Historically, hospitals and physicians have had considerable discretion over whether a patient is admitted to the hospital or is treated as an outpatient. CMS instructed physicians to generally admit patients expected to be in the hospital twenty-four hours or more but noted that a patient's admission would not be covered or not covered "solely on the basis of the length of time the patient actually spends in the hospital."

CMS emphasizes the role played by physicians in making this determination and its complexity: "The decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient's medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital's by-laws and admissions policies, and the relative appropriateness of treatment in each setting."

The need to clarify the necessity for either inpatient admission or outpatient observation became the basis of the 2 MN rule. Instead of relying of standard medical practice or clinical decision making tools CMS drew their line in the sand and based this decision of inpatient or outpatient on time criterion.

In order to clarify previous clarifications and address provider concerns regarding inpatient admission verses outpatient placement, CMS has once again made changes to the “2 MN Rule” for CY 2016. Outlined below are the changes in a simplified version.

Final Two-Midnight Rule

  1. Under the two-midnight rule, CMS generally considers hospital stays of less than two midnights to be outpatient cases, while hospital admissions for stays spanning two midnights or longer are deemed appropriate.

Under the OPPS rule for 2016, certain stays that are less than two midnights would be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician. The documentation in the medical record must support that an inpatient admission is necessary, AND is subject to medical review.

  1. New medical review strategy using Quality Review Organizations (QIO’s) to conduct initial patient status reviews to determine the appropriateness of Medicare Part A payment for short-stay inpatient hospital claims. These first-line medical reviews were previously conducted by Recovery Audit Contractors (RAC’s) or Medicare Administrative Contractors (MAC’s).  Of interest here is that the QIO’s are not paid on a contingency fee basis as the RAC’s were.
  1. CMS is reiterating the expectation that it would be rare and unusual for a beneficiary to require inpatient hospital admission for a minor surgical procedure or other treatment in the hospital that is expected to keep him or her in the hospital for a period of time that is only for a few hours and does not span at least overnight.
  1. CMS made no changes for stays lasting at least two midnights in the final OPPS rule.

Without the black and white specified criteria such as mechanical ventilation, how does one determine what is rare and unusual? Without the physical inspection of a patient’s symptoms and high risk indicators of morbidity or mortality, how does one understand the severity of the patient’s illness?

The answer to these questions is stated in the final rule and quoted here: “The documentation in the medical record must support that an inpatient admission is necessary.” Seems like an oversimplified perception and the clarifications by CMS are ambiguous at best. Even though the judgement of the attending provider is now recognized and will be case by case, supportive documentation must be present AND will be subject to medical review.

However, explicit clinical documentation does far more than simply define the line between inpatient and outpatient. Accurate documentation provides continuity and quality of care to following providers by depicting the whole picture of a patient’s conditions and management. Accurate clinical documentation may prevent adverse events. Explicit documentation is the provider’s defense in litigation. Explicit documentation provides direction to all clinicians involved in patient care. Finally provider documentation is the reflection that will be used to judge the quality of care you give.

Simply stated accurate clinical documentation has always been the cornerstone of communication in the medical record and the foundation on which all medical management is established. Now more than ever it is imperative to communicate your practice of medicine to capture severity of illness, intensity of service, quality of care and yes to justify resource consumption.

CMS seems to need clarification themselves on this issue. Time may be better spent concentrating on your communication of your practice of medicine rather than the most recent clarifications by CMS. If the documentation is accurate and well defined than the chances of denials are diminished. Auditors cannot infer you management plans or the reasons for your orders without explanation of your medical decision making.

With that in mind, ideal documentation includes:

  • List a diagnosis for every home medication in the History & Physical.
  • The History & Physical must contain a Chief Complaintand encompassing history of present illness, vital to paving the way for establishment of medical necessity for admission and amount of work performed as part of the evaluation and management service.
  • In the progress notes list a sign/symptom andprovisional diagnosis for every lab or x-ray ordered. Also document a patient chief complaint for the day as well as interval History
  • Justify in the progress notes why the patient remains in the hospital today.
  • Daily progress notes must incorporate problems identified in the history and physical, treatment initiated patient’s response to treatment, major changes in the patient’s condition and action taken, status of unresolved problems, discharge planning and follow-up.
  • Daily progress notes do not have to reflect admitting information already stated previously in the History & Physical or progress notes.  (This can save some time)
  • Patients must meet continued stay criteria each day to remain in the hospital. From a clinically medical necessity perspective, daily progress notes should reflect the following of whether:
  1. The patient is stable, recovering or improving
  2. The patient is responding inadequately to therapy or has developed  a minor complication
  3. The patient is unstable or has developed a significant complication or significant new problem
  • Diagnoses must be documented in the patient exam as well. For example, if a diagnosis of Acute Respiratory Failure is listed then the exam should show tachypnea, tachycardia, hypoxia, accessory muscle usage, inability to speak a complete sentence or cyanosis. If the exam states “rhonchi and crackles in Left lower base. Mild respiratory distress.” A denial can be anticipated.

The good news is this: Forget about QIO’s, MAC’s, RAC’s, medical reviews and yes even the 2 midnight rule. Communicate your clinical acumen and judgement with explicit clinical documentation and all of the rest will fall into place. Yes, even perfectly documented encounters will at times be questioned and denied. But with documentation that is complete, accurate and explicit denials will occur less frequently and can be overturned.





Bibbins_BettyBetty B. Bibbins, MD, BSN, CHC, CI-CDI, CP-EHR, CP-HIT
Founder and CEO, Executive Physician Educator
DocuComp LLC

Have Questions or a Topic to Suggest?
Email BibbinsMD@DocuCompLLC.com


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