What is the 2 Midnight Rule?

Do you know about the "2 Midnight Rule" policy?

This pertains to hospital billing and Medicare reimbursement. Let's say you are a patient who needs hospital care, but it's not clear whether you should be admitted as an Inpatient or placed on Observation while you are undergoing lab tests and imaging. Hospitals have to make this call, and it can significantly affect how much Medicare pays them and, potentially, how much you will be billed too. The 2 Midnight Rule was implemented by the Centers for Medicare & Medicaid Services (CMS) with the goal to clarify the Observation vs. Inpatient situation. If the doctor expects you'll need to stay in the hospital for two midnights or more, you should be admitted as an Inpatient. If not, you might be under Observation, which is considered Outpatient care.

This matters because it affects how much Medicare pays the hospital and how much you will be billed for your portion. Inpatient stays are covered under Medicare Part A, while Outpatient (or Observation) services fall under Part B, and the copayments and deductibles can be quite different.
Hospitals have to document the medical necessity of Inpatient care very thoroughly. If Medicare reviews a case and decides the hospital stay didn't meet the "2 Midnight" criteria, the hospital might not get paid for Inpatient services. Its all about ensuring that hospital admissions are justified by medical necessity and that patients receive the appropriate level of care for their situation.

If your providers need education about the 2 Midnight Rule criteria, STAR Medical Auditing Services can help! Our clinicians will audit your provider documentation, either prior to coding and billing, or after the fact when you get a denied claim; we will educate your providers on the accurate way to document to ensure the claim is paid. Let us take care of you so you can take care of your patients!