Short-Stay Audits: Common Pitfalls and How to Avoid Them

By Kelly Bilodeau

Traditional Medicare short-stay inpatient stay audits help ensure appropriate patient status decisions and accurate billing. However, organizations commonly struggle to implement a compliant process and run afoul of Medicare regulations, said Sara Williams, MSN, RN, ACM-RN, vice president of clinical strategy at Phoenix.

“Many facilities I’ve visited lately have gaps in their Medicare short-stay audit process,” she said. Hospitals often allow nurses to make downgrade determinations for patient cases that don’t meet one of the Medicare exclusions for an inpatient stay that lasts less than two midnights. However, CMS regulations reserve this role for a physician member of the UR committee. “Other organizations weren’t notifying patients within 48 hours that their stay would be billed under their Part B benefit instead of Part A after a review found they didn’t qualify for an inpatient admission,” Williams said. “Most of the organizations weren’t notifying the patient at all. They were just making the change to Part B billing.”

Monitoring compliance

CMS expects facilities to classify patients accurately, and short-stay reviews are a simple way to verify that the patient’s status is correct.  “Medicare does audit these short stays,” Williams said. The annual Program for Evaluating Payment Patterns Electronic Report (PEPPER) provides valuable insights into an organization’s one-day stay trends, comparing them to national and state data. It also allows facilities to compare themselves against organizations in similar locations. So, facilities should familiarize themselves with the information contained in the report. 

CMS allows for short-stay exceptions, so a UR nurse may determine that a case meets inpatient criteria even if it falls short of the required two midnights. For example, the stay may qualify under an exclusion if the patient’s surgical procedure is on the inpatient-only list. Some other examples of exclusions include the following: 

·       The patient expired before the second midnight.

·       The patient was transferred to a higher level of care.

·       The patient transferred from another facility and has two medically necessary midnights combined between the two hospital stays.

·       The patient left the facility against medical advice.

·       The patient transitioned to hospice during an appropriate inpatient hospitalization.

However, if the case doesn’t meet a defined exclusion, a physician member of the UM committee must review it to make a final determination, Williams said. If the UM Committee physician determines the case doesn’t meet the requirements for Part A billing, they must notify the attending provider and give them a chance to weigh in. The attending can respond within a set time frame to affirm the change, or choose not to respond, which is also seen as an affirmation. In these cases, the hospital must self-deny the original Part A claim and rebill the claim under Part B. This change triggers a mandatory patient notification. “The letter that goes to the patient needs to be very succinct and explain the billing change because it can be confusing. I've seen patients call and say: I was in the hospital? Why are you saying that's not covered?’” Williams said.

However, if the attending physician disagrees with the UM Committee physician’s assessment, they can submit additional details and the case will move to a second review by another physician member of the UM Committee who makes the final determination.

Setting up supportive systems

Medicare short-stay review errors often occur because the staff responsible for the process aren’t given clear guidance, and due to confusion about the requirements outlined in the Medicare Utilization Review Conditions of Participation, Williams said. Providing additional education and tools for UR nurses and UM Committee physicians who carry out these reviews can often solve the problem.

Organizations should establish workflows to support the process, including communication channels with revenue cycle staff members to bill corrected claims accurately. “Leverage your EMR as much as you can to automate this process,” Williams said.

Although the Two-Midnight Rule went into effect more than a decade ago, organizations still struggle to understand the complexities of the short-stay review process. Proper documentation can help. Providers should clearly document why a two-midnight stay in the hospital is medically necessary for each inpatient. Avoid canned, check-box responses. “In addition, if the patient does get better more quickly than expected, there's very clear documentation on the back end to say that,” Williams said. “Sometimes you may anticipate that a patient is going to be hospitalized for two midnights or more, and they improve more quickly than expected,” Williams said.

Establishing a proactive process and coordination between UR and Revenue Cycle/Integrity departments can help ensure your organization gets it right.

Case Management Corner is your go-to source for insightful discussions on relevant topics in case management. Through an engaging interview-style format, our team members share their expertise, experiences, and best practices to keep you informed and empowered. Whether you're looking for industry updates, practical strategies, or real-world perspectives, we bring you valuable conversations designed to enhance your knowledge and support your professional growth. Stay tuned for expert insights straight from the field! Kelly Bilodeau has been a longtime writer for HCPro’s Case Management Monthly.