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O U T P AT I E N T S U R G E R Y M A G A Z I N E O N L I N E | D E C E M B E R 2 0 1 5
C O D I N G & B I L L I N G
CMS's update to its controversial "two-midnight benchmark" gives providers more flexi-
bility when determining whether hospital patients are designated as inpatient or out-
patient in Medicare claims. The changes are part of CMS' final 2016 Hospital
Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems.
The original two-midnight rule told Medicare's payment and audit contractors to
assume that an inpatient hospital admission is legitimate if it spans 2 midnights.
Shorter stays were to be billed as outpatient. While inpatient stays receive a lump
sum from Medicare Part A to cover all aspects of a patient's stay, Medicare Part B
pays for outpatients based on the services provided. In the updated benchmark,
patients staying less than 2 days may be considered
inpatient in special circumstances.
The rule was created in 2013 (CMS has since delayed enforcement) when Medicare
contractors noticed a spike in claims for inpatient services that should have been sub-
mitted as outpatient and rejected these
claims. Meanwhile, cautious providers
began submitting more claims for extend-
ed "outpatient" observation hours, which
left patients on the hook for higher out-of-
pocket costs.
Hospitals and providers have criticized
the rule, saying it undermines their clinical
judgment. In response to the criticism, CMS
says it worked with stakeholders to refine
the rule and will begin enforcing it in 2016.
In the updated two-midnight benchmark,
physicians can admit a patient who is
expected to stay for less than 2 midnights
INPATIENT ADMISSIONS
CMS Refines Two-Midnight Rule
z SHORT STAY In the updated two-mid-
night benchmark, physicians can admit
a patient who is expected to stay for less
than 2 midnights as an inpatient.