Protect your hospital from one-day stay investigations

In light of the government’s burgeoning investigation into "one-day stays" and other transfer and discharge issues, health care attorney Linda Baumann says it is critical for hospitals to review their policies and procedures, and consider auditing in this area to minimize the risk of significant exposure.

According to Baumann, of the Washington, DC, office of Reed Smith, hospitals have struggled with the Centers for Medicare & Medicaid Services’ (CMS) definition of "inpatient" for years. "The judgment as to whether or not to admit a patient to a hospital often requires complex clinical decision making, and the applicable regulations are ambiguous, leaving substantial discretion to the admitting physician," she explains.

Further complicating matters is the fact that until very recently, almost no additional guidance was available from CMS, the fiscal intermediaries, or the peer review organizations (PROs, recently renamed quality improvement organizations), she adds.

Here are six steps hospitals can take to mitigate the potential damage of these looming investigations:

  • Update policies and procedures.

"Hospitals clearly need to ensure that their procedures related to billing for patients who spend less than 24 hours in the hospital are updated to reflect current laws and regulations," says Baumann. She says affected hospital staff should review all correspondence and other publications from CMS, the intermediary, and the PRO on this issue, including those documents pertaining to observation status as well as criteria for inpatient admission.

Most of these organizations have issued various documents on this subject over the past year, including newsletter articles, Q&As, utilization tip sheets, and other checklists that can help hospital personnel make the often difficult judgments as to whether a claim should be billed as an inpatient admission, she adds.

  • Educate physicians.

According to Baumann, physician education is particularly important since physician judgements and documentation are essential to justify an inpatient claim for a one-day stay. Several PROs publish guidance materials specifically directed at physicians, she notes.

  • Contact PRO or intermediary for advice when necessary.

Baumann says that if questions remain with regard to a particular claim, staff should try contacting the PRO and/or the intermediary for advice. Staff should also document the person contacted and the advice received, she adds. Baumann also notes that PRO staff reportedly have been increasingly responsive to queries on this subject in light of its importance to the Payment Error Protection Program.

  • Establish an audit schedule.

Baumann reports that a number of hospitals are so concerned with this issue they have implemented procedures to require pre-bill manual review of all one-day-stay claims. "Depending on your facility’s size and resources, review of all such claims may not be feasible," she says. "Nevertheless, monitoring a certain number of these cases on a regular basis before they are billed would seem advisable."

At a minimum, Baumann says this type of claims should be audited at least once a year and perhaps more often depending on the error rate identified. If the current error rate is high, she says hospitals may want to consult legal counsel and consider a retroactive audit.

  • Stay alert to government inquiries.

"Stay on the alert for indications that the government is investigating your facility’s prior-year claims for one-day stays," Baumann advises. She says any hospital employee who is contacted or receives a request for records from the government on this issue should be instructed to promptly contact their supervisor and/or the compliance officer.

  • Perform your own analysis of alleged errors.

Any "errors" subsequently identified by the government should be reviewed closely since these may be subject to challenge, Baumann says. For example, she says clinical standards with regard to certain medical conditions and procedures may have changed, and cases that should be billed as outpatient in 2002 may well have qualified as inpatient claims in prior years.

"If the error rate identified by the government is low or if you are able to reduce it sufficiently, the matter may end with the return of identified overpayments," says Baumann. However, if a substantial error rate leads to government allegations of false claims liability, she says numerous potential defenses can be considered. "With so many government agencies focused on this issue, it will be important to keep one-day stays on the radar screen for the foreseeable future," warns Baumann.