Keeping patients in observation and thus in outpatient status avoids the risk that an inpatient claim might be denied at a future date.
Appeals from RAC claims increased 506 percent between 2012 and 2013, compared to growth of 77 percent in appeals of other types of claims. In an effort to reduce this backlog, in CMS offered partial payment of 68 percent to any hospital willing to withdraw its pending appeals of claims denied based on patient status.
Under current law and absent additional action by Congress or CMS, Medicare contractors will begin applying the two-midnight rule in making payment determinations and reviewing claims as of . Prior to that date, CMS has said it will evaluate the results of the “probe and educate” process and may issue additional guidance to ensure consistency in application of the two-midnight policy.
In the meantime, hospital associations are continuing to fight the rule. The AHA along with some state hospital associations have filed a lawsuit challenging the two-midnight rule in general and the 0.2 percent reduction in hospital payments in particular. The AHA also supported bills introduced during the last congressional session that would have required CMS to develop appropriate criteria for paying for short inpatient stays (HR 3698/S 2082) and that would reform the recovery audit process (S 1012).
MedPAC is already considering alternative policy options to address short inpatient stays and has emphasized the need to strike a balance between appropriate oversight of proper billing and administrative burden on Medicare providers. Read more about Appeals of RAC denials have overwhelmed the Office of Medicare Hearings and Appeals …