By ANWAR OSBORNE, MD

“You gotta change us to inpatient!”

Mrs. Mack’s daughter was referring to me changing her mother’s status from “inpatient” to “outpatient.” If Mrs. Mack was discharged as an outpatient, she wouldn’t be able to afford to go to the nursing home she needed to make a full recovery, and her daughter couldn’t care for her at home.

Physicians and hospital are all too familiar with this scenario.  When a patient stays inside a hospital building, they can be either an inpatient or an outpatient.  A patient can be either in an inpatient status or an outpatient status, yet stay in a hospital bed overnight and receive identical care.  The ‘2 Midnight Rule’ serves to put this determination of status in the hands of doctors, but somehow, physicians like those in the Society of Hospital Medicine and the American Hospital Association dislike this new responsibility.

When I work as an emergency physician or an internist, I used to have to explain to patient families that this status designation is not in my hands.

Mrs. Mack’s daughter was in a precarious situation, but not an uncommon one; I’ve heard similar requests from patients and their families, and with good reason.

A family in this situation would have to pay for the entire first month of nursing home care if the patient was in an outpatient status, but as an inpatient, Medicare sees the stay as an extension of the hospital visit and it is a covered benefit with much less out-of-pocket expense.

Medicare and many insurers pay hospitals differently and patients are responsible for different amounts based on this status.  For the hospital stay, Inpatient status patients have to pay a Medicare deductible and Outpatient status patients have to pay about 20% of their bill.  This is in addition to having to pay huge bills if they are an observation patient and have to go from the hospital to a nursing home, like the Macks.

Patients don’t get to choose which kind of status they get into.  Often, a specialized nurse or administrator reviews the medical record with commercial tools like the InterQual manual to determine whether the patient is in observation or inpatient status.

Although some agencies say that this adds administrative burden, the 2 Midnight Rule is pretty simple.  With it, if the admitting physician thinks that the patient will be in the hospital for more than 2 midnights, then they qualify for the inpatient status designation.  If not, then they are observation status.  Also, if a patient stays in the hospital for more than 2 midnights, then the patient is automatically considered an inpatient.  The Mack family would be able to qualify for nursing home care without the use of InterQual manual.

Doctors and hospitals don’t like change.  However, the providers are the probably in the best position to make this determination.  First, the payment for the physician is not directly tied to this status.  Second, the commercially available tools are oversimplified and inadequate in assessment of the patient as whole.  In fact, a recent study found the InterQual manual wholly inaccurate in determining who needs which status in heart failure patients.

Medicare has placed this rule, partially, to reassert the primacy of the doctor-patient relationship.  These manuals are no longer necessary and hence, the biggest losers in this change are the makers of these popular tools.  Also, without these bad criteria and the benefit of the doubt resting on the side of the physician, the regulators, who are private contractors working on commission, have less to rely on.  These contractors stand to lose on the change too.

We can’t have it both ways.  Senior citizen advocacy groups have filed suits alleging patients are hamstrung by these tools all the while, the American Hospital Association and MedPAC have even filed a suit alleging that the ‘2 midnight rule’ response from Medicare is arbitrary and harmful to hospitals.  The unintended consequences of the old system are apparent.  There will likely be some unintended consequences with the new ‘2 midnight rule’ but it’s far too early to determine what the effect on hospital revenue and administrative costs will be.

Interestingly, recent analyses of the prior system, including one by the office of the Inspector General at the Department of Health and Human Services show that very few patients have excessive bills related to use of ‘observation status.’

While the true victims of this previous system are probably less than we’ve been lead to believe, they are nonetheless real people, like the Macks, who were caught in a program designed to help them.  The ‘2 midnight rule’ goes a long way to remedy these types of situations.  The real losers here are the makers of the InterQual Manual who’s product will be rendered useless with this policy.  Physicians and patients should embrace this change and realize that no policy is perfect.  Granted, perhaps the entire way Medicare makes payments to hospitals needs an overhaul, but ‘the 2 midnight rule’ was designed to help patients and is more of what we want in healthcare.

Anwar Osborne, MD practices both as a hospitalist and emergency medicine physician at Emory University Hospital Midtown in Atlanta Georgia.  He is also the medical director of 2 observation units and has published extensively in the field of Observation Medicine.