Preparing for MAC Reviews and the Two-Midnight Rule

December 30, 2013

Beginning January 2014, Medicare Administrative Contractors
(MACs) will conduct prepayment reviews of admissions to acute care hospitals,
long-term hospitals, and inpatient psychiatric facilities occurring between January
1, 2014 and March 31, 2014. The goal is to determine whether these hospitals
are complying with the two-midnight rule. 

Claims selected for review will be inpatient hospital claims
with patient stays spanning less than two midnights after admission. Claims for
stays spanning at least two midnights after admission also may be reviewed if
there is evidence of systematic gaming, abuse, or delays in providing care in
an attempt to qualify for the two-midnight presumption, or as part of a MAC’s
routine monitoring or targeted reviews.

Although the purpose of the MAC reviews is to provide
feedback to the Centers for Medicare and Medicaid Services to help them educate
providers on observation services and the two-midnight rule, non-compliant
claims will be denied. 

on the size of the hospital, MACs will initially review between 10 to 25
claims, focusing on a hospital’s compliance with the following requirements:

  • Admission order
  • Certification
  • Two-midnight benchmark

Based on the results of the initial probe review, hospitals
identified as having moderate, significant, or major compliance concerns will
be subject to additional probe reviews for admissions occurring between January
and March 2014.            

preparing for the MAC reviews, please keep in mind:

  • A
    physician’s judgment is the determining factor as to whether an inpatient
    admission is medically necessary.      
  • A
    physician must certify in an admission order that an inpatient admission is
    medically necessary (no specific forms are required to be used).  The certification should include:
  • That
    inpatient hospital services were ordered in accordance with Medicare
  • That
    inpatient hospital services are reasonable and necessary
  • That the
    services are appropriately provided as inpatient services under the
    two-midnight rule, if the services are not specified as inpatient only
  • Reason
    for inpatient hospital services
  • Estimated
    length of hospital stay
  • Plans for
    post-hospital care        

patient’s record must contain documentation of the reasons why an inpatient
admission is medically necessary.   This
documentation should include:   

  • The
    patient’s medical history and co-morbidities
  • Severity
    of signs and symptoms
  • The
    patient’s current medical needs
  •  Risk or
    probability of an adverse event occurring during the time under consideration
    for hospitalization             

patient does not need to meet an inpatient level of care as defined under a
commercial screening tool for an inpatient admission to be determined to be
medically necessary.

And if the patient does meet an inpatient level of care as
defined under a commercial screening tool, it does not necessarily mean the
inpatient admission will be determined to be medically necessary.

Finally, hospitals need to record time spent in observation
(prior to admission as an inpatient) as observation days, not inpatient days,
to ensure a correct count of the inpatient hospital days used by a Medicare
beneficiary during the stay.

If you have questions about observation services and the
two-midnight rule, or need assistance in responding to medical necessity
reviews, please contact Rochelle H. Zapol, a partner in Prince Lobel’s Health
Care Practice Group
and author of this Alert. You can reach Rochelle at 617 456
8036 or

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