Is Your Facility Ready for OIG Short-Stay Audits?

Thoughtware Alert Published: Nov 23, 2020
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The Office of Inspector General (OIG) published a recent update to its Work Plan that will be initiated in 2021 to focus on short stays. 

CMS adopted the Two-Midnight Rule for admissions beginning on or after October 1, 2013 (federal fiscal year 2014). In the calendar-year 2016 Outpatient Prospective Payment System final rule, CMS made revisions for short inpatient hospital stays, adopting the following procedures:

  • For stays less than two midnights of hospital care (and procedures not on the inpatient-only list), the inpatient admission may be payable under Medicare Part A on a case-by-case basis when documentation in the medical record supports the inpatient admission was necessary.
  • It would be unlikely for a beneficiary to require inpatient care for a minor surgical procedure or other treatment in the hospital that doesn’t span at least overnight.

For more information, see the CMS Fact Sheet

While revisions to the Two-Midnight Rule by CMS have been made to clarify the policy, the OIG identified continued vulnerabilities under Medicare’s Two-Midnight Rule in its December 2016 report. Outlined vulnerabilities included:

  • Medicare paid almost $2.9 billion for short inpatient stays in 2014
  • Medicare pays more for short inpatient stays than for short outpatient stays (although stays were for similar reasons)
  • An increased number of beneficiaries in outpatient stays pay more and have limited access to skilled nursing facility services than they would as inpatients
  • Hospitals continue to vary in how they utilize inpatient and outpatient stays

What Should You Do?

  • Analyze hospital-specific data:
    • Identify short-stay inpatient claims
    • Identify outpatient observation encounters that exceed 48 hours
    • Identify outpatient claims submitted with condition code 44
  • Assess documentation for support of the physicians’ determination of patient status:
    • Identify potential gaps in utilization review and/or case management processes
    • Identify physicians who require education on the Two-Midnight Rule and/or observation services
    • Identify if utilization review processes are met to assign condition code 44
  • Track the short-stay and outpatient observation claims through the complete billing cycle:
    • Identify gaps in billing processes (correct application of condition code 44 and occurrence span codes 72 and M1) and develop policies and procedures if noted
    • Ensure that patients are informed about patient financial responsibility

BKD Can Help

BKD’s clinical revenue cycle team can assist you in completing concurrent and retrospective documentation and billing assessments of short-stay inpatient encounters and observation encounters. Our assessments can help you identify areas that require education and training, as well as assist you in demonstrating strong compliance practices and preventing financial implications.

For more information, reach out to a BKD Trusted Advisor™ or submit the Contact Us form below.

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