In a recent Aetna newsletter update (also referred to as OfficeLink), Aetna advised that it would change its reimbursement approach for emergent or urgent inpatient stays that span at least one midnight at facilities that contract with Aetna’s Medicare Advantage (MA) and/or Special Needs Plans (SNPs). Beginning November 15, 2025, under Aetna’s new “[l]evel of severity inpatient payment policy” (the Policy), Aetna will approve urgent or emergent inpatient stays without a medical necessity review but only initially pay the claim at a lower level of severity rate comparable to the observation rate. The inpatient rate would only be subsequently paid if the inpatient stay meets MCG (Aetna Supplemental Guidelines for inpatient admission), meaning that payment for stays spanning more than two midnights could be just the observation rate. The “Policy” thus amounts to an attempt to circumvent CMS’s recent clarification that the “Two Midnight Rule” for when a stay qualifies as an inpatient stay applies to MA plans. Facilities contracted with Aetna should consider challenging the “Policy.”
Background on the Two Midnight Rule’s Application to MA Plans
As King & Spalding previously reported, CMS confirmed in preamble discussion that the statutory requirement that MA plans cover items and services for which benefits are available under traditional Medicare, referred to as “basic benefits,” includes the requirement that MA plans must follow the federal “Two Midnight Rule.” See CMS-4201-F; see also CMS-4208-F. The Two Midnight Rule provides that an inpatient admission is generally appropriate for payment under Medicare Part A (inpatient care) “when the admitting physician expects the patient to require hospital care that crosses two midnights.” 42 C.F.R. § 412.3(d).
CMS’s guidance regarding the Two Midnight Rule’s application to MA plans, however, noted that MA plans may still use prior authorization or concurrent case management review of inpatient admissions based on whether the complex medical factors documented in the medical record support medical necessity of the inpatient admission.
Aetna’s “Policy” Means Inpatient Stays Spanning Two Midnights May Not Be Paid at the Contracted Inpatient Rate
Aetna’s “Policy” attempts to circumvent the Two Midnight Rule by asserting that no medical necessity determinations will be involved, only a determination of whether the stay was severe enough to qualify for payment at an inpatient rate rather than an observation rate. This may be too clever by half and still violate the Two Midnight Rule; CMS’s guidance on the Two Midnight Rule was that “MA plans may not use InterQual or MCG criteria, or similar products, to change coverage or payment criteria already established under Traditional Medicare laws.”
Aetna’s “Policy” could result in certain inpatient claims being paid at the observation rate, not the contracted inpatient rate, which could have a material adverse effect on a facility’s expected reimbursement from Aetna. As a result, facilities contracted with Aetna for its MA and SNP plans should consider promptly objecting to and rejecting Aetna’s “Policy” in writing.
The Aetna OfficeLink Update can be found here.
