CMS Pub. 100-08, ch. 6, § 6.5.2

A Payment for Inpatient Hospital Admissions

(Rev. 13409; Issued: 09-12-25; Effective: 10-13-25; Implementation: 10-13-25)

This section applies to Unified Program Integrity Contractors (UPIC), Medicare

Administrative Contractors (MAC), Supplemental Medical Review Contractor (SMRC),

Recovery Audit Contractors and the Comprehensive Error patient Rate Testing (CERT)

contractor.

For purposes of determining the appropriateness of Medicare Part A payment, Medicare

contractors shall conduct reviews of medical records for inpatient acute IPPS hospital,

Critical Access Hospital (CAH), Inpatient Psychiatric Facility (IPF) and Long Term Care

Hospital (LTCH) claims, as appropriate and as so permitted by CMS, based on data

analysis and their prioritized medical review strategies. Review of the medical record

must indicate that hospital care was medically necessary, reasonable, and appropriate for

the diagnosis and condition of the beneficiary and that the stay was appropriate for

Medicare Part A payment.

A. Determining the Appropriateness of Part A Payment

The term “patient status review” refers to reviews conducted by Medicare contractors to

determine a hospital’s compliance with Medicare requirements to bill for Medicare Part

A payment. Medicare contractors shall conduct such reviews in accordance with two

distinct, but related, medical review policies: a 2-midnight presumption, which helps

guide contractor selection of claims for medical review, and a 2-midnight benchmark,

which helps guide contractor reviews of short stay hospital claims for Part A payment.

“Patient status reviews” may result in determinations that claims are not properly payable

under Medicare Part A; “patient status reviews” do not involve changing a beneficiary’s

status from inpatient to outpatient.

Per the 2-midnight presumption, Medicare contractors shall presume hospital stays

spanning 2 or more midnights after the beneficiary is formally admitted as an inpatient

are reasonable and necessary for Part A payment. Medicare contractors shall not focus

their medical review efforts on stays spanning 2 or more midnights after formal inpatient

admission absent evidence of systematic gaming, abuse, or delays in the provision of care

in an attempt to qualify for the 2-midnight presumption.

Per the 2-midnight benchmark, hospital stays are generally payable under Part A if the

admitting practitioner expects the beneficiary to require medically necessary hospital care

spanning 2 or more midnights, and such reasonable expectation is supported by the

medical record documentation. Medicare Part A payment is generally not appropriate for

hospital stays expected to span less than 2 midnights. If a stay is not reasonably expected

to span 2 or more midnights, Medicare contractors shall assess the claim to determine if

an exception exists that would nonetheless make Part A payment appropriate, including:

• If the procedure is on the Secretary’s list of “inpatient only” procedures

(identified through annual regulation);

• If the procedure is a CMS-identified, national exception to the 2-midnight

benchmark; or

• If the admission otherwise qualifies for a case-by-case exception to the 2-midnight benchmark because the medical record documentation supports the

admitting physician/practitioner’s judgment that the beneficiary required hospital

care on an inpatient basis despite the lack of a 2- midnight expectation. Medicare

contractors shall note CMS’ expectation that stays under 24 hours would rarely

qualify for an exception to the 2- midnight benchmark.

Hospital treatment decisions for beneficiaries are based on the medical judgment of

physicians and other qualified practitioners. The 2-midnight rule does not prevent such

practitioners from providing any service at any hospital, regardless of the expected

duration of the service. Rather, it provides a benchmark to help guide consistent Part A

payment decisions.

I. Reviewing Hospital Claims for Patient Status: The 2-Midnight Benchmark

A. Determine if the stay involved an “Inpatient Only” procedure

When conducting patient status reviews, assuming all other coverage requirements are

met, the Medicare review contractor shall determine Medicare Part A payment to be

appropriate if a medically necessary procedure classified by the Secretary as an “inpatient

only” procedure is performed. “Inpatient only” procedures are so designated per 42

C.F.R. § 419.22(n), and are detailed in the annual Outpatient Prospective Payment

System (OPPS) regulation.

