By Ronald Hirsch, MD, FACP, CHCQM, CHRI

As most are aware, since January 1, 2024, with the effective date of final rule CMS-4201-F, the Centers for Medicare & Medicaid Services (CMS) has added significant regulations that apply to the Medicare Advantage (MA) plans. These provisions are wide-ranging and hospital and insurance case managers and utilization review staff must understand what the rule requires and does not require.

Most significantly, the MA plans must follow all the provisions of the Two-Midnight Rule, including allowing inpatient admission for a patient with a clinically appropriate two-midnight expectation, allowing application of the case-by-case exception for properly documented cases that meet that exception, and recognizing the unexpected occurrences of death, transfer, against medical advice departures, the election of hospice, and unexpected rapid recovery as valid one-midnight inpatient admissions, and allowing inpatient admission for surgeries on the inpatient-only list.

The MA plans are permitted to use commercially available screening tools as guides to assist their staff in making determinations, but these tools cannot be used as the sole determinant to deny inpatient admission. The MA plans must also follow Medicare guidelines when assessing patients for transfer to Inpatient Rehabilitation Facilities, Skilled Nursing Facilities, or Home Care. Hospital staff should review these criteria and ensure the documentation supports the need for that care.

The MA plans can no longer deny transfer when the patient meets Medicare criteria for that level of care. They can though insist the patient transfer to an in-network facility for the MA plan to cover the cost of the care. Patients of course must be offered the choice of any facility that can provide the necessary care but should be informed of the facilities covered by their plan and the financial implications of choosing a non-covered provider.

The early experience in the first few weeks of 2024 is that many of the MA plan staff have had little or no experience with the Two-Midnight Rule. They have received some training, but have not done any hands-on case reviews. For example, an MA plan denied inpatient admission for a patient who had a traumatic hip fracture, underwent surgery, and required 4 days of hospital care to recover. This denial was inappropriate not only for meeting the two-midnight expectation but also for the performance of an inpatient-only surgery. This case was overturned on peer-to-peer review but that required hospital and physician time and effort that never should have been needed.

It is also expected that the MA staff will have great difficulty understanding that midnight counting begins with the first symptom-related care, having never had to consider such a time point in their reviews. As a result, they may miss that first midnight in the ED, a crucial time point for determining the passage of two midnights.

Of note, the MA plans can still require prior authorization for elective care to determine if the medical necessity for the care is present. Hospitals must ensure those authorizations address both the approval for the surgery and the admission status based on the planned surgery. As a reminder, a surgery whose CPT code is on the inpatient-only list must be approved as an inpatient but surgeries not on the list can also be impatient if the patient expects a two-midnight stay or if the patient’s increased risk warrants inpatient admission.

For those working with appeals, MA plans have no limitation on audits from CMS, unlike the CMS contractors who limit their audits to admissions under two midnights. They can audit admissions of any length to determine if hospital care was necessary and if the status was properly determined. As a result, documentation must support ongoing hospital care for the entire stay.

We expect the payers to continue to allow peer-to-peer conversations for cases they plan to deny. However, the new regulations specify that if a denial is issued, it must be issued by a provider with experience treating the condition in question. That provider could be a physician, a nurse, or a therapist. If your doctors are performing the peer-to-peer, it is crucial to capture the name of the plan provider if needed later for disputes.

Each hospital will need to formulate its response if the MA plans do not follow the rule provisions. Right now there is no formal mechanism but the American Hospital Association has asked CMS to develop one. I recommend tracking those denials where the MA plan violates the provisions of the two-midnight rule and consider reporting those, free of PHI, to your CMS regional office.

It should also be noted that the two-midnight provisions apply only to the MA patients covered by these plans. As you know, the major payers have MA patients, Managed Medicaid patients, commercial patients, etc. The plans can and will continue to use their internal admission criteria for their non-MA patients.

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Bio: Dr. Ronald Hirsch is a Vice President of the Regulations and Education Group at R1 RCM Inc. Dr. Hirsch was a general internist and HIV specialist and practiced at Signature Medical Associates, a multispecialty practice located in Elgin, IL. He was Medical Director of Case Management at Sherman Hospital in Elgin, IL from 2006 to 2012, where he was Chairman of the Medical Records Committee from 1995 to 2012, and also served on the Medical Executive Committee. Dr. Hirsch is certified in Health Care Quality and Management by the American Board of Quality Assurance and Utilization Review Physicians, certified in Revenue Integrity by the National Association of Healthcare Revenue Integrity, and on the Advisory Board of the American College of Physician Advisors. He is on the editorial board of He is the co-author of The Hospital Guide to Contemporary Utilization Review, with the third edition published in 2021.