The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has issued a report, “Vulnerabilities Remain Under Medicare’s 2-Midnight Hospital Policy,” which assessed changes in hospital inpatient and outpatient stays since implementation of the “2-midnight” policy. This policy generally provides that an inpatient stay generally requires at least two midnights in order to qualify for inpatient payment (certain case-by-case exceptions may apply). According to the OIG, since implementation of the 2-midnight policy in 2014, the number of inpatient stays decreased and the number of outpatient stays increased. Nevertheless, the OIG found inconsistent use of inpatient and outpatient stays, with hospitals still billing for many short inpatient stays and long outpatient stays.

The OIG recommended that CMS address these ongoing vulnerabilities by, among other things: reviewing those hospitals with high numbers of short inpatient stays under the 2-midnight policy; analyzing the potential impacts of counting time spent as an outpatient toward the three-night requirement for skilled nursing facility services; and exploring ways to protect beneficiaries from paying more for outpatient stays than they would have paid for an inpatient stay for a similar condition. CMS agreed with all of OIG’s recommendations.