MedPAC Offers Mixed Bag of Short-Stay and RAC Review Recommendations—Including Elimination of the Two-Midnight Rule
From: Healthcare Association of New York State – 4/10/15
Following months of debate, the Medicare Payment Advisory Commission (MedPAC) approved a package of recommendations at its April meeting focused on Medicare’s “two-midnight” admission guidance and Recovery Audit Contractor (RAC) policies. MedPAC’s recommendations are not binding, but can influence policy decisions. MedPAC recommended that CMS should:
- withdraw the “two-midnight” rule;
- direct RACs to focus reviews of short inpatient stays on hospitals with high rates of this type of stay;
- modify each RAC’s contingency fees to be based, in part, on its claim denial overturn rate; and
- ensure that the RAC look-back period is shorter than the Medicare rebilling period for short inpatient stays.
MedPAC also recommended revising the skilled nursing facility (SNF) three-day prior hospitalization policy to include time spent in observation, requiring beneficiary notification of observation status, and limiting beneficiary financial liability for self-administered drugs.
While HANYS supports improvements to short-stay policies and RAC reform, MedPAC’s recommendation to withdraw the two-midnight rule and allow RACs to pursue targeted reviews may not fully address the systematic problems that currently exist when identifying inpatient and outpatient stays and recognizing the appropriate level of reimbursement for such stays. HANYS has actively advocated for and will continue to engage the Centers for Medicare and Medicaid Services (CMS) for the establishment of a well-structured, inpatient short-stay payment mechanism to coincide with effective RAC reform. HANYS expects CMS to address policy proposals focused on short-stay issues as part of the Medicare inpatient proposed payment rules to be issued later this month.
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