CMS Delays Enforcement of Inpatient Admission Rule

CMS on Friday announced that it is instructing recovery auditors to wait until Oct. 1 to begin scrutinizing short inpatients stays, one year after a controversial rule on Medicare inpatient admissions governing the audits took effect, Modern Healthcare reports (Carlson, Modern Healthcare, 1/31).

The final rule for the fiscal year 2014 Inpatient Prospective Payment System instituted a time-based presumption period for medically necessary inpatient care. Under the rule, an admission is assumed to be appropriate for a Medicare Part A payment if a physician expects a patient's treatment to require a two-night hospital stay and admits him or her under that assumption.

In guidance released in September 2013, CMS instructed recovery audit contractors to wait 90 days -- until Dec. 31, 2013 -- to scrutinize short inpatients stays. Medicare RACs would not be allowed to question the medical necessity of any inpatient stay lasting up to one day between Oct. 1 and Dec. 31.  The agency said the delay was instituted to give providers more time to adjust to the rule (California Healthline, 9/30/13).

However, enforcement of the rule was delayed a second time -- to March 31 this year -- following complaints from providers.

Then in a letter to CMS officials in November 2013, the American Medical Association and the American Hospital Association urged the agency to further delay the rule until Oct. 1, 2014, describing it as "fundamentally flawed" and "overly complicated."

The organizations argued that the rule ignores how much care patients need and undermines physicians' expertise. They wrote that providers "need additional time to reevaluate and potentially change many internal policies, update existing electronic medical records systems and alter workflow processes to ensure compliance with the two-midnight policy."

In its announcement Friday, CMS said auditors should only begin analyzing claims filed under the two midnight rule after Sept. 30. The agency said it still would allow Medicare administrative contractors to assess short stays and withhold payments if the patients' records do not show that the stays were medically necessary (Modern Healthcare, 1/31).