1

Lone Star Express

HFMA

Healthcare Financial

Management Association

The Lone Star Chapter

News Magazine

December 2014,

Volume 16, Issue 3

9

Appropriate Level of Care and the 2– Midnight Rule

Where It Stands as of NOW Effective October 1, 2013, The Centers for

Medicare and Medicaid Services (CMS)

implemented a new rule, the "2-Midnight

Rule" that is intended to clarify which

patients are sick enough to be admitted to

a hospital by adding “midnight” as a point

in time for determining inpatient length of

stay and requiring physicians to certify

that they have the expectation of care sur-

passing two midnights. Medicare would

then pay inpatient hospital rates. Prior to

this rule, CMS outlined observation care

as short term and generally would not ex-

ceed 24 hours but could be up to 48 hours

in rare and exceptional cases. It is im-

portant to note that a New Jersey State

regulation stipulates a length of stay crite-

ria of less than 24 hours for observation

services. The New Jersey Department of

Health and Senior Services, N.J.A.C., Title

8, Chapter 43G-32.21 outlines the state

standards for observation services and

scope which is more stringent than the

CMS guidance on observation services.

The key elements of the 2-Midnight rule

require documentation in the medical rec-

ord for medical necessity and a presump-

tion of the length of stay. The focus of the

documentation requirements for Medicare

inpatient admission is as follows:

Inpatient admission order at the time

of admission by a physician or quali-

fied practitioner licensed by state to

admit inpatients and who has admit-

ting privileges;

Physician certification of medical

necessity includes (before discharge):

Inpatient admission order signed/

authenticated by the physician or

countersigned, if needed;

Dated order;

Reason for inpatient services,

including diagnosis, patient histo-

ry, patient comorbidities, severity

of signs & symptoms, risk of ad-

verse events, current medical

needs requiring inpatient care,

plan of care, and plans for post

hospital care; and

Estimated length of stay

(expected to stay at least 2 mid-

nights).

the hospital prior to inpatient admission, in

addition to the post-admission duration of

care. The pre-admission time may include

services such as observation services,

treatment in the emergency department

(ED), and procedures provided in the oper-

ating room or other treatment area. MLN

Matters Number: MM8586 was released

January 24, 2014 to provide clarification

to hospitals regarding the billing of inpa-

tient hospital stays to track the total, con-

tiguous outpatient care prior to inpatient

admission to the hospital. CMS has rede-

fined occurrence span code 72 which al-

lows providers to voluntarily identify

those claims in which the 2-Midnight

benchmark was met because the benefi-

ciary was treated as an outpatient in the

hospital prior to the formal inpatient order

and admission.

From the issuance of the Inpatient Pro-

spective Payment System (IPPS) Final

Rule CMS 1599-F for Fiscal Year (FY)

2014 on August 19, 2013 to the soon to be

published IPPS Final Rule FY 2015, CMS

-1607-F on August 22, 2014 to the Outpa-

tient Prospective Payment System (OPPS)

Proposed Rule for Calendar Year (CY)

2015, the public comments and CMS guid-

ance evolves. The table below outlines the

milestones in this regulatory journey. In

spite of the OPPS Proposed Rule for CY

2015 which proposes 20 days as the appro-

priate minimum threshold for physician

certification, these regulations have been

and continue to be effective as of October

1, 2013. In spite of the OPPS CY 15 pro-

posal, clinical documentation in the medi-

cal record drives medical necessity for

inpatient hospital stay. Physician docu-

mentation needs to be specific and explic-

it.

Best Practice Today

Currently, no specific procedures or forms

are required. The physician certification

may be entered on various forms, notes or

records (with appropriate signatures) in-

cluded in the medical record, or on a spe-

cial form, so long as there is a separate

signed statement for each certification. In

the absence of specific certification forms,

the medical record elements identified

above may be sufficient to meet the initial

inpatient certification requirements for

each component.

