At its public meeting last week, the Medicare Payment Advisory Commission (MedPAC) looked at challenges surrounding payments to providers for short hospital stays.
A presentation delivered by MedPAC’s staff looked at the profitability and growing frequency of one-night admissions; the impact of Recovery Audit Contractor (RAC audit) activities; Medicare beneficiary financial liabilities associated with observation stays; the controversial two-midnight rule; and possible ways to address these continuing problems.

MedPAC did not offer any formal recommendations during the meeting.

When the Centers for Medicare & Medicaid Services (CMS) proposed this year’s Medicare inpatient prospective payment system regulation in May, it invited interested parties to offer suggestions on how to address the short-stay issue.  In a letter that addressed a wide range of subjects, the National Association of Urban Hospitals (NAUH) offered the following recommendations on Medicare hospital short stay payment policy.

In NAUH’s view, a Medicare short stay begins with a physician’s initial diagnosis that a patient needs to be admitted to the hospital as an inpatient and is expected to remain at least two midnights or more.  Then, when the patient’s stay is ultimately shorter, NAUH believes that stay should be classified as a short stay for Medicare payment purposes.  A short stay should be reimbursed by Medicare based on Medicare transfer reimbursement policy – that is, for this day, Medicare should pay the hospital twice the per diem rate for the applicable DRG’s average length of stay.  This proposal is based on the generally accepted view that the greatest investment of resources for patient care occurs during the very beginning of a patient’s stay in the hospital and that even in a short stay, a hospital is expending comparable resources on patient care during that first day or two as it does when a patient stays longer.  This is the basis for current Medicare transfer payment policy and NAUH believes it should be the basis for Medicare short hospital stay payment policy as well.  Further, hospitals that serve large numbers of low-income patients and have medical education programs should not be put at a disadvantage when patients just have short stays, so NAUH further proposes that they receive Medicare DSH and medical education payments for these short stays as well.

NAUH’s entire letter to CMS can be found here.

See the MedPAC presentation “Hospital Short Stay Policy Issues” here.