News: IPPS Final Rule features change in inpatient medical necessity rules

CMS redefined the criteria for inpatient admission by implementing the “two-midnights” rule in the recently released IPPS Final Rule. For an inpatient admission to be deemed medically necessary under the final rule, physicians must document why a patient’s say is expended to be a minimum of two midnights. In the past, inpatient admissions were held to a 24-hour rule. An observation stay that crosses one midnight can now count towards the two midnights needed for a qualifying inpatient stay. However, the observation stay will not count towards the three inpatient nights needed to qualify a patient for care in a skilled nursing facility after discharge.

A written order by a physician and medical record documentation of the reason for the stay are required for inpatient services to be properly paid under Part A. Upon inpatient admission, physicians are still expected to use their clinical judgment to predict the level of care and services necessary for a patient and the location where services will be provided.

CMS plans to hold at least one special Open Door Forum call devoted to the two-midnights rule, but has not announced a date. In the interim, email questions about the “two-midnights” rule to ippsadmissions@cms.hhs.gov.

The 2014 rule finalizes a negative 0.8% recoupment adjustment as part of the documentation and coding adjustment mandated by the American Taxpayer Relief Act of 2012, lays out the framework for the new Hospital-Acquired Condition Reduction Program which will begin in FY 2015, and updates measures and financial incentives associated with the Hospital Value-Based Purchasing and Readmissions Reduction programs. 

“The documentation and coding reduction will need attention of hospital leaders, especially HIM, coding and CDI,” says Gloryanne Bryant, RHIA, CCS, CDIP, CCDS, an HIM coding professional and advocate with more than 30 years of experience. “With ICD-10 efforts underway further awareness and collaboration with physicians will be needed. Reinforce documentation concepts.  Now is the time to establish a physician champion or liaison for documentation and coding.”