In the former case, the Centers for Medicare and Medicaid Services (CMS) has offered guidance saying that if the initial documentation was supportive of the physician’s two-midnight expectation, then inpatient billing and payment under Part A would be appropriate. On the other hand, lacking strong documentation supporting the initial admission decision, the hospital would be expected to convert that patient to outpatient status using Condition Code 44 if he or she is still in the hospital or use the self-audit/self-denial process and inpatient part B rebilling if the patient had already been discharged.

This concern about audits of one-midnight stay is well-founded because it is clear that the Medicare contractors, when they resume aggressive auditing as the current moratorium expires, will be targeting these short stays for review. (Remember, two-midnight stays, i.e., two midnights following the admission order, are offered the presumption of medical necessity.) But there are two scenarios in which a patient has a one-midnight inpatient stay: the first being admission from the ED, and the second being admission from outpatient status as the patient reaches the benchmark of the second midnight and requires continued in-hospital care.

CMS has said that “…the decision to admit becomes easier as the time approaches the second midnight, and beneficiaries in necessary hospitalizations should not pass a second midnight prior to the admission order being written.” (IPPS Final Rule CMS-1599-F, Federal Register, p. 50946) But what does it mean that the decision to admit “becomes easier”? It doesn’t mean that the criteria become easier; it doesn’t mean that there is less need for medical necessity for admission, either. The criteria for admission are not dependent on the time of day; they are dependent on the need for hospital care (a “necessary hospitalization”) and a stay spanning two midnights or more. As the time approaches the second midnight, the decision to admit is easier simply because there is less time for the patient’s condition to improve sufficiently to be ready for discharge. And that’s where there may be a major audit risk, because the physician not only has to admit the patient as the second midnight approaches (though admission the following morning would still be valid in many cases), but he or she has to document the medical necessity for the continued stay into the next day—and this is often problematic. Physicians may keep patients overnight “to watch them,” when in reality they just have other things to do after office hours and don’t plan to go back to the hospital to discharge the patient, who will have to wait until the next morning to go home. Physician convenience is not a reason to admit a patient. A patient may be placed in observation for a minor infection when the ED physician gave a dose of an IV antibiotic and the admitting physician ordered another one, but by the end of the second hospital day the patient may be afebrile, asymptomatic, and aleukocytotic (a neologism, sorry), but may not have anyone to pick her up to drive her home, so she asks to stay until morning. Patient and family convenience is not a reason to admit, either.

Or a patient could be placed in observation for community-acquired pneumonia and started on an IV antibiotic, but the next day may be afebrile with normal O2 saturation and no shortness of breath, but that patient may come from an assisted living facility that won’t accept the patient back after 5 p.m., so the physician plans to keep him till morning. No, needing a place to sleep is also not a reason to admit a patient to the hospital, and continuing IV antibiotics doesn’t justify staying over another night, either, because the patient is a candidate for switching to an oral antibiotic and releasing the same day based on accepted clinical practice. Any of these patients might have been admitted because the physician misunderstood the regulations and thought that any patient who stayed a second night should be admitted. The case manager might never become aware that this had happened. The patient could go home early the next day and the hospital would bill for an unjustified inpatient stay that would be denied if pulled for audit.

So while one-midnight stays for patients who are admitted from the ED are going to be major audit targets, one-midnight stays following a night in outpatient status have their own risks, which are not inconsiderable. Since the criteria for admission are different and payment denial based on different criteria and documentation deficiencies, Medicare contract auditors may at one point want to review one midnight ED admissions and at another time, for a different reason, review one-midnight admissions from observation. To meet their need to differentiate between the two (since admission and discharge date would indicate a one-midnight stay for both types of patients), the National Uniform Billing Commission (NUBC), at the request of CMS, announced that effective December 1, 2013, Occurrence Span Code -72 would indicate, when used on a on a hospital UB–04 inpatient bill, that an inpatient stay had been preceded by a contiguous night in an outpatient bed.

This use for Occurrence Span Code -72 may have been simply for administrative purposes, to enable CMS to monitor admissions from the ED versus those from the observation unit, but when OSC -72 was announced, it appeared that CMS was enabling contractors to focus their audits on one-midnight ED-source inpatient admissions, since the critical factors supporting (or disallowing) the admission rested on a subjective interpretation of the patient’s clinical condition and a prediction of length of stay, both of which could be disputed and lead to a denial. By using OSC -72, the hospital would be identifying the one-midnight stays admitted from observation, which have their own vulnerability, as discussed above. The contractor could determine which set of one-midnight stays to audit based on its selected issues or its experience with that facility. For example, if a hospital tends to have a very high admission rate for patients following a night in observation, that hospital might have more OSC –72 cases audited, while if a hospital is conservative on this score but tends to admit and discharge after one night a more than expected number of patients from the ED, those claims that lack OSC -72 could be the focus of more scrutiny. They could even focus on the admitting habits of a single physician or group and use this code selectively. In any case, the use of OSC -72 allows reviewers to slice and dice the hospital’s one-midnight stays at will.

It is important to note that at the time of this writing, the use of OS –72 is voluntary. While this may change at any time (and it probably will as soon as the MACs are all prepared to recognize it), each hospital must decide whether it wants to use OSC -72 and give the auditors this key to focusing in on their admissions.

But what’s more important, physicians must be aware that there must be medical necessity to keep the patient that second night, that this must be well-documented and that it will be under scrutiny to determine whether there was sufficient reason to keep the patient in the hospital and admit. Whether to discharge is the physician’s prerogative, but whether to pay the hospital for an admission based on convenience or other nonclinical factors is the bailiwick of the Medicare contractors. The message is simple: Physicians should send home from the hospital those patients who are clinically stable and who can safely complete their workups and treatments from home and admit only those who truly require continued treatment in the hospital. Documentation will only carry the day if there is medical necessity to back it up.

To read about Occurrence Span Code -72 Download MLN Matters, MM8586 from

About the Author

Steven J. Meyerson, MD, is senior vice president of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

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