Aetna’s New Inpatient Payment Policy – What You Need to Know

From November 15, 2025, Aetna Medicare Advantage will introduce a major change in how hospitals get paid for certain inpatient admissions. This is not just a small update — it could impact how hospitals make decisions, how physicians admit patients, and how much money providers receive.

What’s the Change?

Today:

• Hospitals are paid for inpatient stays if the patient is expected to stay at least two midnights (Medicare’s “Two-Midnight Rule”) or if the admission meets inpatient medical necessity guidelines.
• If Aetna thinks the stay doesn’t qualify, they can deny the claim.
• Hospitals can appeal and try to get the denial overturned.

From November 15, 2025:

• Aetna will automatically approve inpatient admissions that last at least one midnight — without asking for prior authorization.
• BUT… if the case doesn’t meet MCG criteria (Aetna’s medical necessity guidelines), they will pay at a lower observation-level rate instead of full inpatient payment.
• No denial will be issued.
• No appeal will be allowed.
• The shortfall will be marked as a contractual adjustment — so it won’t even appear in your denial reports.

Why This Matters

This might sound like less hassle — no prior authorization, fewer denials — but there’s a big hidden risk:

• Lower payments: Observation rates are usually much less than inpatient rates.
• No way to challenge: Because there’s no denial, hospitals can’t appeal.
• Harder to track: Losses will be buried as “contractual adjustments” instead of denials.
• Patient care impact: Hospitals may be hesitant to admit borderline cases as inpatient, which could delay needed care.

Real-World Examples

Example 1 – Chest Pain Patient

• Patient admitted overnight for monitoring after chest pain.
• Discharged the next morning (1 midnight stay).
• If not meeting MCG inpatient criteria, Aetna will pay at observation rate — thousands less than inpatient — and the hospital can’t appeal.

Example 2 – Elderly Fall

• Elderly patient with a fall, kept overnight for safety checks.
• Does not meet strict MCG inpatient rules → paid as observation even though it was treated as inpatient.

Example 3 – Borderline Cases

• Physician has a patient who could be admitted inpatient but might not meet criteria.
• Fear of low payment may push hospital to choose observation instead — possibly reducing the level of care.

What Hospitals Should Do

1. Educate your teams now — Revenue Cycle, Utilization Review, and physicians need to know the MCG criteria.
2. Update documentation templates — Make sure they capture all details that support medical necessity.
3. Track these payments — Even if not denied, flag cases where payment is downgraded to observation.
4. Review your Aetna contracts — See if there’s room to negotiate protections.
5. Work with associations — Advocate for transparency and fair payment practices.

What Physicians Should Do

1. Document thoroughly — Always explain why inpatient care was necessary, especially for short stays.
2. Note risk factors — Include comorbidities, complications, and why the patient wasn’t safe to go home.
3. Collaborate with UR teams — Confirm the case meets MCG criteria before discharge.

The Bigger Picture

If Aetna succeeds with this model, other insurance companies may copy it. That means less transparency, fewer appeals, and more silent underpayments across the industry.

The key takeaway? Prepare now, train your teams, and tighten your documentation.

💬 What do you think? Is this an improvement in efficiency or a quiet way to cut provider payments? How is your organization planning to respond before November 15?

#RCM #RevenueCycleManagement #Aetna #MedicalBilling #MedicareAdvantage #HealthcareFinance #UtilizationReview #HospitalAdministration #HealthcarePolicy