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Inpatient Hospital Reviews

Update 12-26-2013: CMS has updated the Question and Answer document, based on stakeholder feedback, as of December 23, 2013. All new or revised questions are indicated as such in the left-hand column.  In addition, CMS reminds providers that they may use the Electronic Submission of Medical Documentation System, or esMD, to respond to additional documentation requests during the Probe & Educate process.


CMS will host an MLN Connects National Provider Call on January 14th, 2014 from 1:30 to 3:00p.m.  This call will provide an overview of the inpatient hospital admission and medical review criteria (also known as the 2-Midnight Rule) that were released on August 2, 2013 in the FY 2014 Inpatient Prospective Payment System/Long-Term Care Hospital final rule (CMS-1599-F).  In particular, CMS will be using case scenarios to describe the application of the rule to sample medical records. We will also be addressing frequently asked questions received to date and answering questions from the public.  The target audience of this call includes hospitals, physicians and non-physician practitioners, case managers, medical and specialty societies, and other healthcare professionals.  Additional information will be available at


On August 2, 2013 the Centers for Medicare & Medicaid Services (CMS) issued a final rule, CMS-1599-F, updating fiscal year FY 2014 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital Prospective Payment System (LTCH PPS). The final rule modifies and clarifies CMS’s longstanding policy on how Medicare contractors review inpatient hospital and critical access hospital (CAH) admissions for payment purposes. Under this final rule, surgical procedures, diagnostic tests and other treatments (in addition to services designated as inpatient-only), are generally appropriate for inpatient hospital admission and payment under Medicare Part A when (1) the physician expects the beneficiary to require a stay that crosses at least two midnights and (2) admits the beneficiary to the hospital based upon that expectation. This policy responds to both hospital calls for more guidance about when a beneficiary is appropriately treated—and paid by Medicare—as an inpatient, and beneficiaries’ concerns about increasingly long stays as outpatients due to hospital uncertainties about payment.

The final rule clarifies that the timeframe used in determining the expectation of a stay surpassing two midnights begins when care in the hospital begins. This will include outpatient observation services or services in an emergency department, operating room or other treatment area at the hospital. While the final rule emphasizes that the time a beneficiary spends as an outpatient before the formal inpatient admission order is not inpatient time, the physician—and the Medicare review contractor—may consider this period when determining if it is reasonable to expect the patient to require hospital care spanning two or more midnights as part of an admission decision. Except in cases involving services on the inpatient-only list and in certain other rare and unusual circumstances (See Reviewing Hospital Claims for Patient Status: Admissions On or After October 1, 2013), documentation in the medical record must support a reasonable expectation of the need for the beneficiary to require a medically necessary stay lasting at least two midnights. If the inpatient admission lasts fewer than two midnights due to an unforeseen circumstance, this must also be clearly documented in the medical record.
Please refer to the Related Links section below to access the final rule "FY2014 Hospital IPPS Final Rule CMS-1599-F".
Please refer to the Downloads section below to access "Questions and Answers Relating to Patient Status Reviews".  This document has been updated, and includes any updates to previously released questions and responses.

Other Circumstances Supporting Short Inpatient Stays:

CMS identified in the final rule and provider outreach, circumstances in which the physician’s expectation of a required hospital stay spanning two or more midnights was reasonable, and Part A payment would be generally appropriate, despite an unforeseen circumstance that result in the beneficiary’s length of the stay being shorter (i.e., unforeseen beneficiary death, unforeseen transfer, unforeseen departure against medical advice, and unforeseen clinical improvement). CMS also provided that procedures defined as “Inpatient-Only” are exceptions to the 2-midnight benchmark, and may be appropriately furnished on an inpatient basis regardless of the beneficiary’s length of stay, but do not constitute an all-inclusive list.

Other circumstances where an inpatient admission would be reasonable in the absence of an expectation of a 2 midnight stay should be rare and unusual.  CMS will work with the hospital industry and with MACs to determine if there are any categories of patients that should be added to this list.  Suggestions should be emailed to with “Suggested Exceptions to the 2-Midnight Benchmark” in the subject line.  If any rare and unusual exceptions are identified by CMS, these will be provided through subregulatory instruction.

Inpatient Hospital Reviews:

CMS is issuing guidance about how we will review 1) inpatient hospital claims impacted by the Final Rule and 2) inpatient hospital claims not impacted by the Final Rule.   

    1. Reviews Impacted by CMS-1599-F:

Prepayment Review

CMS will conduct prepayment patient status probe reviews for dates of admission on or after October 1, 2013 but before March 31, 2014.
Medicare Administrative Contractors (MACs) will conduct patient status reviews using a probe and educate strategy for claims submitted by acute care inpatient hospital facilities, Long Term Care Hospitals (LTCHs) and Inpatient Psychiatric Facilities (IPFs) for dates of admission on or after October 1, 2013 but before March 31, 2014.  

  • MACs will select a sample of 10 claims for prepayment review for most hospitals (25 claims for large hospitals).
  • Based on the results of these initial reviews, MACs will conduct educational outreach efforts and repeat the process where necessary

For more information please see “Selecting Hospital Claims for Patient Status Reviews" in the Downloads section below and “Reviewing Hospital Claims for Patient Status" in the Downloads section below.

Post-payment Review
In general, CMS will not conduct post-payment patient status reviews for claims with dates of admission October 1, 2013 through March 31, 2014.  

Recovery Audit Prepayment Demonstration Reviews
Recovery Auditors will limit prepayment reviews to therapy services, per statutory mandate, until further notice. Recovery Auditors may complete reviews for previously requested documentation for claims for dates of service prior to October 1, 2013.

    2. Reviews Not Impacted by CMS-1599-F:

MACs, Recovery Auditors and the Supplemental Medical Review Contractor will continue other types of inpatient hospital reviews, including but not limited to:

  • Coding reviews
  • Reviews for the medical necessity of a surgical procedure provided to a hospitalized beneficiary
  • Inpatient hospital patient status reviews for dates of admission prior to October 1, 2013 (based on the applicable policy at the time of admission)

Recovery Audit review:

  • Post-payment inpatient hospital patient status and medical necessity reviews are limited to claims for (1) short stays defined as inpatient zero or one utilization day (less than 2 midnight) stays, (2) for claims with dates of admission prior to October 1, 2013 and (3) for previously approved complex issues.
  • NOTE: Automated and semi-automated reviews that are approved, or approved complex reviews for issues other than medical necessity of the inpatient admission (i.e. DRG validation), will continue unless otherwise specified by direction from CMS.

Questions can be sent to:

Stay Tuned: CMS will be updating this page with additional medical review information.