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Recent action by Livanta has prompted a new look at old code.

Livanta, the Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) auditor, has reportedly started sending out documentation requests for short-stay inpatient audits. They are selecting 30 inpatient admissions of Medicare beneficiaries whose length of stay (LOS) was either zero or one day, within the prior three months, from targeted hospitals.

This falls in line with the two categories associated with the two-midnight rule. They are the presumption and the benchmark, but these audits focus on the benchmark.

As stated in the rule, “under the two-midnight presumption, inpatient hospital claims with lengths of stay greater than two midnights after formal admission following the order will be presumed generally appropriate for Part A payment and will not be the focus of medical review efforts absent evidence of systematic gaming, abuse or delays in the provision of care…” -Page 50949, IPPS

On the other side, the benchmark of two midnights is “the decision to admit the beneficiary should be based on the cumulative time spent at the hospital beginning with the initial outpatient service. In other words, if the physician makes the decision to admit after the beneficiary arrived at the hospital and began receiving services, he or she should consider the time already spent receiving those services in estimating the beneficiary’s total expected length of stay.” -Page 50946, IPPS

Length of stay starts once the patient is formally admitted. When looking at the targeted areas of these audits, keep in mind that one-day stays and zero-day stays are considered short stays, and may be a reflection of poor utilization review (UR) processes or timing of the UR reviews, but this is not an exclusive statement.

Hence, in order to ensure accurate tracking of the two-midnight requirement for the inpatient level of care, the Centers for Medicare & Medicaid Services (CMS) has allowed hospitals to use Occurrence Span Code 72 to track outpatient care prior to an inpatient admission. This code is commonly used to indicate that the patient has passed two necessary midnights in the hospital, but less than two as inpatient. This code will not exempt the admission from audit, but it doesn’t necessarily indicate that auditing these cases will result in an automatic denial. It is truly dependent on appropriate documentation.

Previously, an inpatient claim only allowed CMS to track the inpatient time after a patient was formally admitted as an inpatient. Using Occurrence Span Code 72 allows providers and review contractors to identify the total number of midnights on the face of the claim (inpatient and observation).

Time receiving outpatient care in the hospital that can be reported with Occurrence Span Code 72 includes:

  • Observation services;
  • Treatment in the ED; and
  • Surgical procedures.

Note: Program for Evaluating Payment Patterns Electronic Report (PEPPER) “one-day stay” reports exclude patients whose claims include Occurrence Span Code 72 with a total stay of fewer than two midnights.

By using this code, a hospital can indicate that the admission met the requirements of the two-midnight rule, thereby reducing the risk of the claim being denied.

Transmittal 1334 provides technical direction and permits the physician and the medical reviewer to consider all time a beneficiary has already spent in the hospital receiving outpatient services, including observation services and treatment in the emergency department, operating room, or other treatment area, in guiding their two-midnight expectation. This change in claim processing instruction is to “notify contractors that Occurrence Span Code 72 was redefined by the National Uniform Billing Committee (NUBC), for inpatient bills, so that contractors may denote contiguous outpatient hospital services that proceeded the inpatient admission. This should permit the contractor the ability to determine the total time in the hospital, as it is voluntarily recorded on an inpatient claim.”

As mentioned above, appropriate documentation is critically necessary to support and justify the acuity needed for an inpatient level of care. There are two areas in particular where this can be accomplished.

  • The history and physical; and
  • The time that the inpatient order is formally recorded.


The history and physical should accurately reflect the acuity, and to that end, keep in mind that the Medicare Benefit Policy Manual (Chapter 1, Section 10) states that the medical predictability of an adverse event is a necessary component of the admitting physician decision-making for an inpatient level of care.

Four simple elements to include in the assessment and plan of a history and physical are the following:

  1. Suspects – what do you suspect is going on with the patient?
  2. Concerns – do you have high or low levels of concern for what adverse event(s) can occur, based on how the patient presents, and in what condition?
  • Predictable events – based on the physician’s knowledge, experience, the literature, and conferences, how predictable are those concerns?
  • Intent for treatment – what treatments will be instituted, and how much time will they take?

One of the things learned during the administrative law judge (ALJ) hearings taking place during the Recovery Audit Contractor (RAC) storm of the past is the importance of what documentation is present at the time of the inpatient order.

With the two-midnight rule, this has been simplified, but some kind of documentation would be helpful to correlate with the order, instead of the relying on the auditor to connect the dots.

What it all comes down to is the three most important words in healthcare:

  • Documentation;
  • Documentation; and
  • Documentation.

Of course, this is where Occurrence Span Code 72 helps.

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