New ‘2 midnight rule’ changes the Medicare definition of an inpatient

CMS recently released regulations that clarify the definition of an inpatient admission under Medicare and call for specific documentation to support such a stay.

“This is the first regulation that addresses the definition of an inpatient for Medicare purposes,” David M. Glaser, JD, of Fredrikson and Byron, P.A. in Minneapolis and Orthopedics Today Editorial Board member, said during a recent webinar. “As of Oct. 1, an inpatient is someone who is expected to be in the hospital for 2 midnights. Another change is you have to have an admitting order and support for the rationale on the record. Also as of Oct. 1, there is going to be explicit documentation requirements that occur [and] the rule reinstates the 1-year timely filing requirement.” Glaser emphasized that under both the current policy and the new rule, inpatient status is based on the expected length of stay, rather than the actual length of stay.

Glaser’s colleague Katherine B. Ilten, JD, added, “If the treating physician or qualified practitioner expects to keep the patient in the hospital for a limited period of time that does not cross 2 midnights, then the services are inappropriate for inpatient admission under Part A.”

David M. Glaser 

David M. Glaser


Katherine B. Ilten

The regulations note that cases of unforeseen death or transfer that result in a shorter stay for the patient would still qualify as inpatient cases, according to Glaser.

New documentation requirements

The rule marks the first time that CMS has required specific documentation, such as the admitting order and course of treatment, for inpatient services.

“The person has to have admitting privileges at the hospital the order is made and be knowledgeable about the patient’s hospital course,” Ilten said. “The person who wrote the order has to be the patient’s attending person who was assigned that patient. You cannot delegate it to someone who does not have admitting privileges to the hospital.”

The physician’s order must be made at or before the time of admission, according to Glaser.

“According to CMS, if you are not sure how long the patient is going to be in the hospital, you can place the patient in observation,” he said.

Physician acknowledgment

The physician or qualified practitioner must sign an acknowledgment noting that Medicare payment is based on a principle and secondary diagnosis, according to Ilten.

“This is currently in the regulations,” she said. “If you do not have this even now, you do not have a condition for payment.”

CMS will also examine whether the treating physician’s order for an inpatient stay was reasonable and necessary, although Ilten noted the Social Security Act states no one can interfere with a physician’s judgment.

“CMS wants to look at whether the physician expectation was reasonable,” Glaser said. “An interesting fight will be whether the regulation gives them authority.” – by Renee Blisard Buddle

Glaser M. Webinar. Short stay update: Medicare’s new “2 midnight” rule. Fredrikson & Byron, P.A. Presented Aug. 22, 2013.
For more information:
David M. Glaser, JD, and Katherine B. Ilten, JD, can be reached at Fredrikson & Byron, P.A., 200 S. Sixth St., Ste. 4000, Minneapolis, MN 55402; emails: and
Disclosure: Glaser and Ilten have no relevant financial disclosures.