Practice Management

Top 10 things physician advisors want hospitalists to know


What is the two-midnight rule, and why does it matter?

In October of 2013, the Centers for Medicare & Medicaid Services initiated the two-midnight rule, which states a Medicare patient can be an “inpatient” class if the admitting provider determines that 1) the patient requires medically necessary care which cannot be provided outside the hospital and 2) the patient is expected to stay at least 2 midnights in the hospital.

Dr. Debra Anoff, University of Colorado at Denver, Aurora

Dr. Debra Anoff

If, at the time of admission, an admitting provider thinks it is likely that the patient may be discharged prior to 2 midnights, then outpatient care with “observation” designation is appropriate. Incorrect patient class assignment may result in significant adverse consequences for hospitals, including improper patient billing, decreased hospital reimbursement, substantial risk for external auditing, violation of Medicare conditions of participation, and even loss of accreditation.

Who can I talk to if I have a question about a patient’s class? What should I do if I disagree with the class assigned to my patient?

The Utilization Management team typically consists of nurses and physician advisors specifically trained in UM. This team functions as a liaison between providers and payers (particularly Medicare and Medicaid) regarding medical necessity, appropriateness of care received, and efficiency of health care services.

When it comes to discussions about patient class, start by learning more about why the determination was made. The most common reason for patient class disagreements is simply that the documentation does not reflect the severity of illness or accurately reflect the care the patient is receiving. Your documentation should communicate that your patient needs services that only the hospital can provide, and/or they need monitoring that must be done in the hospital to meet the medical necessity criteria that CMS requires for a patient to be “inpatient” class.

If you disagree with a determination provided by the UM nurse and/or physician advisor, then the case will be presented to the hospital UM committee for further review. Two physicians from the UM committee must review the case and provide their own determinations of patient status, and whichever admission determination has two votes is the one that is appropriate.

How do I talk to patients about class determinations?

As media coverage continues about the two-midnight rule and the impact this has on patients, providers should expect more questions about class determination from their patients.

An AARP Bulletin article from 2012 advised patients to “ask [their] own doctor whether observation status is justified … and if not ask him or her to call the hospital to explain the medical reasons why they should be admitted as inpatient.”2 Patients should be informed that providers understand the implications of patient class determinations and are making these decisions as outlined by CMS.

We recommend informing patients that the decision about whether a patient is “inpatient” or “outpatient with observation” class is complex and involves taking into consideration a patient’s medical history, the severity of their current medical condition, need for diagnostic testing, and degree of health resource utilization, as well as a provider’s medical opinion of the risk of an adverse event occurring.

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