Inpatient Status: To Be or Not to Be, That is the Question

on Tuesday, 20 August 2013. All News Items | Patient Status | Case Management

With just 40 days until the 2014 Final Rule goes into effect, there are significant changes for hospitals to digest and develop a plan to educate key stakeholders. Ongoing improper payments for short-stay hospital claims prompted two of the biggest changes. These two changes are the Two-midnight Benchmark and the Two-midnight Presumption Medical Review Policies.

Two-midnight Benchmark: Patient Status Guidance for Admitting Physicians

Historically, the decision to admit a beneficiary as an inpatient was based on a 24 hour benchmark. In the Final Rule CMS specifies “that the 24 hours relevant to inpatient admission decisions are those encapsulated by 2 midnights. This distinction is consistent with our application of Medicare utilization days, which are based on the number of midnights crossed.”

The two-midnight benchmark is intended as guidance for Physicians in identifying those patients that are appropriate for inpatient admissions. Specific 2 midnight guidance includes:

    • There are two indications for a Physician to write an inpatient admission order:
      • If the Physician has the expectation that a beneficiary’s length of stay (LOS) will be longer than 2 midnights.
      • If the beneficiary undergoes an inpatient only procedure. In this instance, CMS acknowledges that there are times when a beneficiary would not require a two-midnight stay after an inpatient only procedure and they indicate “that procedures on the OPPS inpatient-only list are always appropriately inpatient, regardless of the actual time expected at the hospital so long as the procedure is medically necessary and performed pursuant to a physician order and formal admission.”
    • The decision to write an inpatient admission order should be based on:
      • The Physician expectation that the beneficiary will require medical care beyond 2 midnights.
      • Factors leading a Physician to write an inpatient admission order need to be clearly and completely documented in the medical record. Supportive documentation would include “complex medical factors such as history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event.”
      • Note: Factors that could result in an inconvenience to the beneficiary and/or family are NOT justification for an inpatient admission.

    • Timing for the two-Midnight Benchmark:
      • If the Physician does not expect that a beneficiary will need medical services beyond 2 midnights then the beneficiary should be placed in outpatient with observation services. “As new information becomes available, the physician must then reassess the beneficiary to determine if discharge is possible or if it is evident that an inpatient stay is required.”
      • After one midnight has past, “the decision to admit becomes easier as the time approaches the second midnight, and beneficiaries in medically necessary hospitalizations should not pass a second midnight prior to the admission order being written.”
      • Currently, the inpatient admission starts at the date and time that the admission order is written. This will continue to apply on or after October 1st.

        However, final rule guidance directs that the decision to admit is based on all of the time a beneficiary is in the hospital, including any initial outpatient services. “In other words, if the physician makes the decision to admit after the beneficiary arrived at the hospital and began receiving services, he or she should consider the time already spent receiving those services in estimating the beneficiary’s total expected length of stay.”

        Services that are to be considered toward the 2 midnight expectation include observation services, treatment in the emergency department and procedures performed in the operating room or other treatment areas.

        • Example: A beneficiary spends one midnight as an outpatient observation or has routine recovery following an outpatient surgery. The following day the physician reassesses the beneficiary and expects that he will need another midnight of medical services. At this point the physician should take the time spent in outpatient observation or routine outpatient surgery recovery into consideration that the 2 midnight benchmark will be met and an inpatient admission order should be written.

    • Potential Exceptions when Inpatient Admission May Not span two-midnights: 
      • When a physician has an expectation that a beneficiary will remain in the hospital beyond 2 midnights and “the beneficiary improved more rapidly than the physician’s reasonable, documented expectation. Such unexpected improvement may be provided and billed as inpatient care, as the regulation is framed upon a reasonable and supportable expectation, not the actual length of care, in defining when hospital care is appropriate for inpatient payment.”
      • “If an unforeseen circumstance, such as beneficiary death or transfer, results in a shorter beneficiary stay than the physician’s expectation of at least 2 midnights, the patient may be considered to be appropriately treated on an inpatient basis, and the hospital inpatient payment may be made under Medicare Part A.”

2-midnight Presumption: Guidance for Medical Reviewers

The 2-midnight presumption “directs medical reviewers to select claims for review under a presumption that the occurrence of 2 midnights after admission appropriately signifies an inpatient status for a medically necessary claim.” Under this revised policy, the main focus of review efforts will now be on inpatient short stays with a LOS of 1 midnight or less.

