One-day stays a big reason for excess pay to hospitals, RAC project finds

Medicare's three-year pilot project to audit hospital, physician and other provider payments found that CMS overpaid for care by more than $980 million, thanks largely to poor records, billing errors and medically unnecessary care. One of the most frequently cited reason for excess pay to hospitals: Patients who did not need to be admitted to the hospital.

As Medicare's Recovery Audit Contractor program expands nationwide, one-day hospital stays—considered an indicator that outpatient care may have been appropriate—are a potentially costly target, say industry insiders and revenue experts.

“It's kind of low-hanging fruit,” said Paul Shoemaker, president and chief executive officer of American Hospital Directory, which analyzes Medicare spending. The truncated hospital stays have long invited scrutiny, he said. The HHS' inspector general's office singled out one-day hospital visits for scrutiny as early as 2000. “It's the obvious first step” for auditors, he said.

And one that could be costly. Hospitals face forfeiting Medicare reimbursement for all but the ancillary services for patients who auditors say are improperly admitted, according to the American Hospital Association.

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Top procedures leading to one-day stays

The differences between outpatient and hospital costs

Medicare spent $8.2 billion in fiscal 2008 on patients hospitalized for a single day, nearly one-fifth of the federally funded program's reimbursement for patients sent home after a hospital stay, American Hospital Directory figures show. “It's a significant amount of money at risk,” said Leatrice Ford, the CEO of ConsultCare Partners.

Ford said auditors' criteria for rejecting one-day hospital stays varied under the pilot and it's unknown what percentage of the more than 40,000 successful appeals by providers as of September—or 7.6% of all overpaid bills identified by auditors—were related to one-day hospital stays.

But hospitals can take basic steps to prepare for review of such brief hospital visits, she said. Executives should ensure doctors explicitly order the patient be admitted; set and consistently follow protocol for hospital admission; and compare admission rates for various procedures against national statistics, Ford said.

In California—where Medicare's pilot auditors focused first, along with New York and Florida—audits of one-day hospital stays were “very extensive and very debilitating,” particularly for rural hospitals with fewer patients and lower cash flow, said Patricia Blaisdell, the California Hospital Association's vice president of post-acute care services.

Hospitals are bracing for scrutiny of their hospital admissions. In Tennessee, where auditors are expected to arrive in November, hospitals have been urged to review how frequently patients are admitted for a single day compared with rates nationwide, said David McClure, vice president of finance for the Tennessee Hospital Association.

And at Wayne Memorial Hospital, in Goldsboro, N.C., executives added three registered nurses and hired clinical consultants Executive Health Resources in August 2007 to prepare for the auditors' arrival, said Rebecca Craig, vice president of finance, chief financial officer and corporate compliance officer, for the 267-bed hospital. Physician consultants review hospital admissions to ensure patients rightly belong there, she said. “Our intention is to bill correctly every time,” she said.

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