ALERT: “Pause” on RAC audits of short stays

Yesterday, September 26, 2013, CMS made a major announcement.

For short stays from October 1, 2013 through December 31, 2013 CMS instructed auditors:

  • Not to review claims spanning more than two midnights after  the formal inpatient order “for appropriateness of patient status.”
  • RACs will not review stays less than two midnights.
  • MACs will conduct a “probe” audit of 10—25 claims for each hospital on hospital stays of one midnight or less after the inpatient order.
  • RACs and MACs will not audit CAHs.

The probe audit by the MAC:

  • Will be on a prepayment basis;
  • “Will provide important feedback to CMS for purposes of jointly developing further education and guidance”;
  • Will be the basis for “education” by the MAC if issues are identified;
  • Will be the basis for “follow up” review by the MAC if issues are identified.

Additional audits may be conducted if there are “significant changes in billing patterns for admissions.”

CMS warned that stays of two midnights after the order will not be audited generally but notes:  “If at any time there is evidence of systematic gaming, abuse or delays in the provision of care in an attempt to surpass the 2 midnight presumption” the stay could warrant medical review.

MedManagement areas of concern:

1. Getting it right is important.  A high “error” rate on the probe may (will?) lead to additional audits because CMS is “obligated” to ensure Medicare only pays for medically necessary services.

2. The limitation on auditing is for “appropriateness of patient status.”  As of today it is not clear that auditing of the certification elements is “off limits” as well.

3. RACs are likely to dramatically increase audits of other areas to compensate for decreased “short stay” reviews during this period.

4. There is increased discussion of “patterns of admissions.”  For your own internal monitoring, a worthwhile exercise would be to evaluate actual length of time patients spend in your hospital for highly audited diagnoses (including “observation” time as well as “inpatient” time.)

5. Repeated CMS statements underscore the importance of making the correct determination before the first midnight in order to get the protections of the two midnight presumption where appropriate.  Make sure resources are available to review cases in the evenings and weekends.

On the following pages you will find yesterday’s letter from Marilyn Tavenner to the American Hospital Association followed by questions and answers with respect to the new directive.

For a quick link to the final rule click here.

If you would like to schedule a conference call for an overview of the regulations, please contact Greg Meadows for scheduling. Greg can be reached at 205-970-8818 or at

As we all continue to work through the changes feel free to send us any questions by email.

Email Joan Ragsdale at or Dr. Gregory Palega at

Leave a Reply

Your email address will not be published. Required fields are marked *