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Two-Midnight Rule Enforcement Delay Extended to March 31, 2015

On April 1, 2014, President Barack Obama signed into law a bill (H.R. 4302) extending the enforcement delay of the two-midnight rule. Under the newly adopted law, Recovery Audit Contractors (RACs) will not conduct patient status reviews of inpatient hospital admissions on a post-payment basis until March 31, 2015. The two-midnight rule, which took effect October 1, 2013, provides that inpatient hospital admissions are generally appropriate when the physician expects the beneficiary will require medically necessary hospital services for 2 or more midnights. Since taking effect, hospitals’ inpatient admission claims under the two-midnight rule have been free from review by the RACs.

Prior to the extended enforcement delay to March 31, 2015, the enforcement of the two-midnight rule was previously delayed by CMS to March 31, 2014, and again to September 30, 2014. Also extended to March 31, 2015 under the new law is the Medicare Administrative Contactors’ (MACs) ability to conduct “Probe and Educate” reviews of a limited set – 10-25 claims depending on the size of the hospital – of inpatient admission claims for each hospital, which are conducted on a prepayment basis. When conducting “Probe and Educate” reviews, CMS has instructed the MACs to review hospital’s compliance with the admission order requirements, the certification requirements, and the two-midnight benchmark.

Until March 31, 2015, hospital inpatient admissions under the two-midnight rule will be subjected only to a limited number of prepayment claim reviews by the MACs. Thus, for inpatient claims with dates of admission October 1, 2013 through March 31, 2015, the RACs will not conduct prepayment reviews, and both the RACs and the MACs will not conduct post-payment reviews.

The delay in the two-midnight enforcement does not mean hospitals should delay in implementing their revised admission policies to comply with the new inpatient admission rules. Failure to comply with the two-midnight rule, as well as the inpatient certification and order requirements, could result in the MACs conducting further “Probe and Educate” prepayment reviews with an increased claim volume (100-250 claims depending on the size of the hospital). Furthermore, the extended enforcement delay will not shield hospitals from CMS contractors where there is evidence of systematic gaming, fraud, abuse, or delays in the provision of care in an attempt to qualify for the two-midnight presumption.

Wachler & Associates will continue to monitor any further developments regarding CMS’s new inpatient admission rule. If you have any questions pertaining to the two-midnight rule or the inpatient certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.