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Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

CONSECUTIVE MEDICARE STAYS 


INVOLVING INPATIENT AND 


SKILLED NURSING FACILITIES


Daniel R. Levinson


Inspector General 


June 2007 


OEI-07-05-00340

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Office of Inspector General 
 http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 

as amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors 

in carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations. These assessments help reduce waste, 

abuse, and mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on 

significant issues. Specifically, these evaluations focus on preventing fraud, waste, or 

abuse and promoting economy, efficiency, and effectiveness in departmental programs. 

To promote impact, the reports also present practical recommendations for improving 

program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 

and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 

convictions, administrative sanctions, or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support in OIG's internal operations. OCIG imposes program exclusions and civil 

monetary penalties on health care providers and litigates those actions within HHS. 

OCIG also represents OIG in the global settlement of cases arising under the Civil False 

Claims Act, develops and monitors corporate integrity agreements, develops compliance 

program guidances, renders advisory opinions on OIG sanctions to the health care 

community, and issues fraud alerts and other industry guidance. 
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Δ EXECUTIVE SUMMAR Y 

OBJECTIVES 

To assess services provided to beneficiaries with consecutive Medicare 

stays involving inpatient and skilled nursing facilities (SNF) to 

determine whether: 

1. problems existed with the quality of patient care, 

2. services were fragmented across consecutive stay sequences, 

3. care was medically necessary and appropriate, and 

4. documentation was sufficient to determine appropriateness of 

 care. 

BACKGROUND 

In June 2005, the Office of Inspector General issued a report entitled 

“Consecutive Medicare Inpatient Stays” (OEI-03-01-00430) which found 

that Medicare paid an estimated $267 million for sequences of Medicare 

inpatient stays in fiscal year 2002 that were associated with 

quality-of-care problems and/or fragmentation of services. This current 

study is similar to that 2005 study but assesses stay sequences that 

include at least one SNF stay. For purposes of this review, we defined 

the term “consecutive stay sequence” as a sequence of three or more 

individual inpatient and SNF stays for the same Medicare beneficiary 

for which the admission date for each successive stay occurred within 

1 day of the discharge date for the preceding stay. 

Fiscal intermediaries ceased performing routine medical reviews of 

inpatient hospital services in 1982, when the organizations now known 

as Quality Improvement Organizations (QIO) were created. These 

organizations were responsible for routinely reviewing items or services 

provided to Medicare beneficiaries to determine whether the quality of 

services met professionally recognized standards of care. However, 

QIOs do not currently conduct routine case reviews of sequences of 

services for the purpose of identifying potential quality-of-care concerns. 

We reviewed calendar year (CY) 2004 Medicare inpatient and SNF 

services and identified 489,730 consecutive stay sequences. We selected 

a stratified-cluster sample of 140 consecutive stay sequences. Three 

internal medicine physicians with geriatric experience reviewed these 

medical records and determined whether care met professionally 

recognized standards of care, such as standards relating to quality of 

care, fragmentation of services, and medically necessary and 

appropriate admissions, treatments, and discharges. They made these 

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EXE CUTIVE S U MMAR Y 

determinations both for the consecutive stay sequences and for the 

individual stays within the sequences. 

FINDINGS 

Thirty-five percent of consecutive stay sequences were associated 

with quality-of-care problems and/or fragmentation of services. 

Quality-of-care problems were defined in this review as medical errors, 

accidents, or patient care that did not meet professionally recognized 

standards which significantly contributed to the need for multiple stays. 

Fragmentation of services, in this review, was defined as cases for 

which care provided across consecutive stay sequences may have been 

necessary and appropriate but should have been consolidated into fewer 

stays. Medicare paid an estimated $4.5 billion in CY 2004 for 

consecutive stay sequences associated with quality-of-care problems 

and/or fragmentation of services. 

Eleven percent of individual stays within consecutive stay 

sequences involved problems with quality of care, admissions, 

treatments, or discharges. Medicare paid an estimated $1.4 billion in 

CY 2004 for individual stays associated with quality-of-care problems 

and stays associated with medically unnecessary admission, 

unnecessary treatment, and inappropriate treatment, care setting, and 

discharge. 

Twenty percent of individual stays lacked documentation sufficient for 

reviewers to determine whether appropriate care was rendered. 

Reviewers noted that medical documentation that facilities submitted 

for 20 percent of individual stays was not sufficient to enable reviewers 

to render a judgment as to whether the admission, treatment, and 

discharge were appropriate. Medicare paid an estimated $3.1 billion for 

individual stays associated with insufficient documentation. 

RECOMMENDATIONS 

In this report, medical review of consecutive stay sequences revealed 

instances of problems with quality of patient care and fragmentation of 

health care services across multiple stays. Physician reviewers’ 

examination of medical records for consecutive stays sequences enabled 

the reviewers to analyze and identify the broader impacts of 

quality-of-care problems and fragmentation of services beyond the level 

of an individual inpatient stay. 

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EXE CUTIVE S U MMAR Y

We recommended in our June 2005 report “Consecutive Medicare 

Inpatient Stays” (OEI-03-01-00430) that CMS (1) direct QIOs to monitor 

the quality of inpatient services provided within sequences of 

consecutive Medicare inpatient stays, (2) encourage QIOs, as 

appropriate, to monitor the medical necessity and appropriateness of 

inpatient services provided within these sequences of consecutive 

Medicare inpatient stays, and (3) reinforce efforts to educate providers 

about the appropriate uses of skilled nursing swing beds. 

The findings from this report are consistent with the quality-of-care 

problems and fragmentation of care that we found in our June 

2005 report. Therefore, we recommend that CMS: 

• Direct QIOs to monitor for fragmentation and quality of care across 

consecutive stay sequences and the quality of care provided during 

the individual stays within those sequences. 

