HAP Blog

Short Hospital Stay? CMS Doesn’t Want to Pay

Under the Centers for Medicare & Medicaid Services’ (CMS) Two-Midnight Rule, hospitals in southeastern Pennsylvania could lose $90 million year in Medicare payments for short hospital stays. 

March 19, 2014

Under the Centers for Medicare & Medicaid Services’ (CMS) Two-Midnight Rule, hospitals in southeastern Pennsylvania could lose $90 million year in Medicare payments for short hospital stays. 

The Two-Midnight Rule implies that inpatient stays of less than two days are unnecessary and should be paid for as outpatient, not inpatient, care. Yet more than one in six hospitalizations in southeastern Pennsylvania fall into this short-stay category. Of these, about a third are Medicare hospitalizations that would be immediately affected by the Two-Midnight Rule.   

Doctors and hospitals are working harder than ever to keep patients healthy and out of the hospital. 

As hospital care has become more effective, the average length of stay in the region’s hospitals has dropped steadily to an all-time low of less than five days. For some patients, all that is needed are short hospitalizations to stabilize their conditions.

CMS’ arbitrary decision to ignore the clinical needs of these short-stay patients and the best medical judgment of their physicians is difficult to understand in any context other than financial. The Two-Midnight Rule squeezes payments for needed hospital care. 

According to a new report by Moody's Investors Service, the rule could cost hospitals as much as $3,000 to $4,000 in revenue per case. For hospitals in our region, that would amount to about $90 million annually.

 As a result, the Two-Midnight Rule would weaken hospitals financially at a time when they:   

  • Have already sustained successive waves of federal cuts (the Affordable Care Act, then sequestration)
  • Are investing in the new resources, partnerships, and models of care needed to improve health and health care while reducing per capita health care costs.

CMS should rethink this rule and convene stakeholders to help develop fair payment policies for short hospital stays, as outlined in the Two-Midnight Rule Coordination and Improvement Act of 2014, introduced recently in the U.S. Senate. 

The hospital and health care community of southeastern Pennsylvania looks forward to the discussion.



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