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P & T Approvals, FDA Warnings About Codeine-Containing Meds, NSAIDS, Proglycem

Pharmacy Focus

See highlights of the June meeting of the Pharmacy and Therapeutics Committee. Also, the U.S. Food and Drug Administration has issued warnings about codeine-containing medicines in children, nonsteroidal anti-inflammatory drugs and Proglycem in infants.

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Doctors Deal With Rules on Patient Classification

Use of Two-Midnight Rule to Determine Status Can Be Confusing

Federal policy designed to clarify when patients in overnight hospital stays qualify as inpatients, outpatients or under observation is causing some confusion among Cedars-Sinai's medical staff, especially documenting "medical necessity" under the two-midnight rule.

"We understand that this new policy may be yet another regulatory burden, but misclassification will ultimately lead to lapses in insurance coverage for patient care services, as well as denial of physician payments," said Chief of Staff Chris Ng, MD. "Fortunately, we have the support of our nursing and case management colleagues, and together we can solve questions of patient status in a timely manner."

The medical staff leadership is working to create simple solutions within CS-Link™, the medical center's secure online medical record, and through educational materials.

Two-Midnight Rule: Important Points to Consider

  • A midnight spent in the Emergency Department or in outpatient or observation status counts toward the two midnights needed to qualify for inpatient status.
  • A patient does not have to stay two midnights to qualify for inpatient status — the physician just has to have a reasonable expectation at the time of decision-making that the patient will require two or more midnights in the hospital.
  • The need for ongoing hospitalization cannot be based on social issues or delays in care.

Requirements to Satisfy Inpatient Status

  • A signed admit order
  • A history and physical with documentation of "reasonable expectation" supported by objective medical information
  • An appropriate discharge plan

The federal Centers for Medicare and Medicaid Services (CMS) established a two-midnight benchmark for physicians to use in determining patient status. CMS specifies that at the time of initial evaluation, if the physician expects the patient to require care that spans two midnights and orders admission based on that expectation, inpatient status is generally appropriate. Conversely, CMS specifies that for hospital stays in which the physician expects the patient to require care for less than two midnights, inpatient status is generally inappropriate.

However, patients who are to undergo procedures on Medicare's inpatient-only list must be classified as inpatient, regardless of their length of stay. Situations such as deaths or transfers also are exceptions to the two-midnight rule.

Otherwise, patients who are expected to need hospital care spanning just one midnight should have outpatient procedure or observation status.

For example:

  • If a physician is scheduling a cardiac pacemaker insertion and expects the patient to be discharged the same day or the next day, the physician should schedule the procedure as an outpatient procedure, as CMS does not recognize a pacemaker insertion as an inpatient procedure.
  • If a Medicare patient presents to the Emergency Department (ED) with a condition that requires an overnight stay in the hospital for further monitoring and evaluation, such as an asthma exacerbation, the physician would order observation status.
  • If a Medicare patient presents to the ED with a more severe condition that will require testing and monitoring for more than two midnights, the physician would order inpatient admission.
  • If a Medicare patient presents with a condition of undetermined severity, such as a gastrointestinal bleed or atypical chest pain, and it is difficult for the physician to determine how long the patient will stay upon initial presentation, the physician should place the patient in observation status. As new information becomes available suggesting a stay that spans a second midnight, the physician should later admit the patient as an inpatient.

In addition, there needs to be clear documentation and detailed analysis in patients' medical records to support inpatient status. "The rationale for the expected stay must be there," said Joe Kim, MD, medical director of Care Management. "Documentation by the physician in the initial history and physical, subsequent progress notes and the discharge summary must be sufficient to support that hospital services were reasonable and necessary."

It is important to keep in mind that the two-midnight rule does not affect what qualifies a stay in a skilled nursing facility (SNF) for Medicare coverage. For Medicare to cover an admission to a skilled nursing facility requires three days of hospital-based care under inpatient status. The three days begin when the inpatient order is written.

The medical record must clearly support that necessary services can be provided only in an acute-care hospital. Patients could be responsible for the entire cost of their SNF care if CMS determines their patient status is documented inaccurately.

"The quicker and more accurately we can classify these patients at the time of admission, the better the documentation is at the point of discharge," said Betty Johnson, RN, manager of Compliance and Revenue Integrity in the Cedars-Sinai Department of Patient Financial Services.

Johnson said it is critical that all members of the patient's care team work together to ensure appropriate and efficient coordination of care.

If you have questions, please ask a case manager, or contact Johnson at or Kim at