CMS Final Rule: Medicare Advantage Plans Subject to Two-Midnight Coverage Condition
On June 5, 2023, CMS’s Final Rule regarding, among other things, “Technical Changes to the Medicare Advantage Program” will become effective – refer to the CMS Fact Sheet and the Final Rule as published in the Federal Register on April 12, 2023. Medicare Advantage (“MA”) plans are, in simplest terms, private commercial plans that offer Medicare Parts A and B coverage (like traditional fee-for-service Medicare) often with Part D coverage and add-ons, such as vision, hearing and dental. In order to gain approval, MA plans must cover certain services. In the MA context, “cover” means providing, arranging or paying. MA coverage looks to the regulations of traditional Medicare and relies on the conditions of coverage. Relevant to this post, CMS notes in the Final Rule “…if Traditional Medicare covers a service only when certain conditions are met, these conditions must be met in order for the service to be considered part of the Traditional Medicare benefits that must be included as basic benefits covered by an MA plan.”
With regard to inpatient admissions specifically, the Final Rule makes clear that the criteria at 42 C.F.R. § 412.3 – though aimed at traditional Medicare – apply to Medicare Advantage plans as coverage criteria. Even though those criteria are a payment rule under traditional Medicare, Medicare Advantage provides coverage for a benefit not just by providing it, but also by paying for it or arranging it. See an excerpt of the discussion on this topic in the Final Rule:
Therefore, under § 422.101(b)(2), an MA plan must provide coverage, by furnishing, arranging for, or paying for an inpatient admission  when, based on consideration of complex medical factors documented in the medical record, the admitting physician expects the patient to require hospital care that crosses two-midnights (§ 412.3(d)(1), the “two midnight benchmark”);  when admitting physician does not expect the patient to require care that crosses two-midnights, but determines, based on complex medical factors documented in the medical record that inpatient care is nonetheless necessary (§ 412.3(d)(3), the “case-by-case exception”); and  when inpatient admission is for a surgical procedure specified by Medicare as inpatient only (§ 412.3(d)(2)).
Of the three bases for coverage in Section 412.3(d), the first one is that the Medicare Advantage plan must provide coverage (i.e., provide, arrange, or pay, as noted above) for an inpatient admission “when, based on consideration of complex medical factors documented in the medical record, the admitting physician expects the patient to require hospital care that crosses two-midnights.” Thus, the Final Rule confirms that the two-midnight condition (which some may know by the names “2-day rule” or “48-hour rule”) set forth in the traditional Medicare regulations applies likewise to MA coverage requirements (i.e., MA plans must cover inpatient admissions that meet these criteria).
The discussion of this topic is detailed and nuanced, so interested readers should click here for more information.