The Centers for Medicare & Medicaid Services (CMS) has extended the deadline for compliance with the two-midnight rule through September 30, 2014. The rule provides that if an inpatient stay crosses two midnights, the admission will be presumed reasonable and necessary, so long as it is also medically necessary. Therefore, any inpatient admission that spans two midnights from the time of admission will not be reviewed, absent evidence of gaming or abuse. Conversely, inpatient stays that do not last two midnights are considered to be more suitable as outpatient observation, a classification under which Medicare reimburses at a substantially lower rate.

During the extension, recovery audit contractors (RACs) will not be permitted to review inpatient stays that last one day or less. However, Medicare administrative contractors (MACs) will be permitted to review small samples of claims for compliance and to aid in education and guidance. These sample claims will not be accessible by RACs during the transition period, nor will they be eligible for look-back review.