Medicare contractors shall review the medical documentation and make an initial

determination of whether a medically necessary inpatient only procedure is documented

within the medical record. If so, and if the other requisite elements for payment are

present, then the Medicare review contractor shall deem Medicare Part A payment to be

appropriate, without regard to the expected or actual length of stay.

If the Medicare review contractor does not identify an inpatient only procedure during the

initial review, the claim should be assessed in accordance with the 2-midnight

benchmark.

B. Calculating Time Relative to the 2-Midnight Benchmark

Per the 2-midnight benchmark, Medicare contractors shall assess short stay (i.e., less than

2 midnights after formal inpatient admission) hospital claims for their appropriateness for

Part A payment. Generally, hospital claims are payable under Part A if the contractor

identifies information in the medical record supporting a reasonable expectation on the

part of the admitting practitioner at the time of admission that the beneficiary would

require a hospital stay that crossed at least two midnights.

Medicare review contractor reviews shall assess the information available at the time of

the original physician/practitioners’ decision. The expectation for sufficient

documentation is well rooted in good medical practice. Physician/practitioners need not

include a separate attestation of the expected length of stay; rather, this information may

be inferred from the physician/practitioner’s standard medical documentation, such as his

or her plan of care, treatment orders, and progress notes. Medicare contractors shall

consider the complex medical factors that support both the decision to keep the

beneficiary at the hospital and the expected length of the stay. These complex medical

factors may include, but are not limited to, the beneficiary’s medical history and

comorbidities, the severity of signs and symptoms, current medical needs, and the risk

(probability) of an adverse event occurring during the time period for which

hospitalization is considered. The entire medical record shall be reviewed to support or

refute the reasonableness of the practitioner’s expectation, but entries after the point of

the admissions order are only used in the context of interpreting what the practitioner

knew and expected at the time of admission.

For purposes of determining whether the admitting practitioner had a reasonable

expectation of hospital care spanning 2 or more midnights at the time of admission, the

Medicare contractors shall take into account the time the beneficiary spent receiving

contiguous outpatient services within the hospital prior to inpatient admission. This pre-admission time may include services such as observation services, treatments in the

emergency department (ED), and procedures provided in the operating room or other

treatment area.

If the beneficiary was transferred from one hospital to another, then for the purpose of

determining whether the beneficiary satisfies the 2-midnight benchmark at the recipient

hospital, the Medicare contractors shall take into account the time and treatment provided

to the beneficiary at the initial hospital. That is, the start clock for transfers begins when

the care begins in the initial hospital. In the event that a beneficiary was transferred from

one hospital to another, the Medicare review contractor shall request documentation that

was authored by the transferring hospital to support the medical necessity of the services

provided and to verify when the beneficiary began receiving hospital care. Medicare

contractors will generally expect this information to be provided by the recipient hospital

seeking Part A payment.

Medicare contractors shall continue to follow CMS' longstanding instruction that

Medicare Part A payment is prohibited for care rendered for social purposes or reasons of

convenience that are not medically necessary. Therefore, Medicare contractors shall

exclude extensive delays in the provision of medically necessary care from the 2-midnight benchmark calculation. Factors that may result in an inconvenience to a

beneficiary, family, physician or facility do not, by themselves, support Part A payment

for an inpatient admission. When such factors affect the beneficiary's health, Medicare

contractors shall consider them in determining whether Part A payment is appropriate for

an inpatient admission.

NOTE: While, as discussed above, the time a beneficiary spent as an outpatient before

being admitted as an inpatient is considered during the medical review process for

purposes of determining the appropriateness of Part A payment, such time does not

qualify as inpatient time. (See Pub. 100-02, Ch. 1, Section 10.2 for additional information

regarding the formal order for inpatient admission.)

C. Unforeseen Circumstances Interrupting Reasonable Expectation

The 2-midnight benchmark is based on the expectation at the time of admission that

medically necessary hospital care will span 2 or more midnights. Medicare contractors

shall, during the course of their review, assess the reasonableness of such expectations. In

the event that a stay does not span 2 or more midnights, Medicare contractors shall look

to see if there was an intervening event that nonetheless supports the reasonableness of

the physician/practitioner’s original judgment. An event that interrupts an otherwise

reasonable expectation that a beneficiary’s stay will span 2 or more midnights is

commonly referred to by CMS and its contractors as an unforeseen circumstance. Such

events must be documented in the medical record, and may include, but are not limited

to, unexpected: death, transfer to another hospital, departure against medical advice,

clinical improvement, and election of hospice in lieu of continued treatment in the

hospital.

