On a recent Monitor Mondays broadcast discussing proposed changes to the two-midnight rule, one listener commented that a consultant expected patients to meet “inpatient criteria” as well as the two-midnight rule before an admission would be justified. Another asked, “Don’t we care about the ‘criteria’?” There remains widespread confusion about when Medicare inpatient admission is allowed. The answer is surprisingly simple. If the physician reasonably expects the patient to be in the hospital for two midnights, and documents the reasons in the medical record, admission is appropriate. That is the ONLY inpatient criterion that exists for Medicare. 

How do we know this to be true? It’s in the regulations. Here is an excerpt from 42 CFR 412.3(e)(1), the relevant regulation: 

Surgical procedures, diagnostic tests, and other treatment are generally appropriate for inpatient admission and inpatient hospital payment under Medicare Part A when the physician expects the patient to require a stay that crosses at least 2 midnights. The expectation of the physician should be based on such complex medical factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event. The factors that lead to a particular clinical expectation must be documented in the medical record in order to be granted consideration. 

There are reasons to dislike the two-midnight rule. It was a dramatic reduction in Medicare payment, because under the old policy an expected one-night stay supported an admission decision. But whether you love or hate the two-midnight rule, everyone should agree it is actually simple to implement. If the physician has a reasonable expectation that the patient will require hospitalization that will last through two midnights, Medicare instructs the physician to admit the patient. The multitude of other criteria, including InterQual, Milliman, and other screening tools, are not relevant to a decision to admit a Medicare patient. It is that simple. 

The regulatory text is quite clear, but the Centers for Medicare & Medicaid Services (CMS)  has also issued informal guidance that explicitly addresses these other tools. In a FAQ available on the CMS website, CMS addresses the issue in a manner that should silence any dissenters on this point:

Q4.5: Does the beneficiary’s hospital stay need to meet inpatient level utilization review screening criteria to be considered reasonable and necessary for Part A payment? 

A4.5: If the beneficiary requires medically necessary hospital care that is expected to span 2 or more midnights, then inpatient admission is generally appropriate. If the physician expects the beneficiary’s medically necessary treatment to span less than 2 midnights, it is generally appropriate to treat the beneficiary in outpatient status. If the physician is unable to determine at the time the beneficiary presents whether the beneficiary will require 2 or more midnights of hospital care, the physician may order observation services and reconsider providing an order for inpatient admission at a later point in time. While utilization review (UR) committees may continue to use commercial screening tools to help evaluate the inpatient admission decision, the tools are not binding on the hospital, CMS or its review contractors….

Simply put, there is no need to use any sort of inpatient “criteria.” The physician’s expectation about the length of stay is the only factor that matters. If the new proposed rule is adopted, then it is possible that some stays expected to last one night will still merit admission, but unless the proposed rule is adopted, we can disregard it. Private insurers may contractually impose some other admission criteria. Medicaid has the ability to implement admission criteria. 

But for Medicare, the only thing that matters is the expected length of stay. There has never, ever been a need to use InterQual, Milliman or other tools to justify a Medicare admission. While the contrary belief is widespread, it is wrong. 

The truth is found in the regulations and on the CMS website. It is time to banish the phrase “inpatient criteria” from the Medicare lexicon.

About the Author

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David assists clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board. 

Contact the Author


Comment on this Article


Share This Article