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Two-Midnight Rule Creates Financial Hurdles, Perverse Incentives

Rene Letourneau, for HealthLeaders Media, September 30, 2013

Like Carnevale, Pagliuzza is worried about the financial fallout from patients having to pay a larger portion of the bill and what that could do to patients' perception of their experience.

"The potential for increased co-pays to the patient are a concern. This may increase our uncompensated care and cost to collect," he says. "In addition, the patients will be expected to provide their self-administered drugs. This will result in logistical challenges for many patients to either obtain them or have the hospital provide them at additional cost to the patient. This has the potential for negative impacts on reimbursement and patient satisfaction."

Determining the Impact
Kendall Johnson, CFO at Baton Rouge (LA) General Medical Center, a 527-bed hospital, says his organization is working to determine exactly how the rule will impact its reimbursements.

"We are currently modeling our patient mix for one- and two-day–stay patients to determine the net impact of the two-midnight rule," he says.

"We currently have patients who are one-day stays and are billed as inpatients. We have estimated that about 80% of these patients will become outpatients. This will have a negative impact on Baton Rouge General financially, even though we have heard that the payment for observation patients will increase," he adds.

On the flip side, Johnson notes that about 80% of patients who are in the hospital for two days and are currently billed as observation patients will become inpatients.

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1 comments on "Two-Midnight Rule Creates Financial Hurdles, Perverse Incentives"


Myers Glower Michelle (10/1/2013 at 11:41 PM)
All the more reason for nursing care managers to review all admissions from the ED at point of entry to get the admission status correct. However, it cannot stop there. As the patient enters the system, further testing, may reveal more information resulting in a dx that converts to inpatient. In addition, patient objective symptoms may equate to conversion as well. It will take concurrent reviews at 100% through a time sensitive process. Physicians will need to be on board and hospitalist can no longer use two days as a work up for the what if's? Potentially this can have a huge impact on patient satisfaction scores and liability in discharging within the two day rule.