CMS releases updates to the Two-Midnight rule

Medical Billing

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The Two-Midnight rule was established in October 2013. According to the fact sheet released by The Centers for Medicare and Medicaid Services, the rule states that inpatient procedures will be payable under Medicare Part A if the patient is expected to require a hospital stay that spans across two midnights.

For the rule to apply, the procedures must be medically necessary, and medical records need to support this if it is the case. However, payment for Part A is not appropriate if the stay lasts less than two midnights.

The goal of this rule is to cut back on medically unnecessary hospital admissions and the associated costs. Often, the cost of a procedure is higher for inpatient admissions than outpatient. Higher costs affect Medicare payment rates as well as patient costs.

The rule was revised to allow some flexibility for cases that qualify as exceptions, such as:

  • If the case requires procedures on the inpatient-only list.
  • The case is identified as a “rare and unusual exception” to the rule.
  • When the doctor expects the patient to require a stay of at least two midnights, but the stay is cut short due to unforeseen circumstances such as death, transfer, improvement or release against medical advice.

A provider may decide that it is medically necessary for a patient to be admitted even though they are not expected to stay inpatient for two midnights. A patient should not be held in observation status for three or more days when admission is more appropriate for the patient’s care.

For more information on the updated Two-Midnight rule, see the CMS fact sheet.


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