CMS Set to Resume Audits of Short Inpatient Stays

On September 12, 2016, CMS announced that the BFF-QIOs (KEPRO for areas 2, 3, 4 and Livanta for areas 1 & 5) will resume auditing of 0 and 1 midnight hospital stays. As you will recall, the Two Midnight Rule was implemented October 1, 2013 in attempt to clarify patient status requirements. If a patient is expected to require medically necessary services in the hospital for a period spanning two midnights, an order for inpatient status is appropriate. Conversely, if the patient is not expected to require services for a period spanning two midnights (such as where the patient requires an outpatient surgery even if the patient stays one midnight) or is scheduled for short term diagnostics or monitoring for a period not expected to span two midnights, then outpatient status is generally appropriate. Actual length of stay is not determinative; there are appropriate inpatient stays where the actual stay is less than 2 midnights such as when the patient leaves AMA, recovers more rapidly than expected, is transferred unexpectedly, etc. Similarly, the patient may actually cross two midnights but may be in the hospital for at least a portion of the stay for patient or physician convenience or for social reasons, and inpatient status may not be appropriate. Thus, CMS has targeted for audit those cases where the actual length of stay in inpatient status is 0-1 midnights. For example if a patient is placed in outpatient status on Monday and remains in the hospital until Friday of the same week, but the inpatient order status was not written until Thursday and the patient was discharged Friday, the case is a 1 day stay (1 midnight after the inpatient order) and it is therefore in the pool of cases that CMS will audit. In this example if the inpatient order had been written as late as Wednesday and the patient was discharged on Friday, the inpatient stay would be for 2 midnights or greater, and the case would therefore not be in the targeted pool for audit of short inpatient stays.

Hospitals have started receiving record request letters from KEPRO and Livanta for chart review. QIO reviews are limited to a six-month look-back period from the date of admission. This is designed to allow providers receiving denial for Part A claims to have sufficient time to rebill under Medicare Part B. QIOs will request a minimum of 10 records in a 30-45 day period. The maximum number of record requests will be 30 records in 30 days. QIOs will rate and stratify providers for education and corrective action based upon the results of the completed initial patient status claim reviews. One-on-one provider education is available claim-by-claim. At the direction of CMS, the QIO will refer providers with inpatient status claims identified as having “major concerns” to the Recovery Audit Contractor to implement provider-specific audits.

Though the “Two Midnight Rule” has been in effect for nearly three years, there remains great confusion about what documentation is required to support an inpatient order. Because the record must support the expectation of the ordering physician that the patient requires care in the hospital setting for a period expected to span two midnights it is critical to understand the importance of documentation about both the patient’s severity of illness and about the treatment plan needed to address the patient’s condition. When first implemented, the Two Midnight Rule required a physician certification that the patient was expected to require care spanning two midnights. Effective January 1, 2015 the certification requirement for acute care admissions was withdrawn, but of course, there remains a requirement that the clinical documentation provide evidence that two midnight stay is required. It is vitally important to engage physician advisor resources to review the clarity of the clinical documentation on an internal audit basis and to provide feedback and resources to medical staff in order to avoid denials attributable to weak documentation. An investment of time and resources to understand documentation vulnerabilities can provide significant returns in reducing denials and appeals.

One final note on CMS activity: CMS has announced that there will once again be an opportunity to settle pending Medicare appeals. No details have yet been released, but the details should be forthcoming shortly. The announcement was posted on September 28 in the following link:
(scroll past “End of Temporary Suspension of the BFFCC-QIO Short Stay Reviews” as well as “Update 12/31/2015” to view “Hospital Appeals Settlement Updated 9/28/2016”). We will all stayed tuned to the CMS guidance on audits and appeals.

If you would like to discuss this review or have questions about this newsletter, contact Ann M. Purdy at As always, we welcome the opportunity to talk with you and to provide assistance.

We will stay tuned to the CMS guidance on audits and appeals so we can keep you informed as news is released.

Joan Ragsdale, J. D.
Chief Executive Officer
EdiPhy Advisors and MedManagement LLC
1500 Urban Center Dr., Suite 325
Birmingham, AL 35242

Client Newsletter October 4, 2016