Under the two-midnight rule, the CMS directs its payment contractors to assume a hospital admission was appropriate if a patient's stay spanned two midnights and otherwise should have been billed as an outpatient observation visit.
The rule was conceived to address a spike in observation stays attributed to hospitals' fear that Medicare audit contractors would challenge their admissions.
Many patients, as a result, found themselves ineligible for skilled nursing after spending days in the hospital because their stay had been billed as observation.
CMS will modify—not scrap—two-midnight' rule - Modern Healthcare
