Two-Midnight Rule Coordination and Improvement Act of 2014

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Two-Midnight Rule Coordination and 
Improvement Act of 2014''.

SEC. 2. DEVELOPMENT OF CRITERIA FOR MEDICALLY NECESSARY SHORT INPATIENT 
              HOSPITAL STAYS.

    (a) In General.--
            (1) Development of criteria.--The Secretary shall develop 
        appropriate criteria with regard to the two-midnight rule (as 
        defined in subsection (e)) for payment under the Medicare 
        program under title XVIII of the Social Security Act (42 U.S.C. 
        1395 et seq.) for a short inpatient hospital stay (as defined 
        in such subsection).
            (2) Requirements.--The criteria developed under paragraph 
        (1) shall--
                    (A) account for medical necessity and the 
                appropriateness of an inpatient stay that is less than 
                the two-midnight benchmark; and
                    (B) subject to paragraph (3), be developed in 
                consultation with interested stakeholders.
            (3) Implementation.--The consultation described in 
        paragraph (2)(B) shall be conducted as part of the annual 
        notice and comment rulemaking process implementing the Medicare 
        hospital inpatient prospective payment system for fiscal year 
        2015.
    (b) Development of Short Inpatient Hospital Stay Payment 
Methodology.--
            (1) In general.--The Secretary shall develop a payment 
        methodology under the Medicare program under title XVIII of the 
        Social Security Act for hospitals for short inpatient hospital 
        stays. Such methodology--
                    (A) shall be implemented in a budget neutral 
                manner;
                    (B) may be a reduced payment amount for such 
                inpatient hospital services than would otherwise apply 
                if paid for under section 1886(d) of the Social 
                Security Act (42 U.S.C. 1395ww(d)) or be an alternative 
                payment methodology; and
                    (C) shall take into consideration the criteria 
                developed under subsection (a).
            (2) Timeframe.--The Secretary shall promulgate such 
        methodology as part of the annual regulations implementing the 
        Medicare hospital inpatient prospective payment system for 
        fiscal year 2015.
    (c) Crosswalk of ICD-10 Codes and CPT Codes; Crosswalk of DRG and 
CPT Codes.--
            (1) ICD-10-to-CPT crosswalk.--
                    (A) In general.--Not later than 2 years after the 
                date of the enactment of this Act, the Secretary shall 
                develop general equivalency maps (referred to in this 
                subsection as ``crosswalks'') to link the relevant ICD-
                10 codes to relevant CPT codes, and the relevant CPT 
                codes to relevant ICD-10 codes, in order to permit 
                comparisons of inpatient hospital services, for which 
                payment is made under section 1886 of the Social 
                Security Act (42 U.S.C. 1395ww), and hospital 
                outpatient department services, for which payment is 
                made under section 1833(t) of such Act (42 U.S.C. 
                1395l(t)). In this subsection the terms ``ICD-10 
                codes'' and ``CPT codes'' include procedure as well as 
                diagnostic codes.
                    (B) Process.--
                            (i) In general.--In carrying out 
                        subparagraph (A), the Secretary shall develop a 
                        proposed ICD-10-to-CPT crosswalk which shall be 
                        made available for public comment for a period 
                        of not less than 60 days.
                            (ii) Notice.--The Secretary shall provide 
                        notice of the comment period through the 
                        following:
                                    (I) Publication of notice of 
                                proposed rulemaking in the Federal 
                                Register.
                                    (II) A solicitation posted on the 
                                Internet Web site of the Centers for 
                                Medicare & Medicaid Services.
                                    (III) An announcement on the 
                                Internet Web site of the Centers for 
                                Medicare & Medicaid Services of the 
                                availability of the proposed crosswalk 
                                and the deadline for comments.
                                    (IV) A broadcast through an 
                                appropriate Listserv operated by the 
                                Centers for Medicare & Medicaid 
                                Services.
                            (iii) Use of the icd-9-cm coordination and 
                        maintenance committee.--The Secretary also 
                        shall instruct the ICD-9-CM Coordination and 
                        Maintenance Committee to convene a meeting to 
                        receive input from the public regarding the 
                        proposed ICD-10-to-CPT crosswalk.
                            (iv) Publication of final crosswalks.--
                        Taking into consideration comments received on 
                        the proposed crosswalk, the Secretary shall 
                        publish a final ICD-10-to-CPT crosswalk under 
                        subparagraph (A) and shall post such crosswalk 
                        on the Internet Web site of the Centers for 
                        Medicare & Medicaid Services.
                            (v) Updating.--The Secretary shall update 
                        such crosswalk on an annual basis.
            (2) DRG-to-APC crosswalk.--
                    (A) In general.--The Secretary shall, using the 
                ICD-10-to-CPT crosswalk developed under paragraph (1), 
                develop a second crosswalk between diagnosis-related 
                group (DRG) codes for inpatient hospital services and 
                Ambulatory Payment Class (APC) codes for outpatient 
                hospital services.
