The AHA last week called on the Centers for Medicare & Medicaid Services (CMS) to extend the partial enforcement delay of the two-midnight policy to conform with other proposed changes to the policy.

The AHA responded to the hospital inpatient prospective payment system (PPS) final rule for fiscal year (FY) 2016, which CMS released on July 31. CMS did not extend the partial enforcement delay of the two-midnight policy that expires on Sept. 30, despite proposing changes to the policy in the outpatient PPS rule that would not take effect before Jan. 1, 2016.

Ashley Thompson, the AHA’s vice president and deputy director for policy, said hospitals were “dismayed” by the lack of a delay. “Hospitals need this delay,” she said. “We urge CMS to issue an extension of the delay quickly.”

When it issued the two-midnight policy in 2013, CMS said that “for those hospital stays in which the physician expects the beneficiary to require care that crosses two midnights and admits the beneficiary based upon that expectation, Medicare Part A payment is generally appropriate.”

On July 1, Medicare proposed allowing for case-by-case exceptions to the policy in the outpatient payment rule. Based on the admitting physician’s judgment, certain short stays could be classified as inpatient so that they would be paid under Medicare Part A. Physicians who admit patients for what are expected to be short stays must document factors that support the decision, such as severity of symptoms and the risk of an adverse medical event occurring during the hospitalization.


Inpatient PPS rates. The final inpatient PPS rule will increase hospital rates by 0.9% after accounting for inflation and other adjustments required by law. The final rule includes an initial market-basket update of 2.4% for those hospitals that were meaningful users of electronic health records in FY 2014 and that submit data on quality measures, less a productivity cut of 0.5 percentage point and an additional market-basket cut of 0.2 percentage point, as mandated by the Affordable Care Act (ACA).

In addition, CMS imposed a 0.8 percentage point cut that would, in part, fulfill the requirement of the 2012 American Taxpayer Relief Act that the agency recoup what it claims is the effect of documentation and coding changes from FYs 2010-2012, which CMS says do not reflect real changes in case mix.

The rule includes ACA-mandated Medicare Disproportionate Share Hospital (DSH) reductions, which will reduce overall Medicare DSH payments by $1.2 billion in FY 2016.


Clinical quality measures. Under the rule, hospitals will be required to submit certain clinical quality measures electronically in calendar year 2016 for payment in the FY 2018 Inpatient Quality Reporting program. However, the agency will require the submission of four electronic clinical quality measures rather than the 16 it had proposed.

CMS also will expand the patient population of the pneumonia readmission measure used in the Hospital Readmissions Reduction Program beginning in FY 2017 but will exclude certain patients from the expanded population.

Most of the provisions in the final rule will take effect Oct. 1. To view the final rule, click on:

AHA members can get more information by accessing the AHA Special Bulletin