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Senators Hear How Two-Midnight Rule Harms Patients, Hospitals

Cheryl Clark, for HealthLeaders Media, July 31, 2014

The financial impact of observation status has become a flashpoint for hospitals and seniors and is the focus of a hearing before the U.S. Senate Special Committee on Aging.

On Medicare's 49th anniversary Wednesday, a Senate panel heard testimony from caregivers and hospital administrators about the costly consequences of the federal program's unclear definitions of "inpatient" and "outpatient."

A Massachusetts resident described how her 92-year-old husband's nursing home stay wasn't covered by Medicare because, though he'd been in the hospital during the prior 10 days, the hospital didn't consider him an inpatient for the minimum period two midnights.

"The [nursing home] administrator told me that we had to pay the nursing home $7,859 immediately upon leaving [after six-weeks of rehab], or the bill would be put into collection for the full amount of $15,000, or my house would have been attached for the full amount," Sylvia Engler said.

Though she has a lawyer and has filed several appeals, Medicare told Engler she can't appeal because the hospital had determined that her husband's status was 'medical observation.' And since he was not an inpatient, Medicare won't cover his nursing home bill. He remains in a nursing home, Engler said, and she continues to fight.

Engler joined officials from the University of Wisconsin School of Medicine, Yale-New Haven Health System, and St. Mary's Health System in Lewiston, ME to tell a U.S. Senate Special Committee on Aging panel how confusion over the definition of inpatient and outpatient status is harming patients and providers.

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4 comments on "Senators Hear How Two-Midnight Rule Harms Patients, Hospitals"


Cheryl (8/6/2014 at 1:49 PM)
I work in a SNF. When we call a hospital to determine the status of the stay it is rare that the front line nurse has any idea if a person is in or out patient. What we also see is an admission coming in-patient per our inquiries and hospital paperwork and then their status is retroactively reversed 3-7 days later once the stay has been reviewed by the hospital (and its stated as though its always been that way). That says to me that these decisions ultimately are made by the utilization review group, NOT the MD or caregivers. We now call prior to admission, on date of D/C to us and a week after discharge to determine status of stays. And FYI: in the example of the lady with the metastatic CA she would not be covered in a SNF for long, if at all, as the requirement is improvement and progress with goals. I have empathy for both sides but we can't keep catching our seniors in the middle.

Ronald Hirsch, MD (7/31/2014 at 1:55 PM)
Why must hospitals and doctors continue to deceive Congress with lies? The cases presented happened prior to the two midnight rule; no patient now should stay in observation over two midnights (hence the name- the two midnight rule). The one case with the humerus fracture does not warrant a stay in a SNF- the patient has a broken arm, not a stroke or a fractured hip. Should $15,000 be paid to a SNF from the Medicare trust fund for her to sit in a SNF in a cast? The breast cancer patient did not need to be in a SNF; there was home care available sso she could go home safely but she did not want to pay for it. Big difference between not having services available and not wanting to pay for available services. The rule makes sense; a short stay DRG system will not change the 3 day SNF rule.

Dennis Byron (7/31/2014 at 10:58 AM)
I am a little confused by the story. 1. If the two-night stay rule is on hold, does that mean the three-night-stay rule it replaced is still in force? 2. Of course the real issue is the combination of whether you are admitted and for how long. Both factors matter. Even if admitted, Medicare will not pay for skilled nursing if you are admitted for one night. That leads to the stupid and costly expense of keeping people with a badly broken ankle who need rehab in a costly acute care setting for three nights when they do not need the acute care. 3. There is also never any comment in these typical Journalism 101 sob story articles about why there is such a rule and resulting audits of the rule. The rule is there because people were abusing Medicare by trying to get it to pay for custodial care that it does not cover. Have you not seen all the articles about fraud, waste and abuse in Medicare (25% of total spending). This is it. 4. Also, none of the articles ever mention that theoretically [INVALID] from a financial point of view [INVALID] one night of observation (the typical case by far) under Part B is better than one night of admittance. Furthermore the theoretical effect on the Medicare beneficiary makes little difference in the real world for 95% of people on Medicare because we all have some kind of supplement that makes up the difference assuming it is a legitimate medical need and the doctor and hospital filled out the right paperwork.