In addition to this shifted focus, CMS will also be monitoring for “evidence of systematic gaming, abuse or delays in the provision of care in an attempt to qualify for the 2-midnight presumption (that is, inpatient hospital admissions where medically necessary treatment was not provided on a continuous basis throughout the hospital stay and the services could have been furnished in a shorter timeframe).”

Reviews contractors will continue to assess claims that cross 2 midnights to ensure the medical necessity of services provided, that the hospitalization was medically necessary, to validate coding and documentation and when directed by the CERT Contractor or other governmental entity to do so.

    • What Medicare Review Contractors are looking for in the Medical Record:
      • A physician order for an inpatient admission to the hospital.
      • Required elements of the physician certification.
      • Medical documentation supporting that the decision to admit as an inpatient was reasonable and necessary.
      • “Contractors will consider complex medical factors that support a reasonable expectation of the needed duration of the stay relative to the 2-midnight benchmark. Both the decision to keep the beneficiary at the hospital and the expectation of needed duration of the stay are based on such complex medical factors as beneficiary medical history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk (probability) of an adverse event occurring during the time period for which hospitalization is considered.”

    • Certification and Recertification of the need for Inpatient Admission:
      • The physician must certify and recertify that inpatient services are medically necessary. CMS clarified that the relationship between the physician order and physician certification by adding language to 42 CFR 412.3(c) that “the physician order also constitutes a required component of the physician certification of the medical necessity of hospital inpatient services under Part 424 of this chapter.”
      • Physicians need to be mindful that the admission order and physician certification are not conclusive proof that an admission was medically necessary but two pieces of information to be considered along with documentation in the medical record.
      • CMS is requiring that for inpatient admissions the certification has to be completed, signed and documented in the medical record before the beneficiary is discharged.
      • Guidance on the certification requirements can be found in the Code of Federal Register (CFR) at §424.10, §424.11 and §424.
      • Note: CMS indicated in an August 15, 2013 Open Door Forum that they will be providing further guidance in the near future on how to satisfy this requirement.

    • Reasonable and Necessary Admissions:
      • Commenter’s of the Final Rule requested additional guidance as to what criteria would support a reasonable and necessary admission.

        CMS Response:
        Medicare review contractors must abide by CMS policies in conducting payment determinations, but are permitted to take into account evidence-based guidelines or commercial utilization tools that may aid such a decision. We also acknowledge that this type of information may be appropriately considered by the physician as part of the complex medical judgment that guides his or her decision to keep a beneficiary in the hospital and formulation of the expected length of stay. As we update our manuals and take additional steps to implement this rule, we anticipate using our usual processes to develop and release subregulatory guidance such as manual instructions and education materials, which may include open door forums, regional meetings, correspondence and other ongoing interactions with stakeholders; and that our contractors will continue to involve local entities as they implement these rules.”

    • Beneficiary Status Order:
      • “The order serves the unique purpose of initiating the inpatient admission and documenting the physician’s (or other qualified practitioner as provided in the regulations) intent to admit the patient, which impacted its required timing. Therefore, we are specifying in new paragraph (d) of §412.3 that ‘The Physician order must be furnished at or before the time of the inpatient admission”
      • An order to “Admit to ICU” or to “Admit” is no longer sufficient for an inpatient status order. The order “must specify the admitting practitioner’s recommendation to admit “to inpatient,” “as an inpatient,” “for inpatient services,” or similar language specifying his or her recommendation for inpatient care.”
    • If Physicians and Review Contractors can consider time spent in outpatient towards the inpatient admission does that mean that this time can count towards the 3 day requirement for Skilled Nursing Facility (SNF) services?
      • Per CMS, “We reiterate that the physician order, the remaining elements of the physician certification, and formal inpatient admission remain the mandated means of inpatient admission. While outpatient time may be accounted for in application of the 2-midnight benchmark, it may not be retroactively included as inpatient for skilled nursing care eligibility or other benefit purposes. Inpatient status begins with the admission based on a physician order.”

CMS held an Open Door Forum this past Thursday August 15th regarding the Final Rule. After participating in this call, it appears that there are more questions than answers. In fact, CMS encourages everyone to send them questions at This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.. They indicated that they will be providing further guidance in the near future. Be assured that as additional guidance is provided we will be sharing it with you.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc. Beth has over twenty-two years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.

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