CMS is retaining but proposing some changes to its Two Midnight rule, regarding when inpatient admissions are appropriate for payment under Medicare Part A. As CMS considered changes to this rule, CMS sought to balance multiple goals, including: continuing to respect physician judgment and support high quality healthcare for beneficiaries, providing clear guidelines for providers, and incentivizing efficient care to protect the Medicare trust funds. The proposed revisions, which are included in the Calendar Year (CY) 2016 Hospital Outpatient Prospective Payment System (OPPS) proposed rule [CMS-1633-P], were issued on July 1, 2015. CMS will accept comments on the proposed rule until August 31, 2015 and will respond to comments in a final rule to be issued on or around November 1, 2015. The proposed rule was issued in the July 8, 2015 Federal Register, Volume 80, Number 130, pages 39199-39375 and can be downloaded from the Federal Register at:

Specifically, CMS proposed the following change in payment policy for admissions not meeting the two midnight benchmark:

  • If the physician expects the patient to need less than two midnights of hospital care (and the procedure is not on the inpatient only list or otherwise listed as a national exception), an inpatient admission would be payable under Medicare Part A on a case-by-case basis where the medical record supports the judgment of the admitting physician regarding the need for inpatient care. The documentation in the medical record must support that an inpatient admission is necessary, and is subject to medical review.

CMS emphasizes that it would be unusual for Part A payment to be appropriate for an inpatient hospital admission related to a minor surgical procedure or other treatment that ordinarily keeps the patient in the hospital for only a few hours and rarely requires an overnight stay. CMS will monitor the number of these types of admissions and plans to prioritize these types of cases for medical review.

There are no changes proposed for stays expected to span greater than two-midnights (i.e., the benchmark) or stays in which the beneficiary receives medically necessary hospital care for two or more midnights after formal inpatient admission (i.e., the presumption).

Seeking a more collaborative approach to education and enforcement, CMS announced that the Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC-QIOs) will conduct the first line medical reviews of providers who submit claims for Part A payment of inpatient short stay hospital admissions. QIOs have a significant history of collaborating with hospitals and other stakeholders to ensure high quality care for beneficiaries.

The QIOs will focus on educating doctors and hospitals about the Part A payment policy for inpatient admissions. The recovery auditors will now conduct patient status reviews for hospitals that have consistently high denial rates based on QIO patient status review outcomes.

A thorough background to the proposed changes, and more detail about these topics can be found in the Fact Sheet: Two-Midnight Rule published on July 1, 2015, at

Click here for more details on the Two-Midnight Rule.

Click here to read about the Two-Midnight Rule Open Door Forum Q&A from 1/26/16