With the Recovery Audit Contractors (RACs) returning and the specter of renewed scrutiny looming just around the corner, retrospective review of short-stay Medicare inpatient claims cannot be overlooked. Most providers routinely review these claims when the patient was hospitalized for less than two midnights. As a reminder, the Centers for Medicare & Medicaid Services (CMS) find inpatient billing appropriate, even without two midnights of hospital care, in the following five scenarios:

1) The patient leaves against medical advice (AMA)

2) The patient requires transfer to a higher level of care

3) The patient dies

4) The patient receives a Medicare inpatient-only procedure

5) The patient improves more rapidly than expected

While I will not debate last year’s Outpatient Prospective Payment System (OPPS) final rule two-midnight exception here, it is important to note that it provides even more opportunities for inpatient billing without two midnights. But for the most part, physician advisor retrospective review of cases with stays of fewer than two midnights should focus on No. 5 in the list above.

Many physician advisors complete retrospective reviews in concert with a nurse in the case management department. Often, inpatients covered by standard Medicare who were discharged following a hospitalization lasting fewer than two midnights are first reviewed by the nurse, who weeds out cases in which the first four situations listed above took place. The remaining cases are sent to the physician advisor to establish whether scenario No. 5 – the patient improved more rapidly than expected – is medically justifiable and well-documented in the chart. 

While most focus on charts involving only one or zero midnights of hospitalization, in the last year or so, Quality Improvement Organizations (QIOs) began including cases of fewer than THREE midnights in their short-stay reviews. At face value, these cases should be appropriate for inpatient billing, given the two-midnight hospitalization. But this simplified assessment could be a spark leading to future denials. For providers as a whole and case managers alike, the expectation of, or plan for, a patient to remain hospitalized past a second midnight can easily lead to a decision that inpatient status is appropriate. Without clearly taking into account the medical necessity, this is a dangerously easy mistake to make. 

By expanding retrospective reviews to inpatient hospitalizations with two midnights (in addition to those with one and zero), you can capture and correct more billing issues before the claims go out the door. These reviews may lead you to find that many providers are still under the impression that a patient’s need for physical therapy, occupational therapy, or assistance with activities of daily living qualifies them for inpatient billing status if they remain hospitalized for these needs for two midnights. Additionally, you may discover that some of your case managers may put too much credence in a physician’s response of, “yes, the patient needs to stay here” when asked about the plan. These discoveries can allow you to provide targeted education to providers about medical necessity and direction to your case management department about when cases should be referred for secondary review (or when more questions should be asked of the provider regarding the plan). I encourage you to consider expanding your own retrospective reviews, and find out where opportunities lie within your own health system.

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