Yesterday’s release of proposed changes to outpatient and ambulatory surgery center payments got mixed reviews from the American Hospital Association.

On one hand, the nation’s largest hospital lobbying group was pleased that the Centers for Medicare & Medicaid Services’ proposed 2016 outpatient prospective payment system rule would ease some of the regulatory burden on observation stays.

“However, it is unfortunate that CMS maintains the misguided 0.2 percent cut to payments for inpatient hospital services as part of the two-midnight policy,” stated Rick Pollack, the AHA’s executive vice president.

The two-midnight policy has been a point of contention since CMS unveiled it in 2013. Under the current construct, an admission is assumed appropriate for inpatient reimbursement if a physician determines that treatment requires at least a two-night hospital stay. Patients in the hospital for shorter stays must be coded as outpatient status. AHA officials have argued that the rule gets in the way of clinical decision-making.

Yesterday’s proposal would allow exceptions to the two-midnight “benchmark to be determined on a case-by-case basis” by the admitting physician “subject to medical review.”

Pollack said the “nation’s hospitals appreciate today’s proposal to maintain the certainty that patient stays of two midnights or longer are appropriate as inpatient cases. We also agree with CMS’s proposal that stays of less than two midnights should be paid on an inpatient basis based on the medical judgment of a physician.”

Also, the agency seeks to shift review of short inpatient stays to Quality Improvement Organizations, rather than recovery audit contractors.

Pollack expressed disappointment at the -0.1 percent update for outpatient services. CMS claimed that the adjustment is based on a projected 2.7 percent increase in the hospital market basket, minus a 0.6 percentage adjustment for multifactor productivity and a 0.2 percentage point adjustment required by law.

“We are dismayed that miscalculations by the actuaries are resulting in penalties to hospitals and the patients they care for,” Pollack said, “CMS must re-evaluate the actuaries’ estimates.”

CMS is accepting comments on the proposed rule through Aug. 31.