There are major changes afoot for Medicare Advantage plans and when they are required to cover inpatient services in hospitals for their members. The changes are likely to present challenges for hospitals and how physicians document inpatient care.
Six things to know about the two-midnight rule and how it applies to Medicare Advantage:
1. In the 2014 Medicare inpatient prospective payment system final rule, CMS included a new regulation for hospitals and health systems: the two-midnight rule
2. Under the rule, inpatient admissions are covered for traditional Medicare beneficiaries who require more than a one-day stay in a hospital or who need treatment specified as inpatient only. Stays lasting less than two midnights must be treated and billed as outpatient.
3. In December, CMS proposed a rule that sought "to ensure that Medicare Advantage enrollees receive the same access to medically necessary care they would receive in traditional Medicare." On April 5, CMS published the final rule, clarifying that MA plans must also follow the two-midnight rule, its case-by-case exception and the inpatient-only list.
4. Under the final rule, an MA plan must provide coverage for an inpatient admission when the admitting physician expects the patient to require hospital care for at least two-midnights, when the physician does not expect the care to cross two midnights but determines inpatient care is still necessary (case-by-case exception), and when the inpatient admission is for a surgical procedure specified as inpatient only under Medicare (inpatient-only list).
5. Debate exists over when the entire rule takes effect for MA plans. According to a CMS spokesperson, "the rule took effect on June 5, 2023, and most of the final policies will begin to be applicable in 2024."
6. Hospitals should expect more scrutiny from payers for inpatient admissions for MA members.
"It's going to be critical that hospitals work with their doctors to improve their documentation, not only to support the need for the patient to be in the hospital, but for how long they expect that patient to be there," Ronald Hirsch, MD, vice president of regulations and education group at R1 RCM, told Becker's. "MA plans are theoretically going to have to pay for a lot more inpatient admissions, so they're going to audit a lot more."
Real the final rule here.