• Encourage both QIOs and fiscal intermediaries, as appropriate, to 

monitor the medical necessity and appropriateness of services 

provided within these consecutive stay sequences. 

• Collaborate with providers to improve systems of care based on 

review results. 

• Reinforce efforts to educate medical providers on their 

responsibility for ensuring that medical records provide such 

information as may be necessary to determine the quality, medical 

necessity, and medical appropriateness of care provided, thus 

supporting the Medicare payments due. 

AGENCY COMMENTS 

CMS concurred with our recommendations. The agency noted that it 

will place growing emphasis on continuity-of-care issues in all settings 

and on measuring the rate of events such as hospital readmissions. 

CMS is also considering incorporating interventions in the upcoming 

Ninth Statement of Work for the QIO program. The agency also noted 

its efforts with the American College of Physicians to increase 

understanding of the “medical home” concept and the agency is 

considering folding this concept into the QIO program. CMS will also 

ask QIOs to categorize complaints by type to provide better data on 

lapses in care continuity with an emphasis on documentation. CMS’s 

technical comments were incorporated into the report. 

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Δ T ABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................ 11

Thirty-five percent of consecutive stay sequences were 

associated with quality-of-care problems and/or fragmentation 

of services ............................................ 11

Eleven percent of individual stays within consecutive stay 

sequences involved problems with quality of care, admissions, 

treatments, and discharges .............................. 13

Twenty percent of individual stays lacked documentation 

sufficient for reviewers to determine whether appropriate care 

was rendered.......................................... 15

RECOM M E NDATI O NS ..................................... 17

Agency Comments...................................... 17

APPENDIXES ............................................. 19

A: Estimates and Confidence Intervals for Consecutive Stay 

Sequences ......................................... 19

B: Estimates and Confidence Intervals for Individual 

Stays ............................................. 20

C: Estimates and Confidence Intervals for Individual 

Stays With Inadequate Documentation .................. 21

D: Agency Comments................................... 22

ACKN O W LEDGMENTS .................................... 24
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Δ INTRODU C TION 

OBJECTIVES 

To assess services provided to beneficiaries with consecutive Medicare 

stays involving inpatient and skilled nursing facilities (SNF) to 

determine whether: 

1. problems existed with the quality of patient care, 

2. services were fragmented across consecutive stay sequences, 

3. care was medically necessary and appropriate, and 

4. documentation was sufficient to determine appropriateness of 

 care. 

BACKGROUND 

In June 2005, the Office of Inspector General (OIG) issued a report 

entitled “Consecutive Medicare Inpatient Stays” (OEI-03-01-00430). 

Medical reviewers determined that 20 percent of consecutive stay 

sequences in fiscal year 2002 were associated with (1) quality-of-care 

problems that significantly contributed to the need for multiple 

inpatient stays and/or (2) fragmentation of health care services across 

multiple inpatient stays. In that study, OIG defined consecutive 

inpatient stays as “three or more individual Medicare inpatient facility 

stays for the same Medicare beneficiary, where the admission date for 

each successive stay occur[red] within 1 day of the discharge date for 

the preceding stay.”1 Further, OIG defined fragmentation in this study 

as a pattern of unnecessary discharges or transfers across multiple stay 

sequences when the same levels and types of service could have been 

consolidated into fewer stays. The prior OIG study sampled from a 

population of 63,345 sequences, for which Medicare paid approximately 

$1.9 billion. These sequences specifically excluded skilled nursing 

facility (SNF) stays. OIG estimated that Medicare paid $267 million for 

the consecutive stay sequences with quality-of-care problems and/or 

fragmentation. Additionally, 10 percent of the individual stays that 

made up the sequences involved problems with the quality of patient 

care, for which Medicare paid an estimated $171 million. 

In the current study, OIG examined consecutive stay sequences that 

included both inpatient stays and SNF stays. The addition of SNF stays 

1 Inpatient facility stays included acute hospitals, rehabilitative hospitals, psychiatric 

hospitals, and skilled nursing swing beds. 

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INTROD UCT ION

increased the number of consecutive stay sequences and dollars 

associated with these sequences by approximately eight times. 

Medicare Part A payments for stays in all facility types included in this 

review totaled $120 billion in calendar year (CY) 2004, the most recent 

year for which data were available at the start of this study. Nearly 

$16.7 billion of these payments were for 489,730 consecutive stay 

sequences, accounting for 1,981,459 individual stays. (See Table 1.) 

Table 1: Medicare Payments for Inpatient and Skilled Nursing Facility Stays, 

CY 2004 

Type of Facility Stay 

Consecutive Stays All Stays 

Number of 

Stays 

Medicare 

Payments 

Number of 

Stays 

Medicare 

Payments 

Inpatient 

Acute Care Hospital 

Rehabilitation Unit 

Skilled Nursing Swing Beds 

Psychiatric Unit 

Long Term Hospital 

Critical Access Hospitals 

Other 

935,508 

72,715 

43,286 

31,067 

29,409 

29,059 

591 

$8,952,499,534 

$991,306,176 

$215,388,291 

$257,771,449 

$946,601,983 

$152,308,409 

$4,440,495 

12,123,844 

505,102 

134,428 

515,867 

125,548 

288,220 

6,803 

$93,761,023,094 

$6,569,321,017 

$660,605,134 

$3,276,644,045 

$3,588,510,587 

$1,141,454,635 

$67,875,555 

SNF Skilled Nursing Facility 839,824 $5,161,047,560 1,791,607 $11,328,459,442 

Totals 1,981,459 $16,681,363,897 15,491,419 $120,393,893,509 

Source: OIG analysis of Medicare claims data, 2006. 

