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“Two-midnight” Medicare bill brings ire, approval, confusion

By Jennifer Bresnick

CMS has long since learned that it can’t please everyone all the time when it comes to healthcare reform, and its newly released guidance for the oft-delayed “two-midnight” rule is proving the maxim true once again.  The rule states that providers who admit patients to the hospital for observation for fewer than two consecutive midnights will not be reimbursed according to inpatient rates.  Fraught with caveats about the nuances of documentation that record the intent of the attending physician, the rule has both confused and exasperated hospitals as well as sparked debate about the role of Medicare recovery audit contractors (RACs) in the struggle between cutting unnecessary costs and being on the safe side when it comes to patient care.

This week, a bipartisan Senate bill introduced by Senators Robert Menendez (D-NJ) and Deb Fischer (R-NE) that is intended to clarify the situation has done nothing more than rekindle the argument.  The bill proposes to delay enforcement of the rule until October 1, 2014, a date familiar to hospitals as the ICD-10 conversion deadline, and tries to kick-start the development of comprehensive guidance over the reimbursement rules.

CMS has already started to formulate guidance with a pair of letters explaining the documentation necessary to avoid an RAC denial of payment for a very short hospital stay. The explanations focus mostly on requiring providers to accurately document their thinking in order to receive accurate reimbursement.  If a short stay for inpatient care is medically necessary, the guidance says, providers simply need to justify the decision in their clinical notes in order to avoid a denial or reduction of payment.

But Medicare’s “probe and educate” review program isn’t cutting it for some.  The American Hospital Association (AHA) immediately voiced its support for the bill, which requires CMS to develop a better alternative to the “red tape” and “administrative and financial burdens” the two-midnight scheme places on providers. “The AHA strongly supports this important legislation,” said Rick Pollack, Executive Vice President, in a statement. “The current CMS policy is bad news for seniors because it undermines the medical judgment of physicians. The bill also rightly calls on the agency to develop an acceptable long-term payment solution.”

Meanwhile, the RAC Coalition, already upset about a reduction in the scope of the Medicare audit program, blasted the delay as just another way for hospitals to get a free ride.  “Our coalition strongly opposes the proposed extension to the Medicare oversight moratorium included in the Two-Midnight Rule Coordination and Improvement Act,” said Becky Reeves, spokesperson for the coalition. “Yet again, under the guise of ‘reform’, hospitals are vying for an extended Medicare oversight holiday. In January, healthcare officials already granted a one-year auditing break to hospitals, at an estimated $4 billion loss to the Medicare Trust Fund.  We urge lawmakers to refrain from supporting this anti-oversight legislation.”

CMS plans to continue collecting sample claims from providers in order to clarify the documentation requirements through September 30, 2014.  “CMS has been working closely with the Medicare Administrative Contractors (MACs) to ensure the accuracy of claim reviews and identify recurrent provider errors,” the guidance says. “Initial data collected indicates that the probe and educate review process is well under way. Review results are being closely monitored in order to focus future educational outreach efforts.”

 

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