There are other circumstances supporting

short inpatient stays, exceptions to the 2-

Midnight benchmark, based upon CMS

guidance which is as follows:

Procedures defined as “Inpatient–

Only”

Unforeseen beneficiary death

Unforeseen transfer

Unforeseen departure against medical

advice

Unforeseen clinical improvement

Election of hospice care in lieu of

continued treatment in the hospital

Mechanical ventilation initiated dur-

ing present visit

Documentation in the medical record, as

always, is critical to explain what hap-

pened during the episode of care. Physi-

cians need to tell the story of the patient by

outlining the above which will provide

auditors with the reasons for the inpatient

status.

The 2-Midnight Presumption and the 2-

Midnight Benchmark

The 2-Midnight presumption and bench-

mark are outlined in CMS-1599-F. The 2-

Midnight presumption specifies that hospi-

tal stays spanning two or more midnights

after the beneficiary is formally admitted

as an inpatient based upon the physician

order, will be presumed to be reasonable

and necessary for inpatient status, as long

as the stay in the hospital is medically nec-

essary. CMS will direct Medicare Admin-

istrative Contractors (MACs) not to focus

medical reviews on stays spanning at least

two midnights after admission. MACs

may review these claims as part of routine

monitoring activity or as part of other tar-

get reviews and/or in the event of evidence

of systematic gaming, abuse or delays in

the provision of care to qualify for the 2-

Midnight presumption

The 2-Midnight benchmark represents

when an inpatient admission is generally

appropriate for Medicare coverage and

Part A inpatient payment. For purposes of

determining whether the 2-Midnight

benchmark was met, CMS will direct

MACs to consider time the beneficiary

spent receiving outpatient services within

10

Appropriate Level of Care and the 2– Midnight Rule

Where It Stands as of NOW

Collaboration of the revenue cycle team,

inclusive of Case Management, Patient

Access Services, Health Information Man-

agement, Clinical Documentation Im-

provement and Patient Financial Services

with the physicians is the key strategy to

success. Understanding the clinical pro-

cesses, electronic health record interfaces

to the billing system and validating the

patient status concurrently are essential.

How would your organization answer

these questions?:

What is the Case Management model

to support concurrent physician deci-

sion making on the patient status; in-

patient vs. observation vs. outpatient?

Are there case managers in the ED to

collaborate with the ED physicians,

hospitalists and/or community physi-

cians to assess the clinical picture of

the patient, ensure the medical record

tells the story and then places the ap-

propriate status?

Is there strong physician leadership to

monitor observation patients timely

and make the next appropriate clinical

decisions?

What is the role of the Utilization

Review Committee and Physician

Advisors?

Are physicians educated and do they

have the tools needed to support the

clinical decision making?

Are the clinical and financial metrics

implemented and assessed for im-

provement opportunities?

Are there policies for observation

billing, use of occurrence span code

72, inpatient only procedures?

Is there auditing of hospital systems,

policies and procedures for compli-

ance?

Is there a process to aggressively ap-

peal cases that appear to meet inpa-

tient criteria?

As CMS continues to state, the decision to

admit a patient as an inpatient is a complex

medical decision based upon many factors

including the risk of an adverse event dur-

ing the period considered for hospitaliza-

tion. The MACs will continue their probe

and educate while the Recovery Auditors

will be in a holding pattern by not con-

ducting inpatient status review of claims

through March 31, 2015. Hospitals need

to monitor the regulatory advisories and

remain diligent and compliant in meeting

the CMS requirements for the 2-Midnight

Rule.

By: Edward J. Niewiadomski, MD and Laureen A. Rimmer, RHIA, CPHQ, CHC

Edward J. Niewiadomski, M.D., Senior Medical Advisor for BESLER Consulting is an accom-

plished physician with over three decades of experience in direct patient care and healthcare admin-istration. Dr. Niewiadomski is the former Senior Vice President of Medical Affairs and Chief Medi-

cal Officer for a community, acute care facility in New Jersey. He has served in multiple senior

leadership positions for other New Jersey hospitals. Dr. Niewiadomski earned his medical degree from the University of Medicine and Dentistry of New Jersey – Rutgers Medical School and com-

pleted a residency in Internal Medicine at Robert Wood Johnson University Hospital in New Bruns-

wick, New Jersey. He also is a member of the American Medical Association, the Medical Society of New Jersey and currently serves on multiple association committees and board of trustees.

