CMS Temporarily Pauses Two-Midnight Reviews by QIOs

Reasoning Unclear, Time-frame Indeterminate


All workstations at CMS contractors have a special, highly visible Pause key. We suspect this is by law.

Audits of Medicare claims concerning the Two-Midnight Rule are temporarily suspended by CMS, to allow CMS to collaborate with the two BFCC-QIO contractors, Livanta and KEPRO, “to ensure consistency in how the rule is applied to QIO case review,” as reported on the Livanta website on May 4, 2016. Livanta also reports that reviews now “in the pipeline for review” will remain as such while awaiting further direction from CMS. Whence, someone is confused.

Par for the course: missed deadlines only have meaning if you are a provider.

Par for the course: missed deadlines only have meaning if you are a provider.

We have received reports of hospitals with claims submitted for review in February, still awaiting review results from Livanta. When queried, Livanta claims that the reviews will still be delayed for at least another three to four weeks. While QIOs may be obligated to complete their reviews within 30 days of receiving a record for review, there does not seem to be any true deadline, nor consequences for not meeting such deadlines. At the same time, of course, hospitals are held to strict deadlines for submitting records requested. (See Livanta’s Two-Midnight Presentation)

Why the Suspension?

At the moment, we can only speculate about why CMS would implement this delay. Possibly, CMS simply intends to train Livanta only, since there is no such notice at the KEPRO website. The notice at the Livanta site, however, says that “CMS notified the BFCC-QIOs of a temporary pause of Two-Midnight Reviews in order to improve standardization across the program. During this period, Livanta will be collaborating with CMS and the other BFCC-QIO to ensure consistency in how the rule is applied to QIO case review.”

confusion hurts

Perhaps there is some solace in the notion that even CMS contractors are now shown to be as confused about the Two-Midnight Rule as providers. But is it really that hard?

We have heard anecdotal reports that Livanta did not understand the rule well enough, issuing improper denials when a provider correctly documented and filed a claim with one outpatient night plus one inpatient night, providing a proper and compliant admission.

On the other hand, perhaps the QIOs are not issuing enough denials, amid reports from providers that their experiences to date with the QIOs have been very congenial, rather than adversarial – a welcome relief from past interactions with other CMS contractors, particularly the Recovery Audit Contractors (RACs). It may be that CMS wishes to re-educate the QIOs in the same way that they re-educated the Administrative Law Judges (ALJs), including rewriting the rules, so that ALJs would (a) no longer be able to grant “Partially Favorable” decisions to force CMS to pay Part B fees when Part A was deemed inappropriate, and (b) no longer use common sense to interpret CMS regulations, instead substituting an interpretation that only favors CMS. After all, CMS and the ALJs all work for The Secretary, and unity is evidently more desirable than reason and justice.

Has or Will Anything Change in the Two-Midnight Rule?

Rumor has it (no reference to Adele's tune) that comedian Steve Harvey has applied for a position at CMS so that he can take the blame for the confusion.

Rumor has it (no reference to Adele’s tune) that comedian Steve Harvey has applied for a position at CMS so that he can take the blame for the confusion.

No real changes in the Two-Midnight rule are proposed or even rumored. Recent article headlines in other publications have hinted, erroneously, at changes in the Two-Midnight rule itself. However, the only changes even proposed concern the -0.2% offset that CMS imposed on hospitals when the rule went into effect, as a result of actuarial calculations which predicted that CMS would see a rise in inpatient admissions as a result of the new rule. In a surprising reversal, CMS proposed to permanently adjust the -0.2 percent offset implemented in the FY2014 IPPS/LTCH IPPS Final Rule (the infamous CMS-1599F) to account for an estimated increase in Medicare expenditures due to the Two Midnight policy, by removing the adjustment itself and also removing its effects for FYs 2014, 2015 and 2016 (with a one-time payment boost of 0.6 percent), which would result in an increase in FY2017 payment rates of approximately 0.8 percent.


CMS may use the Slow key first, but it's doubtful that they'll use the Rewind key at all.

CMS may use the Slow key first, but it’s doubtful that they’ll use the Rewind key at all.

As stated above, other than that, no changes. The only question at the moment is what the result will be from CMS’ further education of the QIOs: will there be more or fewer denials coming out of QIO reviews?

[Note: We owe thanks to several persons who gave us links, opinions and information about this topic, including Nina Youngstrom at, Jessica Gustafson at The Health Law Partners, Dr. Ron Hirsch at Accretive PAS, and others from the rac-relief Google Group, which is owned and run by Dr. Larry Hegland of Ministry Health Care in Wisconsin.]

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