Medicare Advantage Plans Are Supposed to Follow the Two-Midnight Rules

Medicare Advantage Plans Follow the Two Midnight Rule

That statement may appear to be somewhat controversial, but it shouldn’t be. First, plans are required to provide the patient with benefits that are at least as generous as those required under the two-midnight rules.

If that were the only factor in play here, I would say it would mean that the patient can’t be worse off than they would be if the plan used the two-midnight rule. But there is a requirement that MA plans follow Medicare manuals. The bottom line is that if the traditional Medicare program would consider a patient an inpatient, the Medicare Advantage plan must as well.

Let’s look at the law. There is a statutory requirement that Medicare Advantage plans offer Medicare beneficiaries benefits that are at least as generous as those in traditional Medicare. Section 1852 of the Social Security Act says Medicare Advantage plans must offer all of the “benefits” that the original Medicare fee-for-service program offers. The law defines those benefits as “those items and services (other than hospice care or coverage for organ acquisitions for kidney transplants, including as covered under section 1881(d)) for which benefits are available under parts A and B to individuals entitled to benefits under part A and enrolled under part B, with cost-sharing for those services as required under parts A and B or, subject to clause (iii), an actuarially equivalent level cost-sharing as determined in this part.”

In other words, the patient must receive nearly all benefits that they receive under traditional Medicare, and they can’t be required to pay more than they would have paid under traditional Medicare.

Since, under traditional Medicare, the patient pays a 20 percent copay for outpatient services, but no copay for the first 60 days of a hospital stay, it is clearly more expensive for the patient if they are considered an outpatient. If that were the only requirement, it is possible that a Medicare Advantage plan could change its benefit set to eliminate the copay and assert that this solves the problem. But a federal regulation eliminates this possibility.

42 CFR 422.101 requires MA plans to comply with the Centers for Medicare & Medicaid Services (CMS) national coverage determinations and general coverage guidelines included in original Medicare manuals and instructions, unless superseded by regulations in this part or related instructions. The two-midnight rule is included in the Medicare manuals and is not superseded by regulation, so Medicare Advantage plans must follow it.

There has been a fair amount of controversy about whether MA plans may deviate from the two-midnight rule. The statutes and regulations suggest that this dispute is unnecessary because they require MA plans to cover the benefits covered by traditional Medicare and follow the manuals when doing so.

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