Leadership
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Two-Midnight Rule Will Cost Hospitals Big

Philip Betbeze, for HealthLeaders Media, June 13, 2014

The simple demarcation between inpatient and outpatient status prodded by Medicare's proposed rule has the potential to turn into a big revenue problem. But good documentation can help.

The so-called "two midnight" rule has hospital and health system senior leaders extremely worried.

Although its enforcement by Medicare has been delayed a second time, hospitals and health systems still have to deal with it. In essence, the proposed rule calls on doctors, with the help of whatever decision-making staff the hospital has made available, to decide whether a patient is likely to need a stay in the hospital that extends over two midnights.

That essentially determines whether that patient, and his or her billing status, is designated as an inpatient or outpatient.

And that designation can mean a huge difference in reimbursement despite the fact that the inputs (bed occupancy, staff time) are largely the same. Some CFOs I've spoken with say reimbursement for outpatient status is as little as a third of what they would get for inpatient status.


Observation, Two-Midnight Rules Hit in Hearing


Observation status has many implications for patients' pocketbooks as well, but that is a topic for another day. There are plenty of land mines, however, for hospitals and health systems in this simple demarcation between inpatient and outpatient status.

1 | 2 | 3 | 4 | 5

Comments are moderated. Please be patient.

3 comments on "Two-Midnight Rule Will Cost Hospitals Big"


Stefani Daniels (9/25/2014 at 8:38 AM)
In my opinion, the ONLY alignment that will work is when physicians have equal skin in the game. As long as the patient is in the hospital getting the care needed, in my experience, physicians are not going to worry about documenting 'medical necessity' unless it affects their financial well-being. So, if the hospital gets denied payment, so too, should the physicians.

ILYA AVERBUCH MD (6/16/2014 at 12:01 PM)
Reasonably accurate projections of the hospital stay can be made based on the statistical analysis of a large (nationwide) sample of similar cases, using the same clinical / lab parameters that the Medicare contractors are using in their decision-making process. CMS should open its database for such analysis.

Cheryl (6/16/2014 at 9:52 AM)
Philip I don't think the ramifications for patients can be a subject for another day. The decision between observation and inpatient stay costs Medicare recipients tens of thousands of dollars if they need to go to a LTC/Rehab facility because without the 3 day hospital stay they are unable to access their Medicare benefits. In my state we see hospitals reversing a patient's status sometimes a week after they have been discharged. I believe patients deserve to be told and understand the consequences of an observation stay designation.