Medicare Payment Systems 

Medicare Part A provides insurance for inpatient care in acute care and 

other types of hospitals and in SNFs. All Medicare payment amounts 

presented in this report reflect payments made from the Medicare 

Hospital Insurance Trust Fund and do not include any payments from 

beneficiaries. Medicare beneficiaries are responsible for payment of 

deductibles and coinsurance. Medicaid or private insurance policies 

may cover these costs. The following payment systems are in place for 

the Medicare-covered stays in our population. 

Acute care hospitals. Section 1886(d)(1)(A) of the Social Security Act (the 

Act) established a prospective payment system (PPS) for Medicare acute 

care hospital services effective October 1, 1983. Under this system, the 

Centers for Medicare & Medicaid Services (CMS) pays hospitals a fixed, 

predetermined amount for each acute care stay, depending on the 

payment category code (i.e., diagnosis related group (DRG)) assigned to 

the stay. 

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INTROD UCT ION

Rehabilitation units in acute care hospitals. Section 1886(j) of the Act 

requires a PPS to reimburse care in inpatient rehabilitation units. This 

requirement became effective October 1, 2002. 

Swing beds in acute care hospitals. Section 1888(e) of the Act requires 

that skilled nursing swing beds be incorporated into the SNF PPS. This 

requirement became effective July 1, 2002. Swing beds are located in 

hospitals that have special approval to use these beds, as needed, to 

provide either acute care or skilled nursing care. 

Psychiatric hospitals. CMS published its final rule on a per diem PPS for 

inpatient psychiatric facilities in 69 Federal Register 66922 (2004). 

This requirement became effective on January 1, 2005. 

Long term care hospitals. CMS published its final rule on a per discharge 

PPS approach for long term care hospitals with a DRG-based patient 

classification system that reflects the differences in patient resources 

and costs in long term care hospitals in 71 Federal Register 

27798 (2006). This requirement became effective October 1, 2002, and 

was fully implemented on October 1, 2006. 

Critical access hospitals. Critical access hospitals are paid 101 percent of 

their reasonable costs. 

Skilled nursing facilities. Section 1888(e) of the Act required a per diem 

PPS for SNFs. This requirement became effective July 1, 1998. 

Payment is adjusted for case mix and geographic variation in wages. 

Conditions of Payment for Beneficiary Services 

Section 1156(a) of the Act states “[i]t shall be the obligation of any 

health care practitioner and any other person (including a hospital or 

other health care facility, organization, or agency) who provides health 

care services for which payment may be made (in whole or in part) 

under this Act, to assure, to the extent of his authority that services or 

items ordered or provided by such practitioner or person to beneficiaries 

and recipients under this Act—(1) will be provided economically and 

only when, and to the extent, medically necessary; (2) will be of a 

quality which meets professionally recognized standards of health care; 

and (3) will be supported by evidence of medical necessity and quality in 

such form and fashion and at such time as may reasonably be required 

by a reviewing peer review organization in the exercise of its duties and 

responsibilities.” 

Federal regulation defines professionally recognized standards of health 

care as “Statewide or national standards of care . . . that professional 

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INTROD UCT ION

peers . . . recognize as applying to those peers practicing or providing 

care within a State.”2 For the purposes of this review, standards of care 

involved such issues as quality of care; fragmentation of services; and 

medically necessary and appropriate admissions, treatments, and 

discharges. Additionally, section 1862(a)(1)(A) of the Act limits 

Medicare coverage to services that are medically necessary. Finally, 

section 1833(e) of the Act requires that providers furnish “such 

information as may be necessary in order to determine the amounts 

due” to receive Medicare payment. Thus, Medicare should pay only for 

services that meet professionally recognized standards of care, are 

medically necessary, and are sufficiently documented. 

Monitoring Responsibilities 

Fiscal intermediaries. Pursuant to section 1816(a) of the Act and 

42 CFR § 421.100, CMS contracts with fiscal intermediaries to pay 

claims for health care services provided to beneficiaries by hospitals and 

other inpatient facilities and to ensure that the services rendered by 

these facilities are covered by the program. Fiscal intermediaries are 

also responsible for ensuring that services are medically necessary and 

reasonable and are billed and paid appropriately, as required by 

42 CFR § 421.100 and Chapter 1, section 1.2, of the “Medicare Program 

Integrity Manual.” 

Quality Improvement Organizations. Under the authority of the Peer 

Review Improvement Act of 1982, CMS contracts with groups of 

licensed physicians in each State to ensure that quality, effective, 

efficient, and economical hospital care is provided to Medicare 

beneficiaries. Section 1154(a) of the Act stipulates that Peer Review 

Organizations, now called Quality Improvement Organizations (QIO), 

must review health care services rendered by all types of Medicare 

providers to ensure that the quality of services meets professionally 

recognized standards of health care. QIOs are also responsible for 

ensuring that acute care hospital services provided to Medicare 

beneficiaries are medically necessary and reasonable and are billed 

correctly. 

Section 1886(f)(2) of the Act provides specific actions that the Secretary 

of the Department of Health and Human Services may take when QIOs 

determine that a PPS hospital takes an action with the intent of 

2 42 CFR § 1001.2(d). 

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INTROD UCT ION 

circumventing the PPS. Actions circumventing the PPS could include 

admitting patients unnecessarily, unnecessary multiple admissions of 

the same individual, or engaging in inappropriate practices designed to 

circumvent the PPS. Section 4255(C) of the “Quality Improvement 

Organization Manual” specifies prohibited actions that are considered 

circumventions of the PPS, including inappropriate discharges, 

inappropriate transfers, and inappropriate or early readmissions. If a 

QIO establishes that an acute care hospital has been taking actions 

with the intent of circumventing the PPS, the QIO may deny 

admissions, initiate a sanction report and recommendation, or refer the 

case to OIG for potential termination of its Medicare provider 

agreement. QIOs are required to conduct specific types of case reviews 

to fulfill mandatory requirements, including reviews of beneficiary 

complaints, alleged antidumping violations, and gross and flagrant 

violations.3 Some of the triggers of case reviews (e.g., beneficiary 

complaints) require the QIO to review quality of care. 

