Final Rule Adds Flexibility to Two-Midnight Rule

November 4, 2015 | Strategic Insights for Health System


​The Centers for Medicare and Medicaid Services' (CMS) final 2016 Outpatient Prospective Payment System includes provisions that add flexibility to applying the so-called two-midnight rule in determining whether patient stays are reimbursable under the outpatient or more costly inpatient Medicare programs. First issued in 2013, the two-midnight rule sought to limit overpayment of patient stays that were being improperly reimbursed as inpatient by establishing a threshold that patient stays would only be considered inpatient if they crossed two midnights. The rule was criticized for being inflexible and failing to recognize the possibility of legitimate inpatient stays that nonetheless crossed only one midnight. Under the new rule, any stay that crosses two midnights will still be considered inpatient.

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