News Feature | December 3, 2014

GOP Proposes Elimination Of 'Two-Midnight Rule'

Christine Kern

By Christine Kern, contributing writer

HIT Regulation

Kevin Brady unveils a discussion draft written to improve Medicare hospital issues.

Ways and Means Subcommittee on Health Chairman Kevin Brady (R-TX) has unveiled the Hospitals Improvements for Payment (HIP) Act of 2014 discussion draft, according to a press release. This draft is part of the Committee’s greater initiative to achieve comprehensive Medicare reform and includes steps to rectify issues associated with Medicare’s two-midnights policy, short inpatient stays, outpatient observation stays, auditing, and appeals.

The draft was released with a request for stakeholder commentary to review and adjust the legislation as necessary.

Brady said in the release, “The complex challenges facing hospitals require a comprehensive solution. This draft legislation retains the needed oversight of auditors while offering reforms to the RAC process and appeals, and an additional option to the CMS settlement proposal.

“It also includes a number of proposed health care policies developed by both Republican and Democrat members of Congress. To determine the best solutions going forward we need all stakeholders to review this discussion draft carefully and provide timely, real-world feedback.”

The timing of this release may seem odd, given that it comes in the middle of a “lame-duck” session, according to Modern Healthcare. Additionally, some think it is a sign of what is to come in the Medicare debate. There are suggestions parts of this bill might re-emerge as part of the next move to repeal Medicare’s sustainable growth-rate formula for paying physicians, as the latest patch is due to expire March 31.

Eric Zimmerman, a principal with McDermott + Consulting, told Modern Healthcare, “This should be viewed as the latest step in the long-running and very difficult debate about how to deal with short stays at hospitals. It is meant to start a discussion around how to resolve some of these issues.”

Among the issues addressed in Title I of the HIP discussion draft are a new hospital prospective payment system, a new short stay per diem rate, a repeal of the “two-midnight” rule, and improvements to the RAC program. Title II of the HIP draft includes 19 goals, including repeal of the Obamacare moratorium, on physician-owned hospitals, expanding access to Medicare data, and providing relief to critical access hospitals.

“It has been over four years since the last major legislation was passed that made payment changes that impact the way hospitals deliver care in the Medicare program,” the committee wrote about the bill. “It is imperative that we address and consider these priorities as soon as possible.”

A fact sheet for the HIP discussion draft can be found here, and a section-by-section for the HIP draft can be found here.