Two-Midnight Rule: Greater Understanding Yields Better Results

A few weeks ago, during the weekly Monitor Monday broadcast, healthcare attorney David Glaser, presented a great segment that simplified the two-midnight rule into two essential parts: first, that a patient must require hospital care, and second, that the need for that care must be expected to span two midnights.

Yet despite the clarity of these conditions, why does conflict persist between payers and hospitals on how this rule is applied?

One main issue is that some payers still need to fully recognize the rule despite clear regulations. However, a more significant challenge stems from differences in defining and understanding what constitutes hospital care.

This leads to an important question: What exactly is hospital care? Is it simply any skilled service provided within the hospital walls? Alternatively, is it a restrictive definition used by many Medicare Advantage companies, where a patient must meet strict third-party criteria to qualify?

What does it mean for a patient to require hospital care? For insight, we look at Rule 1599F—the two-midnight rule—which clarifies that “The crux of the medical decision is the choice to keep the beneficiary at the hospital in order to receive services or reduce risk or discharge the beneficiary because they may be safely treated through intermittent outpatient visits or some other care.“

If the required care could be delivered safely outside the hospital or in a less intensive setting, it should not count toward the two-midnight benchmark. Notably, the decision should be evidence-based rather than it be convenient for the patient or physician, and external, third-party criteria should not dictate it.

In my most recent segment during the Monitor Monday broadcast, I discussed how an order for observation services indicates that the physician cannot confidently predict a patient will need hospital care for over two midnights. Per the guidance above, on day two of the hospital stay, the patient must be discharged, or documentation to substantiate the need for ongoing hospital care must be present.

Based on the above guidance from the two-midnight rule, this documentation should expressly state or make obvious why the same care cannot safely be provided elsewhere or through periodic outpatient visits. Unfortunately, in our busy healthcare environment, physicians often rely on templated language that needs more specifics on patient acuity or the unique need for ongoing hospital care.

For example, I was able to overturn a denial on peer-to-peer review for a patient with chronic obstructive pulmonary disease (COPD) on room air when the physician documented persistent shortness of breath, tachypnea, and the need for IV steroids. However, despite similar presentations, a patient whose chart stated they had “improved since admission” and whose exam appeared as a generic template was denied because the documentation did not support the need for hospital care.

Both required hospital care, but only one was paid as an inpatient.

How can we close this documentation gap?

While at my previous organization, we piloted an initiative to address documentation gaps. Adding a dedicated section to the physician’s note template prompted hospitalists to include one concise statement, based on their medical judgment, on why the patient required hospital care and could not be discharged. The documentation was to be based solely on the medical rationale and proposed or required treatment and not consider social or other discharge barriers outside the physician’s control.

We wanted them to tell us when the patient was medically cleared and, if not medically cleared, why not. As you can imagine, implementing this required substantial engagement and education and did not happen overnight. Physicians struggled to distill this information into a statement other non-physicians can understand. They are taught to list diagnoses and the appropriate treatment for that diagnosis.

No text or handbook provided in residency teaches young physicians when patients should be discharged. These practice patterns are institutional and passed down from attendings to residents.  

However, in implementing this process, I found that many young hospitalists assumed that someone had determined they needed to be in the hospital because the patient was there. Many didn’t even realize people were looking to them to help with these decisions. I won’t lie; getting this to change takes some heavy lifting, but it ultimately streamlined the status process, reduced denials, and increased overturn rates during peer-to-peer reviews. It also improved communication and participation in multidisciplinary rounds, which helped the care management team organize discharge plans for skilled nursing facilities, home health, and other services.

Instead of the discharge process being worked “in series,” where the care management team would have to wait until the physician cleared the patient to start working on placement, our goal was to have parallel processes that lined up at the same time, thus reducing unnecessary delays waiting for acceptance, authorization, supplies, etc. This proactive coordination significantly decreased avoidable hospital days and length of stay, benefiting both patients and the hospital.

In sum, the two-midnight rule is evident in its intent, but clarity in documentation supporting the ongoing need for hospital care is the third essential step in reducing denials and preventing audit takebacks.  Collaboration between the physician advisor and hospitalist medical director is required to provide physician education and promote engagement and buy-in.

However, the reality is we overcomplicate the two-midnight rule. The rule is clear. It’s often the documentation and rationale that is missing. If you can get that part in order, it is as easy as one, two, three.