QIOs do not currently conduct routine case reviews of sequences of 

inpatient hospital services for the purpose of either identifying potential 

quality-of-care concerns or potential circumventions of the PPS. 

Related Office of Inspector General Work 

In addition to the 2005 report, OIG has conducted a number of other 

reviews of consecutive Medicare stays, including studies to determine 

whether acute care hospitals were engaged in activities to circumvent 

PPS rules. These reviews have focused on the implementation of 

Medicare’s post-acute care transfer policy and readmissions to the same 

acute care hospital on the same day. In a report issued in August 2002, 

“Review of Medicare Same-Day, Same-Provider Acute Care 

Readmissions in Pennsylvania During Calendar Year 1998” 

(A-03-01-00011), OIG examined a sample of medical records and found 

that 63 of 98 readmissions were billed incorrectly because beneficiaries 

were, in fact, admitted to nonacute care units within the hospitals or 

were never actually discharged from the initial admissions. 

In a February 2000 OIG report, “Analysis of Readmissions Under the 

Medicare Prospective Payment System for Calendar Years 1996 and 

1997” (A-14-99-00401), OIG identified a large percentage of cases in 

which beneficiaries had three or more multiple, continuous 

3 42 CFR § 1004.1. 

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INTROD UCT ION

readmissions to the same hospitals. OIG made several 

recommendations, including that CMS review the claims for these 

multiple, continuous readmissions. 

METHODOLOGY 

The methodology for this evaluation was composed of two parts: (1) an 

analysis of Medicare claims for all CY 2004 inpatient and SNF services 

and (2) a medical record review of a sample of inpatient and SNF stays. 

Analysis of Medicare Claims 

We accessed CMS’s Medicare Provider Analysis and Review (MedPAR) 

file to analyze data for all Medicare inpatient and SNF stays in 

CY 2004, the most recent data available at the time of our review.4 

We defined Medicare consecutive stay sequences as three or more 

individual stays including at least one inpatient facility stay (i.e., acute 

care, rehabilitative, skilled nursing swing bed, psychiatric, long term 

hospital, critical access hospitals, or other type of inpatient facility) and 

at least one SNF stay for the same Medicare beneficiary for which the 

admission date for each successive stay occurred on the same day or 

within 1 day of the discharge date of the preceding stay. In each 

consecutive stay sequence, the first stay terminated after 

January 1, 2004, and the last stay terminated before 

December 30, 2004. See Figure 1 (next page) for an example of a 

consecutive stay sequence. 

4 The MedPAR file is made up of final action records for all Medicare beneficiaries using 

inpatient facility services. Each record summarizes services provided to a beneficiary 

during an inpatient facility stay from the time of admission to the time of discharge. The 

file is created quarterly from CMS’s National Claims History 100 Percent Nearline File. 

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INTROD UCT ION 

Figure 1: Example of One Consecutive Stay Sequence 

Hospital Stay 

Discharged From SNF 

and Admitted to Hospital 

(Within 1 Day) 

Discharged From Hospital 

and Admitted to SNF 

(Within 1 Day) 

Hospital Stay 

SNF Stay 

Sample Design for Medical Review 

The sampling frame for this evaluation consisted of sequences of three 

or more consecutive inpatient and SNF stays for the same beneficiary. 

Analysis of CY 2004 MedPAR data indicated that Medicare payments 

for consecutive stay sequences, including both inpatient and SNF stays, 

ranged from a low of $1 to a high of $1,262,242. Therefore, we stratified 

the population of 489,730 consecutive stay sequences based on Medicare 

payment amounts of low (less than $30,000), medium (between 

$30,000 and $55,999), and high ($56,000 or more). For sampling 

purposes, each consecutive stay sequence was considered a cluster, or 

grouping, of individual stays. As shown in Table 2, we selected a 

stratified-cluster sample of 140 consecutive stay sequences 

(580 individual stays). 

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INTROD UCT ION

Table 2: Sampling Frame Values and Sample Sizes for Medical Review by 

Strata 

Stratum 

Number 

Stratum 

Definition 

Total Medicare 

Payments in 

Sampling Frame 

Number of 

Sequences in 

Sampling 

Frame 

Number of 

Sequences in 

Sample Review 

Number of 

Individual 

Stays in 

Sample 

Review 

1 

Sequences with 

Medicare 

payments less 

than $30,000 

$5,359,801,140 276,612 45 159 

2 

Sequences with 

Medicare 

payments from 

$30,000 to 

$55,999 

$6,262,248,663 157,338 50 201 

3 

Sequences with 

Medicare 

payments of 

$56,000 or more 

$5,059,314,094 55,780 45 220 

Totals $16,681,363,897 489,730 140 580 

Source: OIG analysis of Medicare claims data, 2006. 

Data Collection for Medical Review 

Between March 1 and May 31, 2006, an independent medical review 

contractor collected medical records from inpatient facilities and SNFs. 

This contractor’s physicians performed medical reviews of these records 

from April 1 to August 31, 2006. 

Medical records. We identified the names and addresses of the facilities 

that billed Medicare for all stays in each sample consecutive stay 

sequence. We then prepared a series of letters requesting copies of 

electronic and paper-based medical records in support of each stay in 

the sample consecutive stay sequences, and the contractor mailed these 

medical record requests to inpatient facilities and SNFs. The contractor 

received medical records for all 140 sampled consecutive stay sequences 

(579 individual stays), for a 100-percent consecutive stay sequence 

response rate.

5 

5 The medical record for one individual stay was not received. The Medicare payment for 

this stay was $0. The physician medical reviewer was able to render conclusions about 

this sequence without this particular stay. Neither the stay nor the sequence was 

included in the estimates because of the omission. 

