Two-Midnight Rule Creates Financial Hurdles, Perverse Incentives
Carnevale expects the two-midnight rule to also have a negative impact on patient satisfaction, because patients will not understand the difference between inpatient and observation status. Patients will assume that because they are in a hospital bed that Medicare is covering the costs under Part A and will not be happy when they receive their bill.
"It will absolutely result in more patient complaints and lower patient satisfaction," she says. "For example, if a patient status is changed from inpatient to outpatient under Medicare regulations, the patient coverage is now under Part B. Items and services that are covered under inpatient may not be covered under outpatient. The regulations require that the hospital inform patients of this while they are still in the hospital and before discharge. This translates into confusion and frustration for the patient. Someone is going to have to educate these patients, and it is most likely going to be us."
Greater Clarity, Reduced Payments
Greg Pagliuzza, CFO at Trinity Regional Health System, a 584-bed integrated delivery system based in Rock Island, IL, that is part of the UnityPoint Health system, says that while the new rule provides greater clarity to help determine the difference between observation and inpatient status, it will likely result in lower overall Medicare payments for his organization.
"The challenge for us is the timeframe to train and permanently make changes to the documentation by the physician," he says. "[W]e are projecting a significant reduction in reimbursement."
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