Electronic Health Records

Adoption & Implementation News

AHA sues HHS over two-midnight rule, Medicare policies

By Kyle Murphy, PhD

The American Hospital Association (AHA) has increased its advocacy against the two-midnight rule and other Medicare inpatient policies, which now includes a series of complaints filed in United States District Court on Monday.

The complaints call into question the decision on the part of the Centers for Medicare & Medicaid Services (CMS) to withhold reimbursement for admissions of less than three days based upon a new definition of inpatient as well as two other policies related to reimbursement conditions for inpatient services. Also, they include details about the financial impact the rules have had on the hospitals taking part in the lawsuit.

The AHA is one of a handful of plaintiffs listed in the federal court documents, which also include:

• Banner Health
• Mount Sinai Hospital
• Albert Einstein Healthcare Network
• Wake Forest University Baptist Medical Center
• Greater New York Hospital Association
• Healthcare Association of New York State
• New Jersey Hospital Association
• The Hospital & Healthsystem Association of Pennsylvania

The plaintiffs are arguing that these Medicare policies constitute an about-face on the part of CMS after years of supporting a physician’s right to address the needs of each patient on a case-by-case basis:

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.

The complaints also challenge two other components of the Administrative Procedure Act (APA). One focuses on the ability of hospitals to be reimbursement under Medicare Part B for outpatient services in instances where a judgment by Medicare review contractors determines that those services should not be paid under Medicare Part A. The other pertains to written physician orders as a condition of Medicare payment for every inpatient stay:

These three policies deprive hospitals of reimbursement to which they are entitled. They also have forced and are forcing hospitals to spend hundreds of thousands of dollars, and hundreds of hours of personnel time, to change their medical records systems, admissions policies and procedures, and documentation protocols, harming hospitals and consuming resources that instead could be invested in patient care.

The plaintiffs have petitioned to US District Court to set aside the three policies and reverse any decisions to deny claims and withhold payments as a result of these rules being in place.

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