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INTROD UCT ION

Medical review. The contractor employed three physicians of internal 

medicine with geriatric medical experience to review the medical 

records for the sampled consecutive stay sequences. These reviewers 

used a medical review instrument that OIG and the contractors jointly 

developed that was pretested on 10 sample consecutive stay sequences 

prior to the review of the full sample. The reviewers answered specific 

questions pertaining to each individual stay in the sampled consecutive 

stay sequences. Then, to analyze the nature of these stays, the 

reviewers answered questions about each sequence of stays in its 

entirety as a single episode of care. The medical review instrument 

enabled the reviewers to explain their responses in narrative form. 

Issues for medical review. The reviewers first reviewed the clinical 

records for each individual stay in the sample of consecutive stay 

sequences to determine whether: 

• there were problems with the quality of patient care during 

the stay (e.g., care that did not meet professionally 

recognized standards, medical errors, or accidents); 

• the care setting was medically appropriate; 

• the admission and treatment were medically reasonable and 

necessary; 

• the treatment provided during the stay was appropriate to the 

type of unit or hospital where it occurred; and 

• the patient was discharged or transferred appropriately. 

The reviewers then considered each sequence of stays as a whole and 

used their clinical judgment to determine whether: 

• problems with quality of care significantly contributed to the 

need for multiple stays in the sequence, 

• services were fragmented across multiple stays in the 

sequence, and 

• an inappropriate discharge significantly contributed to the 

need for multiple stays in the sequence. 

Data Analysis 

Medical review results. We aggregated the medical review results to 

identify the proportion of consecutive stay sequences, and individual 

stays within those sequences, that physicians cited for quality-of-care 

problems, fragmentation of care, medically inappropriate care setting, 

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INTROD UCT ION 

medically unnecessary admission, medically unnecessary or 

unreasonable treatment, treatment that was not appropriate to the type 

of setting where it occurred, or inappropriate discharge. We analyzed 

the proportion of stays cited for a particular problem by facility type (no 

results found). We estimated total Medicare payments associated with 

these consecutive stay sequences and individual stays. 

We used SUDAAN software to produce weighted estimates of 

proportions and total payments by error category. These estimates 

reflect the complex sample design. Point estimates and confidence 

intervals for all statistics presented in the findings of this report are 

provided in Appendixes A, B, and C. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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ΔF I NDING S FINDINGS 

Thirty-five percent of consecutive stay 

sequences were associated with quality-of-care 

problems and/or fragmentation of services 

The majority of reviewed Medicare 

consecutive stay sequences were 

medically reasonable and 

necessary. However, reviewers 

determined that 35 percent of consecutive stay sequences in 

CY 2004 were associated with (1) quality-of-care problems that 

significantly contributed to the need for multiple stays and/or 

(2) fragmentation of health care services across multiple consecutive 

stays in a sequence. Quality-of-care problems were defined in this 

review as medical errors, accidents, or patient care that did not meet 

professionally recognized standards. Fragmentation of services in this 

review was defined as a pattern of unnecessary discharges or transfers 

across multiple stay sequences when the same levels and types of 

service could have been consolidated into fewer stays. Medicare paid an 

estimated $4.5 billion in CY 2004 for consecutive stay sequences 

associated with quality-of-care problems and/or fragmentation of 

services. This dollar figure represents 27 percent of the total Medicare 

payments in CY 2004 for consecutive stay sequences involving both 

inpatient and SNF stays. See Appendix A for point estimates and 

confidence intervals. 

Twenty-three percent of consecutive stay sequences were associated with 

quality-of-care problems that contributed to multiple stays 

Medicare paid an estimated $2.7 billion for consecutive stay sequences 

that were associated with quality-of-care problems. Quality-of-care 

problems that reviewers found included medical errors, accidents, 

failure to treat patients in a timely manner, inadequate monitoring and 

treatment of patients, inadequate care planning, and inappropriate 

discharges. 

Some examples of quality-of-care problems identified by reviewers 

include the following: 

• A patient known to have aspiration problems aspirated a thin 

liquid that a nursing student accidentally provided to him. The 

patient was later transferred to a specialty hospital for 

rehabilitation. Several more transfers followed, including moves 

to a SNF, an acute care hospital, and finally back to a SNF. Had 

the nursing student not made the error in providing the patient 

the thin liquid, it is unlikely the patient would have required 

multiple stays. 

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F I NDING S 

• A patient suffered a stroke and was admitted to an acute care 

hospital. Later, he was discharged to a SNF. The SNF staff 

failed to adequately monitor the patient’s blood-thinning 

medication. The patient had to be transferred to an emergency 

room, where he was found to have gastrointestinal bleeding and 

abnormal clotting because of the blood-thinning medication. 

Had the SNF staff adequately monitored the patient’s 

medication, the complications may have been avoided. 

• A patient was admitted to an acute care hospital and later 

transferred to a SNF without adequate monitoring of blood 

sugars to ensure stability. The SNF was not alerted that closer 

than usual monitoring was advisable. The patient’s low blood 

sugar was mismanaged and the patient’s condition was 

compounded because a transfer back to the hospital emergency 

department was delayed. Had the blood sugar been managed 

appropriately during the first stay, one or more stays could have 

been avoided. 

Twenty percent of consecutive stay sequences were associated with 

fragmentation of services across multiple stays 

Medicare paid an estimated $2.7 billion for consecutive stay sequences 

that were associated with fragmentation of care.6 Fragmentation can 

result from medical mistakes or inappropriate transfers or discharges. 

