OIG Announces Resumption of Medicare Inpatient Short Stay Audits

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In its November 2020 Work Plan update, OIG announced it will begin auditing short stay inpatient hospital claims under the Two Midnight Rule, and when appropriate, recommend overpayment collections. OIG does not specify the dates of service it plans to review, so it is possible that OIG could review short stay claims with dates of service prior to November 2020. Previously, OIG had stated that the agency would not audit short stays after the implementation of the Two Midnight Rule, effective October 1, 2013.

OIG’s previous position of not auditing short stay inpatient hospital claims after October 1, 2013 was consistent with CMS’s limited review of such claims under the Two Midnight Rule. However, effective November 2020, OIG will resume audits of short stay claims under the Two Midnight Rule to determine whether inpatient claims with short lengths of stay were incorrectly billed as inpatient and should have been billed as outpatient or outpatient with observation. OIG also plans to review policies and procedures for enforcing the Two Midnight Rule at the administrative level and contractor level. In the announcement, OIG noted that prior agency audits, such as OIG Medicare Compliance Reviews, identified millions of dollars in overpayments for inpatient claims with short lengths of stay which should have been billed as outpatient claims.

The OIG Workplan announcement is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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