Medicare's 2-midnight rule

Part 2 of 2 about Medicare's medical necessity requirements.


Last month's column dealt with Medicare's requirement that clinicians certify inpatient medical necessity and noted that the 2-midnight rule and inpatient certification are 2 separate but related issues. Inpatient certification has been around since 1988. The 2-midnight rule became regulatory law on Aug. 2, 2014, and applies to all cases with an admission date starting on Oct. 1, 2014.

The 2-midnight regulation states that an admission encompassing a period of 2 midnights will be presumed medically necessary and that 2 midnights is the benchmark for meeting the length of stay required for inpatient certification, assuming all of the other certification components are completed. Medicare's intent is to provide some objective clarification and guidance to clinicians on the length of hospitalization the agency expects for medically necessary inpatient care.

Photo by Thinkstock
Photo by Thinkstock

Prior to Aug. 2, 2014, Medicare had a guidance policy stating that most patients who were expected to require 24 hours or more of inpatient care should generally be admitted as inpatients and those expected to stay less than 24 hours should be observation cases. The foundation of this policy was documentation of the clinician's reasonable expectation of hospitalization lasting 24 hours or more and patient-specific clinical circumstances justifying that expectation. This 24-hour benchmark did not establish a presumption of medical necessity and did not have the force of regulatory law, binding on auditors.

Medicare always has and continues to recognize that inpatient medical necessity does not depend solely on how long the patient remains in the hospital but is also based on severity of illness, intensity of services, risks, complications, other extenuating circumstances, screening guidelines (like InterQual), and published professional guidelines and medical literature, even if the actual stay is less than 24 hours.

Before the 2-midnight rule, the criteria for inpatient admission were left vague, were subject to broad interpretation, and were highly dependent on the clarity of precise physician documentation. In addition, inadequate oversight of recovery auditors led to many abuses of this 24-hour benchmark, including denials of admissions lasting several days.

Now, under the 2-midnight rule, inpatient medical necessity depends on a clinician's reasonable expectation that the patient will require inpatient care encompassing 2 midnights (no longer just 24 hours). That expectation must be clearly stated, and documentation must support that it is reasonably based on accepted standards of medical practice and patient-specific clinical circumstances. Simply stating that at least a 2-midnight period is expected is not sufficient.

Unlike the former 24-hour policy, the 2-midnight rule creates a regulatory presumption of inpatient medical necessity when the patient's stay actually requires care exceeding 2 midnights. Time spent receiving preadmission services, such as observation, emergency department care, or pre-transfer care at another facility, is included in calculating the 2-midnight duration. In most cases, recovery auditors will not be allowed to review claims with a length of stay spanning 2 midnights. But Medicare has also warned clinicians to play by the rules: “Any evidence of systematic gaming, abuse or delays in the provision of care in an attempt to receive the 2-midnight presumption could warrant medical review.”

What happens when the patient is expected to remain hospitalized for at least 2 midnights but does not? In this case, auditors can review claims and the burden of proof falls on the provider. Thorough and precise documentation at the time of admission of the expected need for hospitalization lasting more than 2 midnights and the clinical reasoning on which that expectation is based adds substantial support to the argument that the inpatient admission was medically necessary, even though the patient was discharged before that time for unforeseen circumstances.

However, Medicare requires that any such unforeseen circumstances “must be documented in the medical record in order to be considered for medical review.” Unforeseen circumstances include death, transfer, departure against medical advice, clinical improvement, and election of hospice care. If a clinician expected the patient to remain hospitalized for 2 midnights but he or she did not, clear documentation of the unforeseen circumstance is necessary.

In summary, the 2-midnight rule creates the assumption that an admission lasting over 2 midnights will be presumed medically necessary. Generally, recovery auditors will not be allowed to review cases with a length of stay spanning 2 midnights. When clinicians, at the time of admission, reasonably expect a patient to require hospitalization for a period of at least 2 midnights, documentation of that expectation, typically in the history and physical assessment, is needed, together with the patient-specific clinical circumstances and reasoning that support the expectation. A general statement that a 2-midnight stay is expected without elucidation is insufficient.

If the admission actually lasts less than 2 midnights due to unforeseen reasons, the admission may still be considered medically necessary if the 2-midnight expectation and clinical reasoning were documented on admission. The expectation and reasoning must be consistent with other medical record information and the accepted standards of medical care. Unforeseen circumstances may include such things as unexpected clinical improvement, leaving against medical advice, transfer, and hospice care or death and must also be clearly documented.