Reviewers found fragmentation in many consecutive stay sequences 

involving both rehabilitation units and SNFs. Typically, patients who 

were discharged from acute care hospitals to rehabilitation units during 

a sequence of stays were later discharged directly to SNFs. A reviewer 

commented that transfers and discharges “. . . can be potentially 

inappropriate, specifically when dealing with physical and occupational 

rehabilitation.” Rehabilitation requires a patient who is alert, 

motivated to work hard, and physically capable of at least 3 hours of 

rehabilitation every day. The vast majority of patient records reviewed 

indicated that the patients lacked one or more of these prerequisites. 

6 Because some sequences were associated with both quality-of-care problems and 

fragmentation of services, the sum of the dollars paid in each subgroup ($2.7 billion and 

$2.7 billion = $5.4 billion) exceeds the total ($4.5 billion). See Appendix A for overlapping 

projections. 

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F I NDING S 

Thus, the most appropriate transfer from the acute care hospital would 

have been directly to a SNF. 

Some examples of fragmentation identified by reviewers include the 

following: 

• A patient who had suffered a stroke had stays in three separate 

facilities—an acute care hospital, a rehabilitation unit, and a 

SNF. Both admissions subsequent to the acute care hospital 

stay were for rehabilitation. The reviewer noted, “I believe the 

same outcome could have been achieved had the patient been 

directly transferred to a SNF . . . .” 

• After a stay in an acute care hospital for abdominal surgery 

complicated by heart rhythm problems, respiratory failure, and 

antibiotic-induced diarrhea, a patient was discharged to a 

rehabilitation unit. Because the patient was not making 

progress, the patient was later discharged to a SNF. The patient 

was later transferred from the SNF back to an acute care 

hospital for care. The patient was ultimately transferred back to 

the SNF. The reviewer believed care could have been provided 

in an outpatient setting rather than being readmitted to the 

acute care hospital. 

• A patient was admitted to an acute care hospital for a hip 

fracture and dislocated shoulder. The patient was later 

transferred to a rehabilitation hospital and later to a SNF for 

rehabilitation. The patient was then readmitted to the acute 

care hospital because of a failed fracture fixation. The patient 

was then again transferred to a SNF for rehabilitation. At the 

time of transfer to the first SNF, it was already known that the 

hip surgery had failed and plans could have been made for 

repeat surgery without additional stays. 

Eleven percent of individual stays within 

consecutive stay sequences involved problems 

with quality-of-care, admissions,

 treatments, or discharges 

Medicare paid an estimated 

$1.4 billion in CY 2004 for 

individual stays associated with 

quality-of-care problems, 

inappropriate discharges, 

medically unnecessary treatments, medically unnecessary admissions, 

inappropriate treatments for the setting, and inappropriate settings. 

This dollar figure represents 9 percent of total Medicare payments for 

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F I NDING S 

individual stays associated with sequences. See Appendix B for 

confidence intervals. 

Eight percent of individual stays were associated with quality-of-care 

problems 

Medicare paid an estimated $986 million for individual stays within 

consecutive stay sequences associated with quality-of-care problems. 

Quality-of-care problems found included medical staff failing to monitor 

patients; exhibiting poor clinical knowledge; providing poor discharge 

instructions; or failing to properly evaluate, diagnose, and treat 

patients.7 

Reviewers described specific medical errors that resulted in 

quality-of-care problems. Examples of these medical errors included 

drug overdoses, failure to notice worsening symptoms, inadequate 

monitoring of clotting factors leading to gastrointestinal bleeding, 

inadequate monitoring of blood sugar, failure to control blood pressure, 

and electrolyte imbalances. 

Five percent of individual stays were associated with medically unnecessary 

admission and treatment, inappropriate treatment and setting of care, and 

inappropriate discharge 

Medicare paid an estimated $510 million8 for individual stays 

associated with problems such as medically unnecessary admission or 

treatment, treatment that was not appropriate for the setting, and 

inappropriate discharge.9 

Reviewers noted several instances of unnecessary admission and 

treatment, inappropriate treatment, and inappropriate discharge. 

Examples of these included rehabilitative treatments performed in the 

acute rehabilitation setting where the SNF setting would have been 

more appropriate, care the patient needed that was beyond the scope of 

the facility, care of a custodial nature that could have been provided in a 

7 The quality-of-care problems that reviewers found in the individual stays often 

contributed to the need for multiple stays in related sequences; however, there were 

instances in which quality-of-care problems did not lead to multiple stays. Of the 

$986 million associated with quality-of-care problems in individual stays, $335 million 

was associated with individual stays only. 

8 Relative precision of the estimate exceeds 50 percent. 

9 Because some stays were associated with both quality-of-care and other issues, the sum of 

the dollars paid for each subgroup ($986 million + $510 million = $1.5 billion) exceeds the 

total ($1.4 billion). See Appendix B for overlapping projections. 

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F I NDING S 

“home setting” rather than in a SNF, a patient whose mental status was 

such that there was little prospect of benefit from an acute 

rehabilitation setting, providers’ failures to document plans of care, and 

discharges that occurred before patients were stable. 

Twenty percent of individual stays lacked 

documentation sufficient for reviewers to 

determine whether appropriate care 

was rendered 

Reviewers noted that medical 

documentation that facilities 

submitted for 20 percent of 

individual stays was not sufficient 

to enable reviewers to render a 

judgment as to whether the admission, treatment, and discharge were 

appropriate. Medicare paid an estimated $3.1 billion for individual 

stays associated with insufficient documentation.

10 Comments that 

demonstrate reviewers’ inability to render judgments because of 

insufficient documentation include the following: 

• It was unclear from the record why the patient could not have 

been treated in the nursing home. 

• The reveiwer saw no documentation for the discharge or 

readmission. The reviewer also saw no indication of a clinical 

status change on the day leading to the readmission. 

• The medical record provided no indication of any acute event or 

any transfers. There was no documentation of a hospital 

admission between this and the last SNF stay. 

