October 15, 2014

Private Payers After Two-Midnights

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As we mark the first anniversary of the two-midnight rule, more private payers are opting to implement it – or some principle that is at least based on it. 

I received an email from one hospital asking:  “One of our Medicare Advantage plans said that they plan to ‘use the two-midnight rule’ and (that) they will also continue to use ‘evidence-based guidelines.’ My question is ‘can they do it?’”

That is an excellent question. 

There are both a legal question and a practical question bundled into her query. The legal question relates to the ability of a payer to impose rules on you. For the purposes of this analysis, Medicare Advantage plans are functionally equivalent to those of any other insurer. Whether a payer can impose a rule on you depends on whether you have entered into a contract with them. If you have, the odds are good that the contract gives them the right to impose rules on you, but that is simply a statement of odds.

To know whether your contract allows them to do it will require you to examine the contract. If the insurer doesn’t have a contract with you, things are far less clear. Then commercially reasonable standards apply, and it would be far easier to argue that the insurer can’t impose the two-midnight rule on you. The question is what the industry norm for inpatient status is. Right now, I think it is a hard question to answer. 

But the more interesting question is this: What does the plan mean when it claims it uses both the two-midnight rule and evidence-based guidelines? I am stumped.

The two concepts seem entirely different and mutually exclusive. The two-midnight rule is governed entirely by physician expectation of length of stay. The judgment of the admitting physician controls things. Evidence-based guidelines are presumably data-driven, meaning the judgment of the admitting physician is immaterial.

The only theory I can offer is that the evidence-based guidelines are being used to determine whether the physician’s expectation of a two-midnight stay was reasonable. But the two-midnight rule doesn’t actually feature the word “reasonable” anywhere in the language of the regulation. If the physician expects a two-midnight stay, the requirements are satisfied. 

So, what are these Medicare Advantage plans going to do? I don’t understand. And if you get a notice that contains internally inconsistent instructions like this, I would encourage you to ask them to detail their plans and their authority.

Since uncertainty regarding what the plans mean persists, the only reasonable option is to ask them. 

About the Author 

David M. Glaser, Esq.is a shareholder in Fredrikson & Byron’s Health Law Group. David assists clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Monday and is a member of the RACmonitor editorial board.

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dglaser@fredlaw.com

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David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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