CurrentHighmark Blueshield NenyPolicy N/A

Two-Midnight Rule (TMR) application for Medicare Advantage Organizations (MAOs) — inpatient admission coverage

Guidance on how the Medicare Two-Midnight Rule (TMR) applies to Medicare Advantage Organizations (MAOs), including coverage expectations, review authority, prior authorization, and documentation requirements for inpatient admissions. Affects hospitals, admitting physicians, and MA plan review staff.

Policy Summary

PayerHighmark Blueshield Neny

PolicyTwo-Midnight Rule (TMR) application for MAOs — inpatient admission coverage

Policy CodePolicy N/A

Change TypeClarified MAO review authority (2024, 2026 Final Rules)

Effective DateN/A

Next Review DateN/A

Key ActionDocument the admitting physician's expectation and clinical factors in the medical record to support inpatient coverage and respond to MAO medical necessity review.

SourceLink

POLICY UPDATE CHANGES

The 2024 and 2026 CMS Final Rules extend the TMR framework to MAOs but explicitly allow MA organizations to conduct medical necessity reviews (including prior authorization and concurrent review) even when the Two-Midnight Benchmark is met.

2Midnights benchmark

2024, 2026CMS Final Rules

YesPrior auth permitted

Yes

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Concurrent review required?

Inpatient Admission Coverage under the Two-Midnight Rule

Inpatient admission coverage under TMR for MAOs

Covered when ALL of the following are met

Two-Midnight Benchmark: Admitting physician documents expectation, based on complex medical factors, that the patient will require hospital care that crosses two midnightscrosses two midnights

Documentation must include patient history, comorbidities, severity of signs and symptoms, current medical needs, and risk of adverse events

MAO review allowance: MA organizations may nevertheless perform medical necessity review (prior authorization, concurrent case review, or post-service claim review) even if the two‑midnight expectation is documentedN/A

MA organizations must comply with medical necessity determination rules at § 422.101(c)

Certain circumstances can justify inpatient payment even when the Two-Midnight Benchmark is not met. Examples include an unforeseen shorter stay because of the beneficiary's death or transfer, surgical procedures designated as Inpatient Only by Medicare, and other case-by-case exceptions where the admitting physician's expectation was based on documented complex clinical factors. In all such cases, the clinical rationale and the physician's expectation must be clearly documented in the medical record to support inpatient coverage.

Medicare Advantage organizations may still determine that an inpatient admission is not medically necessary through their review processes even when the Two-Midnight Benchmark is met. CMS explicitly allows MA plans to perform prior authorization, concurrent case management review, or post-service claim review of inpatient admissions and to make medical necessity determinations in accordance with § 422.101(c), which can result in non-coverage under Part A if documentation does not support inpatient medical necessity.

Prior Authorization, Documentation, and Review Responsibilities

Prior Authorization

Prior Authorization and Concurrent Review Permitted

MA organizations may require prior authorization or conduct concurrent case management review of inpatient admissions; these reviews can occur before, during, or after the service and are permitted even when a provider documents an expectation of a two-midnight inpatient stay.

Prior authorization and concurrent review may be used to evaluate medical necessity.
MA medical necessity reviews may be performed prior to service (prior authorization), during (concurrent case review), or after (claim review).

Denial Risk

MAO Discretion to Review Despite Two-Midnight Expectation

MA organizations are not required to apply the Two-Midnight Presumption the same way traditional Medicare does; they may choose which claims to subject to review and may still deny payment after review even if a two-midnight expectation was documented.

Inpatient Hospital Admission Criteria

inpatient hospital

Physician expectation and documentation: Admitting physician expects at least two midnights of hospital care and documents the complex medical factors (history, comorbidities, severity, current needs, risk) in the medical record>= 2 midnights

Documentation is essential to support inpatient admission under the Two‑Midnight Benchmark

Criteria for Continued Inpatient Stay Review

inpatient hospital

MAO concurrent review: MA organizations may perform concurrent case management or other medical necessity reviews to assess continued inpatient needN/A

Concurrent review may affect continued stay authorization; MA organizations must follow § 422.101(c)

Discharge Considerations

Discharge and payment determinations should consider the admitting physician's documented expectation and the actual course of the stay. If unforeseen events (for example, transfer or death) shorten the stay below the physician's original expectation of crossing two midnights, the admission may still be appropriate for inpatient payment when the record documents the clinical factors that supported the inpatient expectation.

