Two-midnight rule’s inpatient payment cuts now eliminated

Medicaid is discontinuing imposing an inpatient payment cut to hospitals under the two-midnight rule.

The move comes on the heels of ongoing hospital industry criticism and a legal challenge.

The cut is being imposed because CMS estimated it would have to pay almost $220 million more in increased inpatient admissions under the two midnight policy.

Hospitals will also receive a 0.6% temporary increase in revenues from Medicaid in fiscal 2017 — the same amount hospitals lost over the last three years under the two midnight rule.

Last September, a federal judge sided with the American Hospital Association and other hospitals nationwide. The ruling ordered the Department of Health and Human Services to justify the cut — a 0.2% reduction for inpatient services reimbursements.


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