Providers Blast CMS on Two-Midnight Rule

Christopher Cheney, for HealthLeaders Media , July 1, 2014

Fix It
Ronald Hirsch MD, FACP, is calling on CMS to fix the two-midnight rule.

"I find the rule much more sensible than the old method of admission v. observation decision based on risk, which resulted in the appeal mess that now exists," he wrote in his comments to CMS on the proposed 2015 IPPS rules.

In an interview after he filed his comments last month, the VP at Chicago-based Accretive Health said a preferable payment system would "reflect the true costs" for short hospital stays. "Most of the costs incur in the first day of service, so it makes no sense," he said of the two-midnight rule.

Hirsch says it would make more sense to break down the two-midnight rule into eight-hour increments. The first eight hours could be bundled with the emergency department's bill, he said, with reimbursement rates increasing with each eight-hour increment leading up to the two-midnight threshold. "Clearly, patients who stay eight hours and patients who stay 48 hours use different resources," he said.

Under the two-midnight rule, the differential between outpatient and inpatient care reimbursements is too wide and punishes hospitals for providing efficient care, Hirsch believes.

In heart failure cases, for example, the reimbursement for one day of treatment under observation status is about $1,600 compared to $10,800 if a patient can cross the two-midnight mark, he says. "The hospital is going to get a payment that is much lower than if they were inefficient."

Christopher Cheney is the senior finance editor at HealthLeaders Media.
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