D. Stays Expected to Span Less than 2 Midnights

When a beneficiary enters a hospital for a surgical procedure not specified by Medicare

as inpatient only under 42 C.F.R. § 419.22(n), a diagnostic test, or any other treatment,

and the physician expects to keep the beneficiary in the hospital for less than 2 midnights,

the services are generally inappropriate for inpatient payment under Medicare Part A,

regardless of the hour that the patient came to the hospital or whether the beneficiary

used a bed.

The Medicare review contractor shall assess such claims to see if they qualify for a

general or case-by-case exception to this generalized instruction, which would make the

claim appropriate for Medicare Part A payment, assuming all other requirements are met.

E. Exceptions to the 2-Midnight Rule

1. Medicare’s Inpatient-Only List

As discussed above, inpatient admissions where a medically necessary Inpatient-Only

procedure is performed are generally appropriate for Part A payment regardless of

expected or actual length of stay.

2. Nationally-Identified Rare & Unusual Exceptions to the 2-Midnight Rule

If a general exception to the 2-midnight benchmark, as identified by CMS, is present

within the medical record, the Medicare review contractor shall consider the inpatient

admission to be appropriate for Part A payment so long as other requirements for Part A

payment are met.

CMS has identified the following national or general exception to the 2-midnight rule:

Mechanical Ventilation Initiated During Present Visit

CMS believes newly initiated mechanical ventilation to be rarely provided in

hospital stays less than 2 midnights, and to embody the same characteristics as

those procedures included in Medicare’s inpatient–only list. While CMS believes

a physician will generally expect beneficiaries with newly initiated mechanical

ventilation to require 2 or more midnights of hospital care, if the physician

expects that the beneficiary will only require one midnight of hospital care, but

still orders inpatient admission, Part A payment is nonetheless generally

appropriate.

3. Physician-Identified Case-by-Case Exceptions to the 2-Midnight Rule

For hospital stays that are expected to span less than 2 midnights, an inpatient admission

may be payable under Medicare Part A on a case-by-case or individualized basis if the

medical record supports the admitting physician/practitioner’s judgment that the

beneficiary required hospital care on an inpatient basis despite the lack of a 2-midnight

expectation. Medicare contractors shall consider, when assessing the physician’s

decision, complex medical factors including, but not limited to:

• The beneficiary history and comorbidities;

• The severity of signs and symptoms;

• Current medical needs; and

• The risk of an adverse event.

Medicare contractors shall note CMS’ expectation that stays under 24 hours would rarely

qualify for an exception to the 2- midnight benchmark, and as such, may be prioritized

for medical review.

A. Determining Whether Covered Care Was Given at Any Time During a Stay in a PPS

Hospital

Medicare contractors shall utilize the medical record to determine whether procedures

and diagnoses were coded correctly. If the medical record supports that they were, pay

the claim as billed. If the medical record supports that they were not, then utilize ICD-9-

CM or ICD-10-CM coding guidelines to adjust the claim and pay at the appropriate

DRG. See section 6.5.4 of this chapter for further details on DRG validation review.

When you determine that the beneficiary did not, at the time of admission, have an

expected length of stay of 2 or more midnights, or otherwise meet CMS standards for

payment of an inpatient admission, but that the beneficiary's condition changed during

the stay and Part A payment became appropriate, you shall review the case in accordance

with the following procedures:

• The first day on which inpatient care is determined to be medically necessary is

deemed to be the date of admission;

• The deemed date of admission applies when determining cost outlier status (i.e.,

days or services prior to the deemed date of admission are excluded for outlier

purposes); and

• The diagnosis determined to be chiefly responsible for the beneficiary's need for

covered services on the deemed date of admission is the principal diagnosis.

• Adjust the claim according to the diagnosis determined to be responsible for the

need for medically necessary care to have been provided on an inpatient basis.

When a contractor determines that the beneficiary did not meet the requirements for Part

A payment at any time during the admission, the contractor shall deny the claim in full.