Once again, the Centers for Medicare & Medicaid Services (“CMS”) has delayed the enforcement of its controversial two-midnight rule.  On April 1^st, the agency announced that it would postpone enforcement of the rule until April 30^th, an additional month after the previous deadline, in order to give Congress additional time to pass a bill repealing the Sustainable Growth Rate (“SGR”) formula.

Under the two-midnight rule, Medicare will only reimburse hospitals at inpatient rates for treatment that spans two midnights.  The rule was instituted in 2013; however, its enforcement has been repeatedly suspended due to arguments that the law undermines clinical decision-making.  Specifically, many hospitals have objected to components of the law allowing recovery audit contractors (“RACs”) to determine that inpatient admissions were unnecessary.  These hospitals have appealed several claims denied by the RACs, leading to backlogs in the federal administrative court system.  CMS has offered to settle claims in dispute between the RACs and hospitals.  These negotiations are ongoing.