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Are you using something other than two-midnight? Here’s why you shouldn’t be.

Is there the possibility that your utilization management team and physician advisors are applying InterQual, MCG, or any other utilization tool other than the two-midnight rule to your Medicare admissions? Over the last few months, it has become clear to me that many hospitals are systemically under coding, classifying patients who should be inpatients as outpatients because reviewers believe that some type of tool must be used to review the medical necessity of Medicare admissions. While there are times that InterQual or MCG might be appropriate for private pay patients, in the realm of Medicare, there should never, ever, ever be a situation where your team is using InterQual or MCG for anything.  There is one thing, and ONLY one thing that determines patient status for Medicare: the Two-Midnight rule. I know we’ve talked about this before, but it is worth repeating the exact wording of the Two-Midnight rule.  42 C.F.R. § 412.3 says that: “Except as specified in paragraphs (d)(2) and (3) of this section, an inpatient admission is generally appropriate for payment under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses two midnights.”

Paragraphs (d)(2) and (3) allow a person to be an inpatient when they receive a surgical procedure on the inpatient-only list, or when the physician expects a shorter stay but feels that the patient’s condition justifies an admission. In essence, those paragraphs allow inpatient status at times when the physician expects a stay shorter than two midnights. Those paragraphs are expanding, not narrowing, coverage.   When the stay is expected to EXCEED to midnights, paragraph (1) provides coverage. 

To be clear, if the physician expects a Medicare patient to require hospital care for two midnights, the patient should ALWAYS be considered an inpatient. Nothing else matters. The intensity of service and severity of illness are as relevant as the type of car the patient drives, or their favorite ice cream flavor, which is hopefully chocolate peanut butter. 

Ron Hirsh, M.D., and I have written about this so much you may well be sick of it, but if the individuals conducting your utilization management have not been reading the articles, or simply don’t believe it, your organization may be leaving large amounts of money on the table. Lately, I have been doing training sessions with hospital UR teams, and a pattern is emerging. Many of these professionals are convinced that InterQual and MCG provide a litmus test of medical necessity. As a result, they use those tools either in place of or in addition to, the two-midnight rule while reviewing Medicare admissions. When you are working with a private payer, the private payer can impose those admission criteria upon you. But when you’re working with a Medicare patient, those standards are entirely irrelevant.

I realize on my next point many disagree, but I would aggressively argue that Medicare Advantage plans are not permitted to impose any criteria that are more restrictive than the two-midnight rule. I base this on the fact that Social Security Act Section 1852 requires Medicare Advantage Plans to offer all of the “benefits,” the original Medicare fee-for-service program offers. 42 CFR 422.101 requires MA plans to comply with CMS’s national coverage determinations and general coverage guidelines included in original Medicare manuals and instructions unless superseded by regulations in this part or related instructions. The bottom line is that it’s vitally important to make sure your UR team is using the two-midnight rule and only the two-midnight rule for Medicare patients. And I think the same is true for Medicare Advantage patients. To the extent you have skeptics in your team, schedule a training with a lawyer who will help them understand the need to rely solely on the physician’s assessment of the patient’s need for hospital care that is likely to extend for two or more midnights. 


David M. Glaser, Esq.

David M. Glaser is a shareholder in Fredrikson & Byron's Health Law Group. David assists clinics, hospitals, and other health care 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 this position is supported by the law or represents government overreaching. David is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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