stay procedures should be billed as outpatient.  CMS further stipulates when circumstances develop after a short stay procedure that requires the patient to stay two midnights, the physician can order an admission at that time.  To comply with the rule, hospitals often treat the majority of surgical patients as outpatients until such time that they require two midnights.  The exceptions to the rules are those surgical procedures that routinely require hospitalization longer than two midnights.  Keep in mind, one midnight of outpatient care counts toward the expectation of two midnights.
  • CMS has stated that an inpatient admission must have an expectation of a two midnight stay. The two midnights must not be for convenience of the hospital or patient schedule, but rather are two medically necessary midnights.  Physician documentation should be consistent with this rule.  If physician documentation states "anticipate discharge in the AM", admission should not be ordered.  Utilization Management and/or Case Management personnel can assist with screening for cases when the admission status and the anticipated discharge are not consistent. 
  • CMS has maintained that it does not endorse any commercial medical necessity product and has gone as far as to say that these tools are not necessary.  In this new environment, how can the hospital assess if the admission is really medically necessary?  One suggestion is to ask the following two questions at admission:
  1. Does the patient need hospital care? (Has the admitting practitioner documented why the care cannot be provided at a lower level of care?)
  2. Is the patient expected to need two or more midnights of the medically necessary hospital care?

If documentation supports a "Yes" answer to both, then inpatient admission is appropriate.

  • Physician certification is not a new concept, but was resurrected in this rule.  CMS issued clarification on January 30, 2014 that most of the certification requirements can be met within the physician orders and normal documentation requirements.  While a specific certification form may not be required based on CMS clarification, they do expect that documentation will support the Two Midnight Rule and the reasons for admission (i.e., not simply a checkbox).
  • Despite a flurry of legislative activity to eliminate the Two Midnight Rule and replace it with another system of payment for short stays, the rule remains in effect and on the OIG Workplan.  Unless the Probe and Educate reviews are delayed again, or additional legislation is passed, the rule will be available for review by RACs beginning March of 2015.

So, what is the best defense against denials and take-backs from the Two Midnight Rule?  Clear, concise documentation, coupled with medical review at the time of patient entry! SunStone offers Documentation Improvement Solutions specifically targeted to assisting hospitals assess compliance with the Two Midnight Rule. For more information please contact Vonda Moon at 717-676-6133, or via email at