November 21, 2013

Assessing the Operational Impact of Two Midnights

By Dawn Crump, and Rita Bowen, MA, RHIA, CHPS, SSGB

On Oct. 1, 2014, the controversial two-midnight rule went into effect. It gives hospitals a small reprieve in the auditing of observation patients that convert to inpatient status. Termed “medically unnecessary short stays” by the RACs, these cases are the number one reason for complex denials[i]. They represent thousands of RAC medical record requests every quarter.

CMS’ suspension in auditing them until January 1, 2014  provides a slight reduction in administrative burden for both HIM and audit management departments. Or does it?

Impact on Record Requests

While the new ruling creates breathing room for short stays, it does NOT halt audit activity for other types of cases. Audits will continue. Records will still be requested.

Secondly, CMS had already announced and an associated postponement of new record requests beginning on or around November 15, 2013. The window for a reduction in RAC record requests was already open. The two-midnight rule simply widened it. On the flip side, HIM departments are directed by CMS to expand documentation of short stay cases. New admission and medical review criteria are your biggest challenges with the two-midnight rule.

New Documentation Required by CMS

To halt the “gaming” of short-stay cases for billing purposes, CMS is now requiring additional documentation. A new form for Medicare Inpatient Admission Certification is suggested and currently being implemented by hospitals nationwide—either within the EHR or as a separate form. Details regarding the form were released by CMS on September 5, 2013, This form should be included when releasing short-stay records to Medicare for payment justification.

If your facility is not creating a specific form for this purpose, the following information must be included within the medical record documentation prior to submission to Medicare or the RAC (upon audit request).

  • Admission order which includes physician certification/signature attesting that the hospital inpatient services are reasonable and necessary and are provided in accordance with 42 CFR 412.3.
  • Expectation of a patient stay encompassing two midnights.
  • Rationale for medical/surgical inpatient admission.
  • Estimated time the patient will need to remain in the hospital.
  • Plans for post-discharge care.

Four Steps to Take This Week

While the American Hospital Association continues to push back against this new admission and medical review criteria policy, the additional documentation is an official CMS requirement for patients staying in the hospitals for two midnights. Operational suggestions to comply include:

  • Educate HIM and others involved in releasing medical records to auditors of the new documentation requirements.
  • Ensure all pieces to support the stay are included prior to submission.
  • Incorporate a review of these cases prior to submission into audit management workflows.
  • Track missing documentation within your audit management software to identify patterns and trends; fine-tune CDI efforts accordingly.

About the Authors

Dawn Crump is vice president of audit management solutions at HealthPort. She formerly served as network director of audit and compliance at a large regional healthcare system in Missouri.

Rita Bowen is senior vice president of HIM and privacy officer at HealthPort. She formerly served as enterprise director of HIM services for Erlanger Health System and is a past president of AHIMA.

To comment on this article please go to editor@racmonitor.com


[i] AHA RACTrac Survey, 2nd Quarter 2013. August 27, 2013. Available online at: http://www.aha.org/content/13/13q2ractracresults.pdf