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Two-Midnight Rule: Initial Reviews to Resume

News  |  By HealthLeaders Media News  
   September 14, 2016

Having taken time out for retraining and internal audits, contractors may resume initial-phase reviews of Medicare reimbursement claims for short-stay inpatient hospital care, CMS says.

The Centers for Medicare & Medicaid Services has cleared resumption of initial-phase reviews for Medicare claims under the so-called two-midnight rule.

CMS suspended the initial-phase reviews, which are conducted by Beneficiary and Family Centered Care-Quality Improvement Organizations (BFCC-QIOs), on May 4.

In an announcement Monday lifting the suspension, CMS officials said the BFCC-QIO claims reviews were temporarily halted to retrain the contractors: "CMS took this action in an effort to promote consistent application of the medical review policies regarding patient status for short hospital stays and to allow time to improve standardization in the BFCC-QIOs' review process."


Suspension of Two-Midnight Rule Reviews Could Last Through July


Under the two-midnight rule, which has been in place since October 2013 and significantly revised in October 2015, most hospital stays spanning a period of less than two midnights are considered inappropriate for designation as inpatient status and are ineligible for Medicare A reimbursement.

The two-midnight rule changes made in October included making BFCC-QIO's responsible for the initial-phase review of Medicare claims under the short hospital stay regulation. Before October, Recovery Audit Contractors conducted the initial-phase reviews.

Two companies are conducting the BFCC-QIO claims reviews: Annapolis Junction, MD-based Livanta and Harrisburg, PA-based KEPRO.

CMS says five goals have been met since suspension of the BFCC-QIO claims reviews in May:

  1. The BFCC-QIO contractors were successfully retrained about administering the two-midnight rule.
  2. The BFCC-QIOs conducted an internal audit of all the short hospital stay Medicare claims that the contractors had formally denied since October.
  3. CMS officials "examined and validated" the BFCC-QIO internal audit.
  4. The BFCC-QIOs attempted to contact affected healthcare providers regarding the impact of the initial-phase review suspension.
  5. The BFCC-QIOs "initiated provider outreach and education" about the two-midnight rule. These communications efforts directed at healthcare providers included website content, newsletters and one-on-one training, according to Monday's announcement.

The denial and appeals process for disputed Medicare claims is a lingering pain point for many healthcare providers.

Despite a $1.5 billion settlement deal between CMS and hospitals last year, federal officials predict the backlog for appeals of denied claims will climb to about 1 million cases by 2020.

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