In an effort to reduce RAC denials of short stays, CMS attempted to establish a clear rule to determine which short stays are appropriate for inpatient (Medicare Part A) payment and which should be relegated to outpatient (Medicare Part B). This rule is estimated to increase the number of patients officially admitted to the hospital under inpatient status and decrease the number placed in observation status.

Hospitals face significant financial implications from the two-midnight rule. They are under the watchful eyes of MACs and RACs, which have been denying short inpatient stays and demanding hospitals repay Medicare.

Why Might This Involve Emergency Physicians?

Hospital administrators often look to emergency physicians to guide whether patients should be admitted or kept in observation status. The CMS rule contains a provision that includes emergency physicians in the list of providers who can make admission decisions. Hospitals decide who can admit patients. ACEP has appealed to CMS with regard to emergency physicians “certifying” medical need for admission of patients for whom they do not provide inpatient care. The new rule does state that physicians making the decision should clearly indicate why patients require inpatient stays and support that decision by “medical factors,” including patient history, presence of comorbidities, signs and symptoms, current patient-care requirements, and the risk of adverse events during the hospital stay. The rule also implies that emergency physicians could write the orders and make the determination as long as admitting physicians or their designees authenticate that order prior to discharge.

CMS has specifically directed MAC auditors not to count the time spent in the emergency-department (ED) waiting room or triage area. However, care delivered in the ED will count toward determining whether patients’ stays cross the two-midnight standard.

Leading up to March 31, 2014, MAC auditors will conduct a “probe and educate” program by doing a pre-payment review of a sample of stays fewer than two midnights and educating providers having difficulties with the new rule.

However, because implications of the regulation mean potentially millions to each hospital and because a high percentage of hospital admissions come through the ED, emergency physicians will likely play a pivotal role in designating patients for inpatient versus outpatient status.

Paul Kivela, MD, MBA, FACEP, is managing partner at Napa Valley Emergency Medical Group, medical director of Medic Ambulance, and part owner of Elan Medical Corporation. He is also the secretary-treasurer of the ACEP Board of Directors.