Laureen A. Rimmer, is the Director of Coding, Accreditation & Clinical Services for BESLER Consulting. Laureen has over twenty-five (25) years of experience in health information manage-

ment administration, performance improvement, utilization management, medical staff operations

and physician practice management. Laureen’s health information management experiences, as well as operational experiences, have provided key expertise in compliance and revenue cycle engage-

ments for the firm. Laureen has extensive experience with CMS/State licensure compliance and has

been instrumental with implementing change in departmental operational engagements for the firm. Laureen is a graduate of Northeastern University, Boston, MA, is a Registered Health Information

Administrator (RHIA), Certified Professional in Healthcare Quality (CPHQ) and Certified in

Healthcare Compliance (CHC).

11

Appropriate Level of Care and the 2– Midnight Rule

Where It Stands as of NOW Date Guidance Comments

8/19/13 IPPS Final Rule CMS-1599-F

for FY 2014

2 Midnight Rule effective with admissions on or after 10/1/13.

9/26/13 CMS Special Open Door Forum Conference call and transcript of call outlining responses to provid-

er questions and probe & educate by the MACs for dates of admis-

sion 10/1/13 to 12/31/13. MAC to focus on one inpatient midnight

claims. Recovery Auditors not to review claims for this issue for

same dates of admission. (exception for pre-payment reviews of

therapy in pre-payment demonstration states).

1/24/14 CR # 8586 Occurrence Span

Code 72 Identification of Outpa-

tient Time Associate with an

Inpatient Hospital Admission

and Inpatient Claim for Payment

Guidance to account for total hospital time, including outpatient

time that directly precedes the inpatient admission when determin-

ing if an inpatient order should be written, based upon the expecta-

tion that the beneficiary will stay in the hospital for 2 or more mid-

nights receiving medically necessary care.

1/30/14 CMS guidance to clarify physi-

cian order & certification for

Hospital inpatient admission

Content of physician certification outlined, timing, authorization to

sign the certification, inpatient order and specificity of orders.

10/1/13 to

1/31/14

MAC Probe & Educate Probe & educate time period 10/1/13 to 9/30/14. MAC requested

to re-review claims to ensure claim decision and subsequent educa-

tion consistent with most recent clarifications. Appeal timelines

clarified.

4/1/14 President signed the Protecting

Access to Medicare Act of 2014

Extends MAC probe & educate to 3/31/15. Recovery Auditors

prohibited to conduct inpatient status review of claims 10/1/13 to

3/31/15.

5/12/14 CMS UPDATE: MACs com-

pleted most of first round probe

reviews (10 or 25 claims, vol-

ume dependent) and beginning

provider education

CMS conduct pre-payment patient status probe reviews for dates of

admission 10/1/13 to 3/31/15. MACs conduct patient status re-

views using probe & educate strategy for claims 10/1/13 to 3/31/15.

MAC education and repeat process, when necessary.

5/15/14 CMS, HHS Proposed IPPS Rule

for FY 2015. Final Rule to be

published 8/22/14.

Suggested Exceptions for the 2 Midnight Benchmark; inviting fur-

ther feedback in rare and unusual circumstances that were not iden-

tified to justify inpatient admission for Part A payment, absent an

expectation of care spanning at least 2 midnights.

7/14/14 CMS, HHS Proposed OPPS rule

for CY 2015

Inpatient admission order is necessary for all inpatient admissions

and proposing to require such orders as a condition of payment,

rather than as an element of the physician certification. Medical

necessity documentation for inpatient stay still required. Propos-

ing, for non-outlier cases, 20 days as the appropriate minimum

threshold for physician certification and define long stay cases as

cases with stays 20 days or longer.