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Schwartz Leads Bipartisan “2 Midnight Rule” Dear Colleague Letter and CMS Announces 3 Month Enforcement Delay

September 27, 2013—Rep. Allyson Schwartz (D-Pa.) and 105 other representatives Sept. 24 sent a bipartisan “Dear Colleague Letter” to Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner requesting a six month delay in implementation of the agency’s “Admission and Medical Review Criteria for Hospital Inpatient Services” provision (“2-Midnight Rule”) that was finalized as part of the fiscal year (FY) 2014 Inpatient Prospective Payment System rule [see Washington Highlights, Aug. 9].  The AAMC Sept. 13 requested a six-month delay in enforcement [see Washington Highlights, Sept. 20] to give providers sufficient time to have questions answered, educate physicians and others, and make the changes to IT systems that will be necessary to insure compliance with the new requirements.

CMS Sept. 26 announced a three-month delay in enforcement of the new policy, though the 2-Midnight Rule requirements remain effective Oct. 1.  However, the AAMC and other stakeholders are concerned that CMS failed to acknowledge the legitimate clinical circumstances where inpatient care is required and the patient stay does not span 2 midnights.

The “Dear Colleague Letter” expressed appreciation of CMS’s “effort to provide clarity regarding when an inpatient hospital admission should be ordered and certified and when inpatient hospital admissions are generally appropriate for Medicare Part A payment.”  The letter also offered support for CMS’s goal of “ensuring that Medicare only pays for inpatient services when they are medically necessary.”

However, in asking for the delay, the members of Congress expressed concern that “Medicare beneficiaries could assume a higher financial burden for their care under the new policy,” and “hospitals in our districts could be undercompensated for providing medically necessary services that do not meet the new criteria spelled out by CMS and face administrative challenges in complying with new requirements.”

CMS Sept. 26 responded by letter to the AAMC on the 2-Midnight stay policy. The letter included a Frequently Asked Questions (FAQs) document explaining that CMS will delay enforcement of the 2 Midnight Rule for 90 days.  CMS also will be posting additional FAQs related to these policies on its website in the near future.

The FAQs state that during the implementation period of Oct. 1 through Dec. 31, CMS will instruct the Medicare Administrative Contractors (MACs) and Recovery Auditors not to review claims spanning more than two midnights after admission for appropriateness of patient status.  MACs will select a sample of 10-25 claims that span less than two midnights to review solely for provider education purposes.  Additionally, for services provided during this period, CMS will not permit Recovery Auditors to review inpatient admissions of one midnight or less.

During a Sept. 26 Special Open Door Forum on the 2-Midnight provision, CMS staff explained that they are still working on instructions related to the application of these policies after Jan. 1, 2014 (when the 90-day delay in enforcement ends).  CMS indicated that agency staff will continue the conversation with hospitals and will consider a longer enforcement delay if the data warrants it.  The agency also plans to issue further guidance on certification and admission orders.


Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499

Len Marquez
Director, Government Relations
Telephone: 202-862-6281


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806