                    (B) Data to be used.--In developing such crosswalk, 
                the Secretary shall use claims data for inpatient 
                hospital services for discharges occurring in fiscal 
                years beginning with fiscal year 2015 and for 
                outpatient hospital services furnished in years 
                beginning with 2015.
                    (C) Publication.--Not later than June 30, 2017, the 
                Secretary shall publish the DRG-to-APC crosswalk 
                developed under this paragraph.
    (d) Delay of Enforcement of the Two-Midnight Rule.--
            (1) In general.--The Secretary shall not enforce the 
        provisions of the two-midnight rule with respect to admissions 
        to a hospital for which payment is made under the Medicare 
        program under title XVIII of the Social Security Act--
                    (A) for admissions occurring before October 1, 
                2014; and
                    (B) in the case of admissions occurring on or after 
                October 1, 2014, prior to the applicable date (as 
                defined in paragraph (3)).
            (2) Application to medicare review contractors.--Paragraph 
        (1) shall also apply to Medicare review contractors (as defined 
        in subsection (e)). No Medicare review contractor may, based on 
        the provisions of the two-midnight rule, deny a claim for 
        payment for inpatient hospital services furnished by a 
        hospital, or inpatient critical access hospital services 
        furnished by a critical access hospital, for which payment may 
        be made under title XVIII of the Social Security Act for 
        discharges occurring before the applicable date (as defined in 
        paragraph (3))--
                    (A) for medical necessity due to the length of an 
                inpatient stay in such hospital or due to a 
                determination that the services could have been 
                provided on an outpatient basis; or
                    (B) for requirements for orders, certifications, or 
                recertifications, and associated documentation relating 
                to the matters described in subparagraph (A).
            (3) Applicable date defined.--In this subsection, the term 
        ``applicable date'' means the earlier of--
                    (A) the date on which the criteria described in 
                subsection (a) are implemented pursuant to subsection 
                (a)(3); or
                    (B) October 1, 2015.
            (4) Continuation of medicare probe and educate program for 
        inpatient hospital admissions.--
                    (A) In general.--Subject to subparagraph (B), 
                nothing in this subsection shall be construed to 
                preclude the Secretary from continuing the conduct by 
                Medicare administrative contractors of the Medicare 
                Probe and Educate program (as defined in subparagraph 
                (C)) for hospital admissions during the delay of 
                enforcement under paragraph (1).
                    (B) Maintenance of sample prepayment record 
                limits.--The Secretary may not increase the sample of 
                claims selected for prepayment review under the 
                Medicare Probe and Educate program above the number and 
                type established by the Secretary under such program as 
                of November 4, 2013, such as 10 claims for most 
                hospitals and 25 claims for large hospitals.
                    (C) Medicare probe and educate program defined.--In 
                this paragraph, the term ``Medicare Probe and Educate 
                program'' means the program established by the 
                Secretary as in effect on November 4, 2013 (and 
                described in a public document made available by the 
                Centers for Medicare & Medicaid Services on its Web 
                site entitled ``Frequently Asked Questions 2 Midnight 
                Inpatient Admission Guidance & Patient Status Reviews 
                for Admissions on or after October 1, 2013''), under 
                which Medicare administrative contractors--
                            (i) conduct prepayment patient status 
                        reviews for inpatient hospital claims with 
                        dates of admission on or after October 1, 2013, 
                        and before March 31, 2014; and
                            (ii) based on the results of such 
                        prepayment patient status reviews, conduct 
                        educational outreach efforts during the 
                        following 3 months.
    (e) Definitions.--In this section:
            (1) Hospital.--The term ``hospital'' means the following 
        (insofar as such terms are used under title XVIII of the Social 
        Security Act):
                    (A) An acute care hospital.
                    (B) A critical access hospital.
                    (C) A long-term care hospital.
                    (D) An inpatient psychiatric facility.
            (2) Interested stakeholders.--The term ``interested 
        stakeholders'' means the following:
                    (A) Hospitals.
                    (B) Physicians
                    (C) Medicare administrative contractors under 
                section 1874A of the Social Security Act (42 U.S.C. 
                1395kk-1).
                    (D) Recovery audit contractors under section 
                1893(h) of such Act (42 U.S.C. 1395ddd(h)).
                    (E) Other parties determined appropriate by the 
                Secretary.
            (3) IPPS fy 2014 final rule.--The term ``IPPS FY 2014 Final 
        Rule'' means the final rule (CMS-1599-F, CMS-1455-F) published 
        by the Centers for Medicare & Medicaid Services in the Federal 
        Register on August 19, 2013, entitled ``Medicare Program; 
        Hospital Inpatient Prospective Payment Systems for Acute Care 
        Hospitals and the Long-Term Care Hospital Prospective Payment 
        System and Fiscal Year 2014 Rates; Quality Reporting 
        Requirements for Specific Providers; Hospital Conditions of 
        Participation; Payment Policies Related to Patient Status'' (78 
        Fed. Reg. 50496 et seq.).
