Question: Why does CMS want to decrease the number of extended observation stays?
Answer: Extended observation stays have a negative impact on beneficiaries since they require a 20 percent co-pay for the service and do not count towards the 3 inpatient day stay required for Medicare coverage skilled nursing facility (SNF) admissions.
The Centers for Medicare & Medicaid Services released its controversial “2 midnights” rule in the 2014 Medicare Inpatient Prospective Payment System (IPPS) final rule.
Under the “2 midnights” rule CMS has set both a benchmark and a presumption for when an inpatient satay would be considered appropriate. If the inpatient stays spans two midnights, CMS will presume that the stay is reasonable and necessary. In addition, admitting clinicians can use the “2 midnight stay” as a benchmark in determining when it is appropriate to admit a patient as an inpatient rather than keeping the patient in an outpatient status in an observation unit. Read more