Two-Midnights Rule Spells Grim Financial Forecast for Hospitals
The rule will have one positive regulatory impact on hospitals and could help cut healthcare delivery costs over the long term, Moody's suggests—fewer Recovery Audit Contractor reviews. "This clarifies it more. There's a strict definition," Steingart said, adding he hesitates to call fewer RAC reviews a significant benefit for healthcare providers. "It's more of a silver lining… It's no great panacea to the hospitals."
Moody's also predicts hospitals will strive to treat patients who are expected to require care for less than two midnights in low-cost settings.
"Over the next two years, we expect hospitals to adapt by adjusting care protocols for the most frequent diagnoses impacted by the rule, and by opening dedicated units to treat these patients," the sector comment states. "Over the last few years, some hospitals have opened lower-cost, separate observation units to care for patients that don't meet the qualifications for inpatient admission but require treatment. This has the potential to lower costs for certain groups of patients."
Steingart said patients reporting chest pains and gastrointestinal symptoms, diagnoses that often land patients on hospital observation status rather than being admitted, could be placed in clinical centers with lower costs than boarding in emergency departments or specialty clinics. But any cost savings hospitals realize from the two-midnights rule will be gained over the long haul, he cautions. "That is not something you can do overnight," he said.
Christopher Cheney is health plans editor at HealthLeaders Media.
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