            (4) Medicare review contractor.--The term ``Medicare review 
        contractor'' means any contractor or entity that has entered 
        into a contract or subcontract with the Centers for Medicare & 
        Medicaid Services with respect to the Medicare program to 
        review claims for items and services furnished for which 
        payment is made under title XVIII of the Social Security Act, 
        including--
                    (A) Medicare administrative contractors under 
                section 1874A of the Social Security Act (42 U.S.C. 
                1395kk-1); and
                    (B) recovery audit contractors under section 
                1893(h) of such Act (42 U.S.C. 1395ddd(h)).
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (6) Short inpatient hospital stay.--The term ``short 
        inpatient hospital stay'' means, with respect to an inpatient 
        admission of an individual entitled to benefits under part A of 
        title XVIII of the Social Security Act to a hospital, a length 
        of stay that is less than the length of stay required to 
        satisfy the 2-midnight benchmark described in section 412.3 of 
        title 42, Code of Federal Regulations, as amended under the 
        amendment 2 referred to in paragraph (7)(A).
            (7) Two-midnight rule.--The term ``two-midnight rule'' 
        means the following numbered amendments to 42 CFR Chapter IV 
        contained in the IPPS FY 2014 Final Rule (and includes any sub-
        regulatory guidance issued in the implementation of such 
        amendments and any portion of the preamble of section XI.C. of 
        such rule relating to such amendments):
                    (A) Amendment 2 (on page 50965), which adds a 
                section 412.3 of title 42, Code of Federal Regulations 
                (relating to admissions).
                    (B) Amendment 3 (on page 50965), which revises 
                section 412.46 of such title (relating to medical 
                review requirements).
                    (C) Amendment 23 (on page 50969), which amends 
                paragraphs (d) and (e)(2) of section 424.11 of such 
                title (relating to conditions of payment: General 
                procedures).
                    (D) Amendment 24 (on pages 50969 and 50970), which 
                revises section 424.13 of such title (relating to 
                requirements for inpatient services of hospitals other 
                than inpatient psychiatric facilities).
                    (E) Amendment 25 (on page 50970), which revises 
                paragraphs (a), (b), (d)(1), and (e) of section 424.14 
                of such title (relating to requirements for inpatient 
                services of inpatient psychiatric facilities).
                    (F) Amendment 26 (on page 50970), which revises 
                section 424.15 of such title (relating to requirements 
                for inpatient CAH services).

Summary: Two-Midnight Rule Coordination and Improvement Act of 2014 - Directs the Secretary of Health and Human Services (HHS) to develop appropriate criteria with regard to the two-midnight rule for payment under title XVIII (Medicare) of the Social Security Act for a short inpatient hospital stay. (The two-midnight rule allows Medicare coverage of only hospital stays for which a physician admits to a hospital a beneficiary expected to require care that crosses two midnights, but generally denies coverage of care expected to require less than a two-midnight stay.) Requires the criteria developed by the Secretary to: (1) account for medical necessity and the appropriateness of an inpatient stay that is less than the two-midnight benchmark, and (2) be developed in consultation with interested stakeholders. Directs the Secretary to develop a budget-neutral Medicare payment methodology for hospitals for short inpatient hospital stays. Allows the methodology to be: (1) a reduced payment amount than would otherwise apply to inpatient hospital services if paid for under the Medicare prospective payment schedule, or (2) an alternative payment methodology. Directs the Secretary to develop: (1) general equivalency maps to link the relevant International Statistical Classification of Diseases and Related Health Problems (ICD)-10 codes (used to report medical diagnoses and inpatient procedures) to relevant Current Procedural Terminology (CPT) codes, and the relevant CPT codes to relevant ICD-10 codes, in order to permit comparison of inpatient hospital services and hospital outpatient department services; and (2) a second crosswalk between Diagnosis-Related Group (DRG) codes for inpatient hospital services and Ambulatory Payment Class (APC) codes for outpatient hospital services. Prohibits the Secretary from enforcing the two-midnight rule for admissions occurring: (1) before October 1, 2014; and (2) on or after that date until October 1, 2015, or the new two-midnight rule criteria are implemented, if sooner (applicable date). Prohibits a Medicare review contractor from denying a claim for inpatient hospital services furnished by a hospital, or inpatient critical access hospital services furnished by a critical access hospital, on the basis of the two-midnight rule for discharges occurring before the applicable date for: (1) medical necessity due to the length of an inpatient stay in such hospital or due to a determination that the services could have been provided on an outpatient basis; or (2) requirements for orders, certifications, or recertifications, and associated documentation relating to such matters. Declares that nothing in this Act shall be construed to preclude the Secretary from continuing the conduct by Medicare administrative contractors of the Medicare Probe and Educate program for hospital admissions during the delayed enforcement of the two-midnight rule.  Prohibits the Secretary from increasing the sample of claims selected for prepayment review under the Medicare Probe and Educate program above the number and type established by the Secretary as of November 4, 2013, such as 10 claims for most hospitals and 25 claims for large hospitals.