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July 23, 2018

The Two-Midnight Rule: Preventing Denials

Hospital Inpatient vs. Outpatient

What type of care does my Medicare beneficiary need?

The physician or qualified practitioner must decide whether it is reasonable and necessary to admit the beneficiary as an inpatient or whether it is more appropriate to provide outpatient treatment. In both cases, actual treatment takes place in the hospital facility. In order to support an inpatient hospital admission, the beneficiary's clinical presentation, prognosis and expected treatment must support the expectation of the need for his/her hospital care to span two or more midnights.

  • This decision significantly impacts provider reimbursement and beneficiary cost sharing
  • Not all care (Medical or Surgical) provided in a hospital setting is appropriate for inpatient, Part A coverage

Documenting the Decision to Admit

What documentation should be provided by the physician in order to support that an expectation of a hospital stay spanning 2 or more midnights was reasonable?

The decision to admit the beneficiary as an inpatient is a complex medical decision made by the physician in consideration of various factors including (but not limited to):

  • Beneficiary's age
  • Disease processes
  • Comorbidities
  • Potential impact of sending the beneficiary home

Many elective procedures that transpire without complications will require a stay less than two midnights, and do not merit an inpatient hospital admission. If the physician is unable to determine at the time the beneficiary presents whether he/she will require 2 or more midnights of hospital care, the physician may order observation services and reconsider providing an order for an inpatient admission at a later point in time. This "change of status" order must be completed and documented prior to the patient's discharge. If the physician determines that the patient's care will likely require a stay spanning two or more midnights, the medical record should reflect those factors in order to support that conclusion.

Documentation Expectations

  • Expected length of stay to span 2 or more midnights and
  • Determination of the underlying need for medical or surgical care at the hospital is supported by complex medical factors in the physician assessment, plan of care, treatment orders, and physician notes
    • History and comorbidities
    • Severity of signs and symptoms
    • Current medical needs
    • Risk of an adverse event
    • Any additional documentation to provide medical necessity


CERT has identified high error rates with inpatient hospital admission claims that did not meet the criteria established in the Two-Midnight Rule in order to be determined reasonable and necessary for a covered Part A inpatient admission.

The Two-Midnight Rule States

  • Hospital care is covered as a Part A inpatient admission when the admitting practitioner expects a patient's hospital stay to cross two midnights and the medical record supports this reasonable expectation
  • Coverage under Part A is not appropriate for hospital stays where the practitioner does not expect care to span two or more midnights
  • Treatment decisions are based on medical judgment of physicians and/or qualified practitioners¬†
  • This rule does not prevent the physician from providing any service at any hospital, regardless of the expected duration of the service

Special Notation for Coverage

When the physician expects the patient to stay at least 2 midnights, (and the medical record supports this expectation), but the length of the actual stay was less than two midnights due to unforeseen circumstances such as: unexpected patient death, transfer, clinical improvement, departure against medical advice or the patient was admitted for an inpatient only procedure; the care is still appropriate for Part A inpatient coverage.

Short Inpatient Hospital Stays (expected to last less than two midnights)

  • If the procedure is not on the inpatient only list (refer to CR10417 in References section below) or otherwise listed as a national exception, an inpatient admission is covered under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician
  • An inpatient hospital admission that is required for care when the beneficiary is not expected to be hospitalized at least two midnights is a rare and unusual scenario
    • Documentation in the medical record must support an inpatient admission is necessary; and is subject to medical review

      CGS Two Midnight Errors Jan 2018-May2018


The official instruction, CR10417, issued regarding this change is available at PDF.

The official instruction, CR10080, issued regarding this change is available at PDF.

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