Key Terms and Benchmarks

inv-09: Two-Midnight Benchmark — definition and coverage implication

DefinitionTwo-Midnight Benchmark: A MA plan must provide coverage (by furnishing, arranging, or paying) for an inpatient admission when — based on consideration of complex medical factors documented in the medical record — the admitting physician expects the patient to require hospital care that crosses two midnights.

Coverage implication for MAOsWhen the admitting physician documents an expectation of care crossing two midnights (with supporting clinical factors), the MA plan is required to cover the inpatient admission under the Benchmark.

Required documentationDocumentation must include the complex medical factors considered (patient history, comorbidities, severity of signs/symptoms, current medical needs, and risk of adverse events) in the medical record to support the physician's expectation.

Limits of protectionUnlike original Medicare's presumption, meeting the Two-Midnight Benchmark does not fully insulate an admission from MAO clinical review; MA plans may still perform medical necessity reviews per CMS rules.

Policy Background and Scope

The Two-Midnight Rule establishes a benchmark where an admitting physician's expectation that hospital care will cross two midnights typically indicates the need for inpatient status. CMS extended the TMR framework to MA organizations in recent Final Rules but clarified that MA plans retain authority to review inpatient admissions for medical necessity; accurate documentation of the physician's expectation and the complex medical factors (history, comorbidities, severity, current needs, risk of adverse events) is essential to support inpatient coverage.

Policy Summary

PayerHighmark Blueshield Neny

PolicyTwo-Midnight Rule (TMR) application for MAOs — inpatient admission coverage

Policy CodePolicy N/A

Change TypeClarified MAO review authority (2024, 2026 Final Rules)

Effective DateN/A

Next Review DateN/A

Key ActionDocument the admitting physician's expectation and clinical factors in the medical record to support inpatient coverage and respond to MAO medical necessity review.

SourceLink

On This Page

The Two-Midnight Presumption applies to traditional Medicare but MAOs may opt to review claims regardless of that presumption.
CMS guidance allows MAOs discretion in deciding which claims to review and how to prioritize reviews.

Documentation Required

Documentation of Physician Expectation and Clinical Factors

Document the physician's expectation and the clinical factors that support inpatient care in the medical record. These should include patient history and comorbidities, severity of signs and symptoms, current medical needs, and risk of adverse events.

Physician expectation of at least two midnights must be explicitly documented along with supporting clinical factors.
If an unforeseen circumstance shortens the stay (e.g., transfer or death), documentation of the original expectation supports inpatient payment.
Inpatient Only surgical procedures specified by CMS (§ 419.22(n)) are generally appropriate for Part A payment regardless of expected length of stay.

Denial Risk

Risk of Medical Necessity Denial Despite Two-Midnight Expectation

Even when a provider documents an expectation of a two-midnight inpatient stay, MA organizations may still conduct medical necessity review and potentially deny payment if the record does not support inpatient admission under § 422.101(c).

MA medical necessity reviews must comply with § 422.101(c).
A documented two-midnight expectation does not guarantee payment under MA contract review processes.

inv-10: Two-Midnight Presumption — presumption in original Medicare and applicability notes

Original Medicare presumptionTwo-Midnight Presumption: In original Medicare, hospital stays that cross two midnights after inpatient admission are generally considered payable under Part A and insulated from traditional or original Medicare reviews.

Applicability to MAOsThe Two-Midnight Presumption applies to traditional Medicare only; CMS made clear that MA organizations are not required to use the presumption to decide which claims to review.

MAO review authorityMA organizations may perform prior authorization, concurrent case management review, or post-service claim review of inpatient admissions even when the two-midnight benchmark/presumption threshold is met, provided they comply with § 422.101(c) for medical necessity determinations.

Operational noteCY2024 and CY2026 Final Rules align MAOs more closely with the TMR framework but explicitly preserve MAO authority to conduct clinical reviews independent of the original Medicare presumption.