CMS finalizes two-midnight inpatient presumption as part of 2014 IPPS final rule

CMS finalized a major change to its inpatient admission guidelines as part of the 2014 IPPS final rule, released August 1.

As part of the rule, CMS finalized the two-midnight presumption for inpatient admissions. If a patient the physician expects a patient’s treatment, testing, or surgery to require an inpatient stay covering two midnights, and admits the patient based on that belief, CMS will presume that the stay is be medically necessary.

CMS emphasized that the physician must formally order an inpatient admission, but added that the physician can consider the time the patient has already spent in the ED or observation when deciding whether to admit the patient.

CMS made the change in part to reduce long outpatient or observation stays.

CMS also finalized the timely filing requirement for Part A to Part B rebilling. In March, CMS released a ruling and a proposed rule allowing hospitals to rebill Part A inpatient services as Part B outpatient services if the inpatient stay was not medically necessary and the services would have been covered in the outpatient setting. The ruling, which went into effect in March, did not including a filing timeframe. Under the final rule, hospitals will have one year from the date of service to rebill claims.

CMS finalized the criteria to rank hospitals with a high rate of hospital-acquired conditions (HAC). Hospitals in the lowest quartile for HACs will see a payment reduction of 1%.