“The two-midnight rule undermines medical judgment and disregards the level of care needed to safely treat patients,” said Richard Umbdenstock, president and CEO of the AHA, in a release announcing the lawsuits. “Hospitals stand by a physician’s decision on what care is appropriate for each patient. The two-midnight rule is misguided and we feel confident the court will agree.”

“The hospitals take issue with the wholly arbitrary requirement that a physician must certify at the time of admission that a Medicare patient is expected to need care in the hospital for a period spanning two midnights to be considered an inpatient,” the release also said.

The doc-fix bill recently approved by Congress included a six-month extension before compliance would be enforced for the two-midnight rule. AHA apparently plans to use that time contesting it in court.

The existing two-midnight rule says admitting physicians must have good reason to believe that a patient will need two nights in the hospital before Medicare will pay full inpatient rates under Part A for the stay. Lacking such documentation, Medicare auditors will generally classify the stay as outpatient observation, which pays hospitals much less under Part B and sticks the patient with a 20% co-payment. That rule went into effect Oct. 1. But it was modified so that Medicare’s aggressive recovery audit contractors could not overturn claims under the new policy until Sept. 30, 2014.

The enacted legislation requires Medicare to extend that recovery-auditing moratorium until March 31, 2015. It also gives Medicare officials the discretion to extend what’s known as the “probe and educate” process until the same date next year. Under that process, a different set of companies, known as Medicare administrative contractors, can audit a small number of short-stay inpatient claims and train hospitals on how to submit more accurate bills. 

Read the article in Modern Healthcare (requires a free subscription).