The 5 Biggest Healthcare Finance Trouble Spots

Rene Letourneau, for HealthLeaders Media , December 2, 2013

3. Two-Midnight Rule

Jerry Arndt

Jerry Arndt, senior vice president for business services at Gundersen Lutheran
As if dealing with RAC denials wasn't already difficult enough, CMS upped the ante with its two-midnight rule, which went into effect on Oct. 1. According to the new rule, providers will be reimbursed under Medicare Part B unless a patient is hospitalized for two midnights or more. That's of great concern to hospital finance executives, who believe the rule will result in reduced reimbursements and unhappy patients. Medicare patients on observation status are typically responsible for a 20% copay and do not receive coverage for some medications administered in the hospital or for postacute care.

To Jerry Arndt, senior vice president for business services at Gundersen Lutheran, a 325-bed integrated healthcare organization based in La Crosse, WI, the two-midnight rule feels like a punishment for running a competent, well-managed shop.

"It's just another one of those absolutely classic examples of being penalized for being efficient. If you can discharge somebody with a one-night stay, then it will get paid as an observation as opposed to discharging them at 12:05 a.m.," he says. "It's another example of having to choose between doing what is right and what maximizes revenue, and this is really, really getting to be a difficult situation."

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