Two-Midnight Rule: Is It Keeping You up at Night?

A baby born on the east coast at 1:00 am will have a different birthday than a baby born at that same moment on the west coast. A lot happens at the stroke of midnight; the calendar changes, gremlins should not be fed, Cinderella loses her carriage and shoe. Midnights matter to CMS. They affect payment, length of stay resources available to a patient and now status. It has been almost four years since CMS adopted the Two-Midnight Rule, yet it continues to be a source of confusion and ambiguity for providers. An identical patient presents to the hospital at 11:59 pm and another at 12:01 am. They stay for 36 hours and are discharged. One will be classified as an ‘inpatient’, the other an ‘observation patient’. They will have different financial liabilities and different access to services. Should doctors care about the Two-Midnight Rule? Should they care if they get it right the first time if a helpful case manager or physician advisor can “tell them” what order they should put in the chart? The answer is an obvious yes. Otherwise this would be a short blog post. Accurate determinations matter to patients. If a patient is misclassified, it can have a major impact on how they are billed and what services are available to them. Accurate initial determinations matter to hospitals. Improvements in throughput and efficiency have led to brief lengths of stay, and patients are often discharged prior to reevaluation of their status. If a patient is discharged with an inappropriate status, the visit might be denied. Even changing the initial status while the patient is in house can be a hassle. For instance, when a patient is initially admitted erroneously and then converted to observation, they must be noted with Condition Code 44. This can be very confusing and upsetting to patients, compromising the care team’s relationship with them. Hospitalists should know the following about the Two-Midnight Rule:

When does the clock start for the Two-Midnight Rule?

The clock starts when the patient first starts receiving care for their condition, either by a nurse or provider. This contrasts with when the clock begins for the three-midnight requirement for a skilled nursing facility stay, which begins when the inpatient order is written by a provider. Time spent in observation counts towards the two-midnight clock.

So if a patient doesn’t stay for two midnights, they are automatically classified as an observation patient?

No. There are a number of specific scenarios where a patient might be an inpatient, even if they are not hospitalized for two midnights. These include:

• Miraculous recovery – A patient with gram negative sepsis has a rapid and brisk recovery and is discharged prior to their second midnight. The admitting provider documented a greater than two midnight expectation considering the patient’s condition.
• A surgical patient undergoing an inpatient-only surgery – A patient has an arthroplasty in a highly efficient orthopedic center and is discharged the following morning.
• Signing out against medical advice – A patient is admitted with chest pain and is found to have an elevated troponin and EKG changes. They sign out against medical advice the next morning prior to being medically cleared.
• Transfers to another facility – A patient develops an ST elevation myocardial infarction after an elective procedure and is transferred to a hospital that has a cardiac catheterization lab.
• Unexpected death (not enrolled in hospice at the time of admission) – A patient presents with a massive stroke and is given TPA and admitted for further management. They aspirate that night and, after consulting with the critical care team and palliative care, pursue hospice the following morning. The patient passes away later that evening. However, note that if the patient was enrolled in hospice prior to admission and was brought into the hospital for convenience and coordination, this would not be an appropriate admission.
• Mechanical ventilation – A brittle heart failure patient develops flash pulmonary edema resulting in acute respiratory failure requiring intubation and has a brisk response to Lasix and is discharged the following morning.

So it doesn’t matter what I document. If a patient stays for two midnights, they are inpatient and I am golden, right?

No. Your documentation and articulation of medical necessity is more important today than it was prior to the Two-Midnight Rule.  While CMS has shifted the focus of determinations to a time-based metric, the expected length of stay and justification of medical necessity for hospitalization must be supported by the medical record.

So what are the criteria that CMS uses to determine medical necessity?

CMS does not mandate that hospitals use a specific criteria and even stated that, with the Two-Midnight Rule, hospitals would deemphasize established industry criteria, such as Interqual and MCG. As a provider, you should focus your documentation on explaining why the patient needed to be hospitalized:

• Describe the patient’s severity of illness.
• Describe their risk of an adverse event if they are treated in a less intense environment.
• Describe the interventions that will be provided that will require inpatient monitoring and care.

Example: Ms. Jones is a frail 88-year-old woman with advanced dementia, presenting with sepsis secondary to a urinary tract infection with a resulting encephalopathy. Her sepsis and underlying comorbidities put her at an increased risk of adverse outcomes, and she cannot be safely treated as an outpatient. She will require aggressive fluid resuscitation and IV antibiotics and close monitoring for deterioration and response to treatment. 

Can’t I just let the case manager tell me what the patient’s status is?

As providers, we have the obligation to assess our patients and determine what kind of care they will need. CMS places the decision of hospitalization squarely on our shoulders. While it is tempting to let other professionals drive the process of determinations, it compromises validity as we still have to be the authors that justify why a patient needs to be hospitalized. A case manager cannot do his or her job if we do not perform our role in articulating medical necessity.

This can get confusing.

Certainly. If you were caring for a patient with a set of complex cardiac issues, you would involve a cardiologist or an appropriate specialist. The care will be better for the patient and you might learn something that will be useful in your work down the road. Determinations are no different. As a hospitalist, you can often correctly assess which patients are appropriate inpatients or observation patients, but you may find that you need assistance in making a determination. Collaborate with case management or contact your physician advisor to discuss cases and get the determination right the first time. Find out how Sound Advisory Services program can benefit your hospital or system. Contact us for more information.