Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Medicare Advisers Take Aim at Hospital Two-Midnight Rule

By Kerry Young, CQ Roll Call

April 2, 2015 -- Congress's advisers on Medicare are backing a proposal that would overhaul payment policies for short hospital stays, including bringing to an end the so-called two midnight rule.

Members of the Medicare Payment Advisory Commission (MedPAC) recently supported a package of draft recommendations regarding hospital payments for short stays. With members voting by a show of hands, commissioners sought to bring to an end a policy that has drawn frequent complaints from hospital executives and associations.

The package of draft recommendations includes proposals to update auditing programs by government contractors to target reviews at hospitals with large numbers of short patient stays. It also suggests that patients be notified when they are being kept in observation status and not admitted for inpatient status.

The two-midnight rule was a bid by the Centers for Medicare and Medicaid Services (CMS) to reserve its higher inpatient-stay payments for cases serious enough to require a patient being admitted for at least two nights.

Hospitals have protested that the policy adds administrative hassles and could leave them at risk of losing payments for care delivered if decisions to admit patients are challenged. In response to complaints, CMS and Congress have never allowed the rule to be fully implemented.

In general, both Medicare and beneficiaries save money when hospitals classify care delivered over short periods as observation status, MedPAC staff said. But people can face unexpected bills in instances where they move from hospitals to skilled nursing facilities or use self-administered drugs.

The two-midnight rule is part of an effort to contain one of the federal government's biggest expenses, the roughly $167 billion Medicare pays annually for hospital services.

But, in the actual practice of medicine, the rule "creates the potential for an incentive to inappropriately hospitalize patients,"  MedPAC Chairman Glenn M. Hackbarth said.

This debate over short hospital stays is part of a broader debate over whether payments are "siloed" in the different sections of the federal health program for the elderly and disabled, Hackbarth said.

"We all long for the day when we're  focused less on the silos and the problems that the silos create, and we have payment systems where there are better incentives for high-quality care for Medicare beneficiaries," he said.

Publication Details