Knowledge Base Article

What Is and What Is Not?

Since CMS guidance on the two-midnight benchmark and presumption was put forth in the 2014 IPPS Final Rule, CMS and their contractors have worked at educating providers on what appropriately constitutes a two-midnight expectation and how that needs to be documented in the medical record. The Medicare Administrative Contractors (MACs) are in the midst of the Probe and Educate program where they review short stay inpatient claims, make their determination regarding the appropriateness of inpatient status and then educate providers on their specific cases. So a lot is being said about “what is” an appropriate inpatient admission, but “what is not” an appropriate inpatient admission beyond the consideration of two midnights?

With the implementation of the two-midnight benchmark, CMS intended to reduce inappropriate payments for medically unnecessary short-stay inpatient admissions and to reduce extended observation stays. CMS has made it clear that if a patient receiving observation services is approaching a second midnight and will still be receiving medically necessary services requiring a hospital setting, then it is appropriate for the physician to order an inpatient admission. In our review of 835 claims data, Medical Management Plus is seeing some hospitals that continue to have a large percentage of their observation stays that go beyond the second midnight. These cases could potentially have been converted to an inpatient admission prior to the second midnight. We encourage all hospitals, but especially those hospitals with a high incidence of obs stays beyond a second night, to have systems in place that allow case managers to carefully evaluate observation stays approaching a second midnight to determine if they should be appropriately converted to an inpatient status. This would result in the hospital receiving an MS-DRG payment instead of an outpatient payment.

But don’t assume that just because the patient is there past a second midnight that an inpatient admission is always correct. With this in mind, is it ever appropriate to have an outpatient stay or outpatient with observation stay that goes beyond a second midnight? The answer is yes because not all patients staying for a second night are still receiving medically necessary therapeutic or diagnostic services that require a hospital setting. Medical Management Plus recently reviewed several outpatient records with a length of stay exceeding 24 hours and two midnights to determine if we thought an inpatient admission would have been appropriate.

We admit that although CMS has indicated they believe their current guidance is much easier to understand and implement, there is still a lot of subjective judgment in determining patient status. But here are some of the circumstances that we observed in our review that we believe do not warrant an inpatient admission:

• Patients who complete diagnostic testing prior to the second midnight but remain in the hospital a second night waiting on the attending physician to evaluate test results
• The patient’s treatment is not completed until late at night and the patient remains overnight due to the late hour to be discharged the next morning
• Needed tests or treatments are delayed because it is the weekend
• Lack of communication, timely orders, physician availability or other causes of delays in obtaining needed consultations
• Unable to discharge patient while making post-acute care discharge arrangements
• Outpatient testing that could have been safely provided on an outpatient basis after the patient was discharged, but is provided while the patient is in the hospital for patient convenience

There were also some records where the reason for the second midnight stay was not clearly documented. For example, if the patient is staying for tests that could be provided on an outpatient basis, is he/she staying because of physician concerns about the patient‘s risk? Is that last hemodialysis treatment in the hospital due to the patient’s medical condition or for the patient’s convenience? As always, clear and complete physician documentation is critical to knowing the correct patient status.