What is the two-midnight rule in hospitals? The two-midnight rule is Medicare rule to determine whether hospital stay should be billed as inpatient or outpatient for payment purposes. Under rule, if physician expects patient to require hospital care spanning at least two midnights, the stay is generally considered inpatient and paid under Part A, while if care expected to span less than two midnights, it is considered outpatient and paid under Part B, unless exception applies. The rule helps prevent short inpatient stays being billed as inpatient when outpatient more appropriate, and guides physician documentation of expected length of stay. The clock starts when patient begins receiving hospital care, including emergency department and observation. If expectation changes, documentation must support. So two-midnight rule is guideline for Medicare to classify hospital stays as inpatient requiring two midnights expectation versus outpatient observation, affecting billing and patient cost-sharing.
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