In 45 percent of individual stays with documentation problems, 

reviewers were unable to render judgments in more than one area. For 

example, a reviewer was unable to determine both quality of care and 

medically necessary treatment for the same individual stay. 

Reviewers could not determine the following (dollars and percentages 

are estimates associated with each bulleted item): 

• Quality of care – $1.6 billion or 10 percent of individual stays,11 

10 Because some stays were associated with both quality-of-care and other issues, the sum 

of the dollars paid in each subgroup (sum of individually identified documentation 

problems = $5.0 billion) exceeds the total overall dollar estimate ($3.1 billion). 

See Appendix C for overlapping projections. 

11 Relative precision of the estimate exceeds 50 percent. 

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F I NDING S 

• Appropriateness of Discharge – $1.0 billion or 6 percent of 

individual stays, 

• Medically Necessary Treatment – $897 million or 7 percent of 

individual stays,12 

• Appropriateness of Treatment Setting – $820 million or 

6 percent of individual stays, and 

• Medically Necessary Admissions – $720 million or 5 percent of 

individual stays.13 

12 Relative precision of the estimate exceeds 50 percent. 

13 Relative precision of the estimate exceeds 50 percent. 

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ΔFEXE I NDING CUTIVE S S U MMAR Y RECOMME NDA TIONS 

 OE I-07-05-00 340 

In this report, medical review of consecutive stay sequences revealed 

instances of problems with quality of patient care and fragmentation of 

health care services across multiple stays. Physician reviewers’ 

examination of medical records for consecutive stays sequences enabled 

the reviewers to analyze and identify the broader impacts of 

quality-of-care problems and fragmentation of services beyond the level 

of an individual inpatient stay. 

We recommended in our June 2005 report “Consecutive Medicare 

Inpatient Stays” (OEI-03-01-00430) that CMS (1) direct QIOs to monitor 

the quality of inpatient services provided within sequences of 

consecutive Medicare inpatient stays, (2) encourage QIOs, as 

appropriate, to monitor the medical necessity and appropriateness of 

inpatient services provided within these sequences of consecutive 

Medicare inpatient stays, and (3) reinforce efforts to educate providers 

about the appropriate uses of skilled nursing swing beds. 

The findings from this report are consistent with the quality-of-care 

problems and fragmentation of care that we found in our June 2005 

report. Therefore, we recommend that CMS: 

• Direct QIOs to monitor for fragmentation and quality of care across 

consecutive stay sequences and the quality of care provided during 

the individual stays within those sequences. 

• Encourage both QIOs and fiscal intermediaries, as appropriate, to 

monitor the medical necessity and appropriateness of services 

provided within these consecutive stay sequences. 

• Collaborate with providers to improve systems of care based on 

review results. 

• Reinforce efforts to educate medical providers on their 

responsibility for ensuring that medical records provide such 

information as may be necessary to determine the quality, medical 

necessity, and medical appropriateness of care provided, thus 

supporting the Medicare payments due. 

AGENCY COMMENTS 

CMS concurred with our recommendations. The agency noted that it 

will place growing emphasis on continuity-of-care issues in all settings 

and on measuring the rate of events such as hospital readmissions. 

CMS is also considering incorporating interventions in the upcoming 

Ninth Statement of Work for the QIO program. The agency also noted 

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R E C O MMENDA T I O N S 

its efforts with the American College of Physicians to increase 

understanding of the “medical home” concept and the agency is 

considering folding this concept into the QIO program. CMS will also 

ask QIOs to categorize complaints by type to provide better data on 

lapses in care continuity with an emphasis on documentation. CMS’s 

technical comments were incorporated into the report. The full text of 

CMS comments can be found in Appendix D. 

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ΔRINTROD R E C O MMENDA UCT IONT I O N S  APPENDIX A 

Estimates and Confidence Intervals for Consecutive Stay Sequences 

Sequence Counts, Point Estimates, and Confidence Intervals for Consecutive Stay Sequences (n=140 Sequences) 

Estimate Description Point Estimate 95-Percent Confidence Interval 

Medicare payments for sequences associated with quality-of-care problems 

Percentage of sequences associated with quality-of-care problems 

$2,688,654,896 

22.6% 

$1,687,361,526 - $3,689,948,265 

14.2% - 31.0% 

Medicare payments for sequences associated with fragmentation of services 

Percentage of sequences associated with fragmentation of services 

$2,709,903,725 

19.6% 

$1,655,689,690 - $3,764,117,761 

11.7% - 27.5% 

Total Gross Overlapping Payments 

Total Gross Overlapping Rates 

(Payment Overlap) 

(Sequence Overlap) 

$5,398,558,621 

42.2% 

($872,077,767) 

(7.2%) 

Medicare payments for sequences associated with quality-of-care problems 

and/or fragmentation of services 

Percentage of sequences associated with quality-of-care problems and/or 

fragmentation of services 

Percentage of Medicare payments for sequences associated with quality-of-care 

problems and/or fragmentation of services 

$4,526,480,859 

35.0% 

27.4% 

$3,299,063,111- $5,753,898,598 

25.6% - 44.4% 

20.0% - 34.9% 

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Δ APPENDIX B 

Estimates and Confidence Intervals for Individual Stays 

Stay Counts, Point Estimates, and Confidence Intervals (n=579 Individual Stays) 

Estimate Description Point Estimate 95-Percent Confidence Interval 

Medicare payments for stays associated with quality-of-care problems 

Percentage of stays associated with quality-of-care problems 

$986,477,670 

7.5% 

$513,855,548 - $1,459,099,811 

4.1% - 10.9% 

Medicare payments for stays associated with inappropriate discharges, 

medically unnecessary treatments, medically unnecessary admissions, 

inappropriate treatments for the setting, and inappropriate settings 

Percentage of stays associated with inappropriate discharges, medically 

unnecessary treatments, medically unnecessary admissions, 

inappropriate treatments for the setting, and inappropriate settings 

$510,250,017 

4.8% 

$184,846,299 - $835,653,735 

2.1% - 7.6% 

Total Gross Overlapping Payments 

Total Gross Overlapping Rates 

(Payment Overlap) 

