After years of payment cuts based on the controversial two-midnight rule, CMS is finally giving hospitals a break in its 2017 hospital payments final rule.
The two-midnight adjustment has also been going on since 2014, when CMS put in the rule requiring patients who are admitted as inpatients to be reclassified as recipients of outpatient care if their stay, from admission to discharge, does not last through two midnights in local time. (CMS was suspicious that inpatient admissions were being ordered without cause.)
In addition to throwing out inpatient claims on the basis of the rule, CMS has also been docking 0.2% each year from the Medicare hospital inpatient prospective payment systems (IPPS) to pay for cost of enforcement.
The abolition of the pay cut appeared in the proposed rule in April, and its finalization was one of the few things the American Hospital Association (AHA) found to praise when the final rule was released Aug. 2. The policy itself, however, remains in effect.
Overall, so long as they successfully take part in quality reporting and meaningful use standards, hospitals should see their payments on the fee schedule rise by approximately 0.95%, despite a rise in the ATRA recoupment adjustment from standardized hospital payments from 0.8% to 1.5%. (The American Taxpayer Relief Act of 2012 requires CMS to recoup $11 billion dollars from the system; they're behind, so they're bumping up that adjustment.)
Other IPPS final rule features:
Big cuts for high readmissions; CABG joins list. In 2017, CMS expects to reap $528 million from hospitals who miss agency targets for readmissions on six major conditions (including, for the first time, coronary artery bypass graft, aka CABG).
Observation notice finalized, but not yet in effect. CMS finalized that all patients receiving outpatient observation services for more than 24 hours must receive and sign a Medicare Outpatient Observation Notice (MOON) before outpatient services have been in effect for 36 hours. The notice must explain the possible financial impact of the observation stay versus an inpatient stay. But the wording of the notice has to go through a paperwork-reduction approval process, then get its own 30-day public comment period -- so you don't have to give them out until that's finished. (Note: Your state may currently require its own observation notice -- CMS' MOON will be an entirely separate requirement.)