The 2 Midnight Rule in Utilization Management

Most of the work a physician advisor does during the work is revolving around the 2 mid night rule. An other part of 2 mid night rule is the “exceptions to the 2 mid night rule” that I listed below. Make sure you have this list in handy while doing your reviews. It is very important to know when does the time start for using 2 mid night rule as given below.

The 2 Midnight Rule

Utilization management plays a crucial role in healthcare organizations, helping to ensure that medical resources are used efficiently and appropriately. One important aspect of utilization management is the 2 midnight rule, which governs the admission and reimbursement of patients in hospitals. In this article, we will explore what the 2 midnight rule is, why it was implemented, and how it affects both patients and healthcare providers.

What is the 2 Midnight Rule?

The 2 midnight rule is a policy introduced by the Centers for Medicare and Medicaid Services (CMS) in 2013 and amended in 2016. It states that “inpatient services are generally payable under Medicare Part A if a physician expects a patient to require medically necessary inpatient hospital care that spans at least two midnights.”

Reasons for Implementing the 2 Midnight Rule

The 2 midnight rule was implemented for several reasons. One of the main goals was to address concerns about the increasing number of short hospital stays that were being classified as inpatient admissions. This was resulting in higher costs for Medicare and other payers, as well as potential overutilization of hospital resources.

By requiring a minimum stay of two midnights for inpatient status, the CMS aimed to ensure that only patients with more serious conditions that required hospitalization would be classified as inpatients. This would help prevent unnecessary admissions and reduce healthcare costs.

Impact on Patients

The 2 midnight rule can have both positive and negative impacts on patients. On the positive side, it helps ensure that patients who truly need hospital care receive appropriate treatment. By preventing overutilization of inpatient services, the rule aims to prioritize resources for those with more serious conditions.

However, the rule can also lead to some challenges for patients. If a patient’s stay is expected to be less than two midnights, they may be classified as an outpatient/observation, even if they receive the same level of care as an inpatient. This can have financial implications for the patient, as outpatient services are often subject to different cost-sharing arrangements and may not be covered to the same extent by insurance.

Furthermore, the 2 midnight rule can create uncertainty for patients and their families. The decision of whether a patient will be classified as an inpatient or an outpatient is often made on an individual basis, taking into account the specific circumstances of the case. This can lead to confusion and frustration, as patients may not fully understand why their admission status is determined by the length of their stay.

Impact on Healthcare Providers

The 2 midnight rule also has implications for healthcare providers. Hospitals and physicians must carefully evaluate each patient’s case to determine whether their stay is likely to span two midnights and qualify for inpatient status. This can require additional documentation and administrative work, as well as potential challenges in accurately predicting the length of a patient’s stay.

Furthermore, the rule has financial implications for healthcare providers. Hospitals receive higher reimbursement rates for inpatient services compared to outpatient services. Therefore, if a patient is classified as an outpatient due to a stay expected to be less than two midnights, the hospital may receive lower reimbursement for the care provided.

When does the 2 Midnight Rule time start?

It starts in the ED when the patient starts receiving symptom related treatment. It does not start in waiting room or at the time of registration before the actual treatment begins.

Exceptions to the 2 Midnight Rule

If the patient had an unexpected Recovery.

if the Mechanical Ventilation was required.

If the patient is admitted to Hospice after admission.

if the patient signed out AMA [Against Medical Advice].

if the patient expired.

if the patient underwent a procedure which is listen in Medicare IPO [Inpatient Only] list.

if the patient is transferred to a higher level of care.

Should the Medicare Advantage Plans Follow the Two-Midnight Rule?

The Centers for Medicare and Medicaid Services (CMS) Medicare Advantage final rule for 2024 (Final Rule) clarified that Medicare Advantage plans must adhere to the “two-midnight rule” including the exceptions. However, Medicare Advantage plans can still audit claims for inpatient care lasting more than two midnights.


The 2 midnight rule is an important component of utilization management in healthcare. By requiring a minimum stay of two midnights for inpatient status, the rule aims to ensure that hospital resources are used efficiently and appropriately. While it has benefits in terms of reducing costs and prioritizing care for more serious conditions, it can also create challenges and uncertainties for patients and healthcare providers. Understanding the 2 midnight rule and its implications is essential for all stakeholders involved in the delivery and management of healthcare services.