Providers are pleased that CMS is delaying enforcement of new guidelines governing Medicare reimbursements for short-term hospital stays, but they insist the new rule is flawed and say they will continue to oppose it.
CMS's decision late Friday to delay full implementation of a new rule that reforms Medicare reimbursement for short-term hospital admissions is drawing cautious praise from providers and their allies in Washington, D.C.
In the announcement, officials at the Centers for Medicare & Medicaid Services stated that they are extending the so-called two-midnight rule's "probe and educate" transition period to the end of the federal fiscal year on Sept. 30. Full enforcement of the policy had been slated to begin in April.
"Hopefully, the two-midnights [rule] delay is a recognition that we do need to go back to the table… and seniors will know what their costs are going to be," said Lori Prater, legislative counsel to U.S. Rep. Jim Gerlach, a Pennsylvania Republican who has been pushing for delay and revision of the new rule since December.
Under the rule, which CMS issued in August 2013, hospitals that admit patients for less than two nights will receive reimbursement at Medicare B outpatient rates. The rule states that hospital admissions shorter than two midnights in length are "generally inappropriate for payment under Medicare Part A, regardless of the hours the patient came to the hospital or whether the patient used a bed."
For most services, Medicare B reimburses providers at 80 percent of the Medicare A rate. Friday's announcement from CMS is the third time since October that full implementation of the two-midnight rule has been delayed.
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CMS officials have said the rule is needed to clarify admission guidelines and address a recent spike in Medicare patients being admitted to hospitals for brief observation stays. Objections from hospitals and doctors have included unease over the financial impact of the rule on patients, who face higher copays, and concern that the rule will penalize efficient treatment of patients in less than two nights.
Prater says Gerlach introduced a bill in December that sought to force CMS to delay the full rollout of the two-midnight rule until the beginning of the next federal fiscal year in October. "That was really the main part of the bill," Prater said of the legislation, which had 85 co-sponsors when CMS embraced the delay on Friday. "It gave hospitals an opportunity to come in and make their case with their representatives."
In a prepared statement issued Monday, the American Hospital Association sounded a guardedly optimistic tone on the latest two midnight rule delay.
"We are pleased that CMS has extended its enforcement moratorium on the two-midnight policy for an additional six months, as the AHA has urged," said Rick Pollack, the group's executive vice president.
"This action clearly recognizes that there are still many unanswered questions about the policy. At the same time, we continue to urge CMS to fix the critical flaws of the underlying policy by immediately engaging stakeholders to find a workable solution that addresses the reasonable and necessary inpatient-level services currently provided by hospitals to Medicare beneficiaries that are not expected to span two midnights."
Ardis Dee Hoven, MD, president of the American Medical Association, says the physician group is urging CMS to revise or scrap the rule over the next six months.
"The AMA has been actively involved in issues surrounding hospital observation care and strongly opposes the two-midnight policy due to serious concerns about potential increased documentation burdens for physicians and financial liabilities for patients," she said in a prepared statement Monday.
"We recognize that these issues are causing tremendous difficulties for physicians and patients, and we will continue to work with stakeholders to pursue workable solutions during the additional time afforded by the delay issued by CMS."
During the newly extended transition period, short-term hospital admissions will be reviewed under the new rule's guidelines, but reimbursements will not change. "Medicare Administrative Contractors (MACs) will continue to select claims for review with dates of admission between March 31, 2014 and September 30, 2014," Friday's CMS announcement states, adding, "Generally, Recovery Auditors and other Medicare review contractors will not conduct post-payment patient status reviews of inpatient hospital claims with dates of admission on or after October 1, 2013, through October 1, 2014."
CMS officials did not return a request for comment.
Officials at Wake Forest Baptist Medical Center in North Carolina said delaying implementation of the two midnights rule is a positive development but only the first step in process necessary to fix or drop the new guidelines. The 885-bed teaching hospital in Winston-Salem is among four healthcare providers that have appealed CMS's plan to reduce Medicare reimbursements by 0.2 percent to help pay the agency's costs linked to implementing the two-midnight rule.
"We appreciate CMS's announcement delaying the enforcement of the two midnight rule until October 1, 2014," said Joanne Ruhland, WFBMC's vice president of government relations. "However, the rule is still CMS policy, which we will continue to oppose through the legislative and judicial process."
Christopher Cheney is the CMO editor at HealthLeaders.