The Centers for Medicare and Medicaid Services (CMS) announced a further delay, through December 31, 2015, of the Recovery Auditors’ (RA) audits of the “Two-Midnight” Rule. Congress previously passed a law delaying enforcement Recovery Audits for the Two Midnight Rule through September 30, 2015. This has now been extended through December 31, 2015 with enforcement audits of suspect non-compliant providers commencing on or about January 1, 2016. The proposed two-midnight rule sets forth criteria to be used in determining whether inpatient admission is reasonable and payable under Medicare Part A. CMS has been particularly concerned with the high rates of hospital outpatients who receive extended observation services, and the rule seeks to reduce or eliminate payment for services that are rendered in a medically unnecessary setting (i.e., inpatient rather than outpatient). Please note that hospital outpatient days do not count towards the three-day inpatient hospital stay that is required before a beneficiary becomes eligible for Medicare coverage of skilled nursing facility services.