Federal Reports

The North Mississippi Medical Center (the Hospital) (operating in Tupelo, Mississippi) complied with Medicare billing requirements for 158 of the 237 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 79 claims, resulting in overpayments of $41,000 for the audit period. Specifically, 4 inpatient claims had billing errors, resulting in overpayments of $12,000, and 75 outpatient claims had billing errors, resulting in overpayments of $29,000. These errors occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors. On the basis of our sample results, we estimated that the Hospital received overpayments of at least $119,000 for the audit period.

CMS implemented the "2-midnight" policy in fiscal year (FY) 2014. The policy establishes that inpatient payment is generally appropriate if physicians expect beneficiaries' care to last at least 2-midnights; otherwise, outpatient payment would generally be appropriate. CMS implemented the 2-midnight policy to address three vulnerabilities in hospitals' use of inpatient and outpatient stays: improper payments for short inpatient stays; adverse consequences for beneficiaries of long outpatient stays, including that they may not have the 3 inpatient nights needed to qualify for skilled nursing facility (SNF) services; and inconsistent use of inpatient and outpatient stays among hospitals. This report follows up on previous OIG work and compares data from the year before and the year after the implementation of the 2-midnight policy.