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  • '2 Midnights' Rule Subject of Lawsuit

    The enforcement delay for the Centers for Medicare and Medicaid Services' (CMS) "2 midnights" rule has apparently left an opening for a legal attack. This week, the American Hospital Association (AHA) announced that it has filed 2 lawsuits against the US Department of Health and Human Services challenging the rule as "wholly arbitrary," according to an AHA press release (.pdf).

    Intended to reduce costly admissions in cases better suited to outpatient treatment, the rule stipulates that auditors can presume that an admission is reasonable and necessary if the patient spent at least 2 days as an inpatient, defined as spending 2 midnights in a hospital bed. AHA and some physician organizations view the rule as a usurpation of medical judgment by CMS.

    The primary suit (.pdf), filed in the US District Court for the District of Columbia, states that "CMS’s newly-minted 'two-midnights' rule has deprived and will deprive hospitals of Medicare reimbursement for reasonable, medically necessary care they provide to patients. And the rule is arbitrary and capricious: It undoes decades of Medicare policy. It unwisely permits the government to supplant treating physicians’ judgment. And most important, it defies common sense. The word 'inpatient' simply doesn’t mean 'a person who stays in the hospital until Day 3,' and CMS is not at liberty to change the meaning of words to save money."

    Although the rule was implemented in October 2013, Medicare Recovery Audit Contractors (RACs) were prohibited from auditing inpatient claims under the 2 midnights rule until September 30, 2014. When Congress passed the sustainable growth rate (SGR) patch legislation in March, the delay on enforcement was extended to March 31, 2015.

    CMS still allows Medicare Administrative Contractors (MACs), who process claims for payment, to review and deny payment for short stays if the medical record does not support medical necessity under a “probe and educate” program. This program, which assesses provider understanding and compliance with the 2 midnights rule, will be carried out by the MACs on a prepayment basis through March 31, 2015.

    AHA is joined in the lawsuit by several state hospital associations and individual hospitals.

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