MRA Thought of the Day – New FY 2014 “2-MIDNIGHT” RULE – A Documentation Concern

Cathie Wilde, RHIA, CCS, Vice President of Coding Services Cathie Wilde, RHIA, CCS, Vice President of Coding Services


In the CMS 2014 IPPS Final Rule[1] effective October 1, 2013, the criterion for inpatient admission has been redefined with the implementation of the “2-midnight” rule. This differs from the current 24 hour benchmark for determining inpatient vs. observation stays. With this policy change, CMS expects the number of observation stays lasting two nights will be reduced as well as an anticipated reduction in the number of short inpatient stays. Details include:

  • For an inpatient stay to be deemed medically necessary, the physician must expect a patient’s treatment to cross two midnights and admit the patient based on that belief
  • It is to be based on the documented presumption that the physician expected the patient to stay two midnights and not on the actual length of stay; some patients may be discharged earlier due to death, faster recovery or transfer
  • The physician must write an order and documentation must be provided as to the reasons an inpatient stay is required
  • The documentation in the medical record must support the expectation of a 2-midnight stay and the need for inpatient services
  • The starting point for the 2-midnight estimate begins with the patient’s initial outpatient service (e.g. ER). If patient has already passed one midnight as an outpatient, admission would be considered appropriate if the physician expects (and documents) the patient to stay at least one additional midnight.

42 CFR Part 424 subpart B and 42 CFR 412.3 outlines the physician certification requirements of inpatient services. These include:

  • The physician certifies that the inpatient services were ordered in accordance with the Medicare regulations
  • The provider may adopt any method that permits verification
  • The physician documents the reason for inpatient services. This requirement will be met either by the diagnosis and plan documented in the inpatient admission assessment or by the inpatient admitting diagnosis and orders.
  • The physician documents the estimated time the beneficiary requires for inpatient services. This will be met by the inpatient admission order written in accordance with the 2-midnight benchmark, supplemented by the physician notes and discharge planning instructions.
  • The plans for posthospital care, if appropriate. This may be met by either MD notes or discharge planning instructions.
  • The certification begins with the order for inpatient services and must be complete, signed, dated and documented in the record prior to discharge
  • The regulation specifies who is authorized to sign the certificate which also must be the physician responsible for the case or by another physician who has knowledge of the case and who is authorized to do so.

The physician order requirements for inpatient stay include:

  • Must specifically state that patient is admitted for inpatient services
  • The order must be written by those qualified to do so
  • Must be ordered by practitioner who has sufficient knowledge of the patient
  • Order must be furnished at or before the time of the inpatient admission; Medicare does not permit retroactive orders or the inference of orders
  • The order must clearly state patient admitted to inpatient status. Other ordering documentation MAY be considered as specifying admission to inpatient (e.g. a service typically provided on an inpatient basis) but it must be consistently documented and supported in the remainder of the record.

Is your facility and its physicians ready to meet the above criteria for appropriate documentation to support medical necessity of inpatient services? Who is going to be responsible for verifying that the necessary elements of an inpatient admission are met?

What are your thoughts ?

Subscribe to our MRA Newsletter

Bringing peace of mind to healthcare since 1986

Share this post with your friends

You may be interested in...

AHIMA Approved

This program has been approved for continuing education unit(s) (CEUs) for use in fulfilling the continuing education requirements of the American Health Information Management Association (AHIMA). Granting of Approved CEUs from AHIMA does not constitute endorsement of the program content or its program provider.