Practice Management

Medicare’s two-midnight rule


  • The physician expects the beneficiary to require hospital care spanning at least two midnights.
  • The physician provides a service on Medicare’s inpatient-only list.
  • The physician expects the beneficiary to require hospital care for less than two midnights but feels that inpatient services are nevertheless appropriate.

This most recently updated version of the two-midnight rule can be found in Section 42 CFR §412.3 of the Code of Federal Regulations.2 Each of these three situations warrants additional discussion.

Care expected to span two midnights

The first situation is the one most applicable to hospitalists. In this circumstance there are three key points to remember.

The first point is that the two-midnight rule is based on a reasonable expectation of a need for hospitalization for at least two nights, not the actual length of hospitalization. Auditors, based on long-standing guidance from the CMS, should consider only the information known (or that should have been known) to the provider at the time the inpatient decision is made.

For example, if the expectation of the need for hospitalization of at least 2 midnights is well documented in the admission note, but the beneficiary improves more rapidly than expected and can be discharged before the second midnight, billing Medicare under Part A for inpatient admission remains appropriate. Auditors may look for provider documentation describing the unexpected improvement, and while such documentation is not an absolute requirement, its presence can be helpful in defending inpatient billing.

Other situations in which there can be an expectation of hospitalization of at least two midnights, but the actual length of stay does not meet this benchmark, are death, patients leaving against medical advice, or transfer to another hospital. For example, if a patient is hospitalized as an inpatient for bacterial endocarditis, and the documented plan of care includes at least 2 days of IV antibiotics and monitoring of cultures, inpatient remains appropriate even if the patient signs out against medical advice the following day.

The second key point to understand is that a night must be “medically necessary” to count toward the two-midnight benchmark. Hospital time spent receiving custodial care, because of excessive delays, or incurred because of the convenience of the beneficiary or provider does not count toward the two-midnight benchmark. For example, imagine a patient hospitalized with chest pain on Saturday evening and the attending physician determines that the patient requires serial cardiac isoenzymes and ECGs followed, most likely, by a noninvasive stress test. The attending physician, knowing that the hospital does not offer stress testing on Sunday, expects the patient to remain hospitalized at least until Monday, thus two midnights. However, in this situation, the second midnight (Sunday night) was not medically necessary and does not count toward the two midnight expectation.

The third key point to know is that the clock for calculating the two-midnight rule begins when the beneficiary starts receiving hospital care, not when the inpatient order is placed. Further, care that starts in the ED or at another hospital counts, too. In contrast, care at an outpatient clinic, an urgent care facility, or waiting-room time in an ED does not count.

When CMS implemented the two-midnight rule in 2013, they said that they would be open to exceptions. The first and only exception to date to the two-midnight rule is newly initiated and unanticipated mechanical ventilation. (This excludes anticipated intubations related to other care, such as procedures.) For example, inpatient is appropriate for a patient who requires hospitalization for an anaphylactic reaction or a drug overdose and needs intubation and mechanical ventilation, even if discharge is expected before a second midnight of hospital care.

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