Two Midnight Rule

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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…

CMS has announced that it is allowing Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations (QIOs) to resume initial patient status reviews to determine the appropriateness of Part A payment for short stay inpatient hospital claims, effective September 12, 2016.  Such reviews had been “paused” since May 4, 2016 to promote consistent application of…

The Centers for Medicare & Medicaid Services (CMS) has released its final rule to update Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) payments and policies for fiscal year (FY) 2017.  With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the final rule will increase total IPPS payments by about $746 million in FY 2017 compared to FY 2016. The rule provides a 0.95% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHRs).  This update reflects a 2.7% market basket update, adjusted by a -0.3 percentage point multi-factor productivity (MFP) adjustment and an additional -0.75 percentage point adjustment (as mandated by the Affordable Care Act, or ACA), resulting in a 1.65% update.  This update is subject to an additional -1.5 percentage point documentation and coding recoupment adjustment (required by the American Taxpayer Relief Act of 2012) and a one-time increase of approximately 0.8 percentage points to permanently negate the cumulative impact of a “Two Midnight Policy” adjustment adopted in the final FY 2014 rule.
Continue Reading CMS Finalizes FY 2017 Update to Medicare IPPS, LTCH PPS Rates and Policies

CMS has temporarily “paused” Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews under CMS’s “two-midnight policy” for short hospital stays. The pause, which took effect May 4, 2016, was a result of inconsistencies in the BFCC-QIOs’ application of the two-midnight policy and was intended to give CMS…

CMS has published a notice with comment period describing its rationale for reducing Medicare inpatient prospective payment systems (IPPS) rates by 0.2% in FY 2014 to offset a projected $220 million increase in IPPS spending as a result of adoption of CMS’s “2-midnight” admission policy. The December 1, 2015 notice was issued in response to…

On November 13, 2015, the Centers for Medicare & Medicaid Services (CMS) is publishing its final rule updating the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2016. CMS estimates that total federal expenditures under the OPPS will drop by $133 million in CY 2016 compared to CY 2015 due to the changes in the final rule, while overall ASC payments are expected to increase by approximately $128 million in 2016. The OPPS update for 2016 is -0.3%, driven in large part by CMS’s correction of a $1 billion error it made when estimating “packaged payment” for clinical laboratory tests under a policy implemented in 2014. Specifically, the -0.3% update reflects a 2.4% market basket increase, which is partially offset by a -0.5% multifactor productivity (MFP) reduction and an additional 0.2% reduction (both mandated by the Affordable Care Act), further reduced by a 2.0 percentage points to recoup the prior $1 billion overestimation of laboratory test packaging. Hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements are subject to an additional 2% reduction. The actual update for individual procedures can vary dramatically, however, based on reconfiguration of ambulatory payment classifications (APCs) and other policies in the rule. Other highlights of the final rule include the following:
Continue Reading CY 2016 Medicare OPPS Spending to Drop by 0.4% under Final OPPS Rule; ASC Payments Get Small Boost

CMS recently provided an update on its education and enforcement strategies related to its “Two Midnight” policy, which addresses when surgical procedures, diagnostic tests and other treatments are generally considered appropriate for inpatient hospital admission under Medicare Part A. The Medicare Access and CHIP Reauthorization Act of 2015 generally bars recovery audit contractors (RACs)…

Today President Obama signed into law H.R. 2, the “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA), which reforms Medicare payment policy for physician services and adopts a series of policy changes affecting a wide range of providers and suppliers. Most notably, MACRA permanently repeals the statutory Sustainable Growth Rate (SGR) formula, achieving a goal that has eluded Congress for years. Now, after a period of stable payment updates, MACRA will link physician payment updates to quality, value measurements, and participation in alternative payment models.
Continue Reading President Obama Signs MACRA: Permanently Reforms Medicare Physician Reimbursement Framework, Includes Other Health Policy Provisions

The OIG has defended its hospital compliance review policies in response to objections raised by the American Hospital Association (AHA). Specifically, a January 15, 2015 OIG letter addresses four main areas of AHA concern about the OIG’s application of Medicare rules and policies: (1) the need for a physician order, (2) the treatment of canceled…

A number of Congressional panels have focused on following health policy issues recently, including the following:

  • The House Ways and Means Health Subcommittee examined various Medicare hospital issues, including the CMS two-midnights policy, short inpatient stays, outpatient observation stays, Recovery Audit Contractor audits, and the appeals backlog.
  • The House Energy and Commerce Committee held a

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On April 1, 2014, President Obama signed into law H.R. 4302, the “Protecting Access to Medicare Act of 2014” (“the Act”). The Act includes a one-year Medicare physician fee schedule fix that averts a nearly 24 percent payment cut set for April 1, 2014, but which falls far short of earlier hopes for full repeal of the current sustainable growth rate (SGR) formula. The Act also includes numerous other Medicare payment and policy changes, including skilled nursing facility value-based purchasing provisions, reforms to the physician fee schedule relative valuation process, a new framework for clinical laboratory payments, a variety of changes impacting imaging services, changes in the exceptions for long term care hospitals, and extension of certain expiring provisions. In other areas, the bill includes a one-year delay in the transition to ICD-10, changes to the timetable for Medicaid disproportionate share hospital cuts, and “front-loading” of the 2024 Medicare sequestration reduction.
Continue Reading President Signs Medicare Physician Fee Schedule/SGR Patch with Numerous Health Policy Provisions

On February 24, 2014, CMS posted additional guidance on its controversial “2 Midnight Rule” Medicare inpatient hospital admission and medical review criteria. Among other things, CMS is requesting Medicare Administrative Contractors (MACs) to re-review claims denials made during the “probe and educate” phase of implementation to make sure that MACs are applying CMS…

CMS has announced that it is extending provider education activities related to its new Medicare inpatient hospital admission and medical review criteria (commonly known as the 2-Midnight Rule). Specifically, CMS is extending what it refers to as the “Probe & Educate” review process for an additional six months, through September 30, 2014. Under this extension,…

CMS is hosting a provider call on January 14, 2014 to discuss the Medicare inpatient hospital admission and medical review criteria (also known as the 2-Midnight Rule) included in the FY 2014 Medicare inpatient prospective payment system/long-term care hospital final rule. During the call, CMS will present case scenarios on the application of the rule…

CMS continues to release subregulatory guidance on the inpatient hospital admission/medical review criteria that were adopted in the final FY 2014 Medicare inpatient prospective payment system/long-term care hospital final rule. In short, under this new policy, if the ordering practitioner expects a beneficiary’s surgical procedure, diagnostic test, or other treatment to require a stay in…

A November 12, 2013 CMS call will focus on the physician order, physician certification, inpatient hospital admission, and medical review criteria that were adopted in the final FY 2014 Inpatient Prospective Payment System/Long-Term Care Hospital final rule. In short, under this new policy, if the ordering practitioner expects a beneficiary’s surgical procedure, diagnostic test or…

As discussed in previous reports, the final FY 2014 IPPS rule established new criteria for determining the appropriateness of inpatient admissions. In brief, under this policy, CMS generally will presume that surgical procedures, diagnostic tests, and other treatments are appropriate for Medicare Part A inpatient hospital payment when the physician admits a patient based…

As previously reported, the final FY 2014 Medicare inpatient prospective payment system (IPPS) rule established new criteria for determining the appropriateness of inpatient admissions. In brief, under this policy, CMS generally will presume that surgical procedures, diagnostic tests, and other treatments are appropriate for Medicare Part A inpatient hospital payment when the physician admits…