The Two-Midnight Rule: It Doesn’t Have to Spook You

Scary movies, candy, and playing spooky games make up our October days. My favorite game, “Ghost in the Graveyard,” was played in a nearby cemetery until someone tripped and ended up in the ER. Hopefully, your Halloween shenanigans don’t include a hospital visit - especially one that could require the Two-Midnight Rule.

The Two-Midnight Rule went into effect on or after October 1, 2013, and was updated on October 30th, 2015. The rule of the goal is “to reduce uncertainty regarding the requirements for payments to hospitals and CAHs under Medicare Part A related to when a Medicare beneficiary should be admitted as a hospital inpatient, in this final rule, we are clarifying the rules governing physician orders of hospital inpatient admissions for payment under Medicare Part A. We are clarifying and specifying in the regulations that an individual becomes an inpatient of a hospital, including a CAH, when formally admitted as such pursuant to an order for inpatient admission by a physician or other qualified practitioner described in the final regulations. The order is required for payment of hospital inpatient services under Medicare Part A. We are specifying that for those hospital stays in which the physician expects the beneficiary to require care that crosses 2 midnights and admits the beneficiary based upon that expectation, Medicare Part A payment is generally appropriate. Conversely, we are specifying that hospital stays in which the physician expects the patient to require care less than 2 midnights, payment under Medicare Part A is generally inappropriate.” 

In basic terms, the rule basically says that if the provider generally expects the patient’s stay to span two nights, Medicare Part A will pay for Inpatient services. “Two midnights” means the patient’s body is in the hospital at 12:00 am for 2 consecutive nights. In instances where the patient is not expected to stay for two midnights, the patient should be considered an outpatient and the claims should be billed with an Outpatient place of service (POS) such as 22.

But like many things in healthcare, there are gray areas, exceptions, and a lot of room for coding error. That’s why it’s important to get handy tips on how to avoid errors in Two-Midnight documentation.

Download our free asset by expert healthcare auditor, Lori Cox, The Two-Midnight Rule: Scary Mistakes to Avoid, to learn how to avoid coding and documentation errors with examples of appropriate use versus problematic use, ways to establish medical necessity in the inpatient note, and when you can expect denials from Medicare/Medicaid.