AHA Fires Back at CMS for ‘Unlawful’ 2-Midnight Rule Payment Reduction

by Steven Andrews

The debate over CMS’ 0.2% IPPS payment reduction as a result of implementing the 2-midnight rule continued this week, with the American Hospital Association (AHA) calling the cut “unlawful” in a letter to Andy Slavitt, CMS acting administrator.

The AHA sent the letter in response to CMS’ notice with comment period posted in early December that outlined the agency’s reasoning for making the reduction, which it said was required to cover the additional inpatient expenses expected as a result of the rule. CMS argued that not only was the 0.2% reduction appropriate, but in light of new regulations and using different metrics to measure the shift, even more cases might be moved to the inpatient side.

In a detailed letter from Tom Nickels, AHA’s executive vice president, the association argues that the overall reduction was unlawful, and the data the agency cited was arbitrary or incomplete. CMS’ notice “failed not only to provide critical factual information underlying the methodology behind the reduction but also to provide a reasoned explanation for the many assumptions made in its modeling,” Nickels wrote.

The AHA called on CMS to release more information about the methodology and data used to support its claims so that hospitals can replicate the analysis and confirm the data. The association also wants CMS to remove the 0.2% payment cut and reimburse hospitals for the difference in Medicare payments since October 1, 2013.

CMS released the notice as the result of a court order issued in 2015 in relation to the ongoing federal lawsuit brought by the AHA and other hospital associations and organizations after the payment cut was first imposed.

In the latest OPPS final rule, CMS tweaked the 2-midnight policy to move responsibility for rule enforcement and education from Recovery Auditors to Quality Improvement Organizations. The agency did not make any adjustments to payments related to the rule.