(Sequence Overlap) 

$1,496,727,687 

12.3% 

($80,965,640) 

(1.2%) 

Medicare payments for stays associated with quality-of-care problems, 

inappropriate discharges, medically unnecessary treatments, medically 

unnecessary admissions, inappropriate treatments for the setting, and 

inappropriate settings 

Percentage of stays associated with quality-of-care problems, 

inappropriate discharges, medically unnecessary treatments, medically 

unnecessary admissions, inappropriate treatments for the setting, and 

inappropriate settings 

Percentage of Medicare payments for stays associated with quality-ofcare problems, inappropriate discharges, medically unnecessary 

treatments, medically unnecessary admissions, inappropriate treatments 

for the setting, and inappropriate settings 

$1,415,762,047 

11.1% 

8.6% 

$852,393,116 - $1,979,130,977 

7.0% - 15.2% 

5.1% -12.0% 

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Δ APPENDIX C 

Estimates and Confidence Intervals for Individual Stays With Inadequate Documentation 

Stay Counts, Point Estimates, and Confidence Intervals (n=579 Individual Stays) 

Estimate Description Point Estimate 95-Percent Confidence Interval 

Medicare payments associated with stays for which quality of care could not 

be determined 

Percentage of stays for which quality care could not be determined 

$1,565,752,796 

10.0% 

$1,017,283,102 - $2,114,222,490 

6.7% - 13.2% 

Medicare payments associated with stays for which appropriateness of 

discharge could not be determined 

Percentage of stays for which appropriateness of discharge could not be 

determined 

$1,000,347,511 

6.3% 

$511,142,511 - $1,489,552,511 

3.7% - 8.9% 

Medicare payments associated with stays for which medically necessary 

treatment could not be determined 

Percentage of stays for which medically necessary treatment could not be 

determined 

$896,734,826 

6.9% 

$394,294,530 - $1,399,175,122 

3.3% - 10.5% 

Medicare payments associated with stays for which medical appropriateness 

of setting could not be determined 

Percentage of stays for which medical appropriateness of setting could not be 

determined 

$820,031,234 

6.0% 

$432,682,287 - $1,207,380,181 

3.1% - 8.8% 

Medicare payments associated with stays for which medically necessary 

admissions could not be determined 

Percentage of stays for which medically necessary admissions could not be 

determined 

$719,852,375 

5.2% 

$359,083,147 - $1,080,621,604 

2.6% - 7.7% 

Total Gross Overlapping Payments 

Total Gross Overlapping Rates 

(Payment Overlap) 

(Sequence Overlap) 

$5,002,718,752 

34.4% 

($1,874,844,887) 

(14.3%) 

Medicare payments associated with stays for which quality of care, 

appropriate discharges, medically necessary treatments, medically necessary 

admissions, appropriateness of treatments at the setting, and appropriate 

settings could not be determined 

Percentage of stays for which quality of care, appropriate discharges, 

medically necessary treatments, medically necessary admissions, 

appropriateness of treatments at the setting, and appropriate settings could 

not be determined 

$3,127,873,855 

20.1% 

$2,292,587,972 - $3,963,159,737 

14.7 - 25.5% 

Percentage of stays for which reviewers were unable to render a judgment in 

more than one area 

44.9% 33.1% - 56.8% 

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.. APPENDIX D

Agency Comments

(. ø ~ OEP-T OFHEAm &_ 5IèE ,~'r èenle lOr' MedlC& Med SeIV

ilinlstriitar lIAY 11 20 WafngOC201

FROM:

TO: Danel R. Levin

Inper Geera

SUB: Offce of Inpetor Geeraòs Dra Reprt: "Consecutive MedCà Stays

Iivolvig Inpatentand Skiled Nurg Faclities" (OEI-07-OS,.340)

Th you.forthe opportity to. review an conuent on the Ofce of Inpector Generl's

(OIG) dr reprt "Consutive Medcae StaY$ Iivolvj Inpatent afdSkilledNuring

Facilities" (OEI-07-0S-00340). We apprciate the OIG'seffort to e~thattheCeters for

Medcar & Medcad Servces (CMS) is respndigappríy to quaity of car'afd

frgmentation of serice prblems lea4ng to Cpiiu,ve Medica stys.

The CMS is commtted to ensung thati~ beeficiaiesrecve h1gh quaitycaandmwnta

both the Quity Imrovement Organizon (QIO) progr~dthSareyandCeI'caon

progr to ca out ths commtment The OIG'sinpeon ispaculyfuelybeeaus we

ar curntly exai trsitions of cae and developing sttegìestöre~ tnetate of

rehospitaon. We are also conductg the ContiUity Asen Review and EVàuation

(CAR) demonstion, which is inteed to nïetrsitioïiSàer for patients.

om Recommendations

· Dir QIOs to monior forftagmentaon and quaty ofc¡ across consecutive. sty

seuences and the quaty of cae provided dur the individua stys within those

setùence.

· Encourge both QIOs and fi intermares, as approprite, to monitotth meca

necty and appropriatenes of servce provided with these consecutive sty

sequences.

· Collarate with providers to imrove systems of ca bas on review reults.

· Reiorc effort to educate medca provictersori their reporiibil.ty foterurg th

medcal reords provide such informon as may be nec todetine the quaity,

medical necessity, an medca appropriatnesofCà.

CMS Response

We ag with.the remmendation that QIOs pay greater attention to quaity problems

asociated with consecutive stys.' We plan to put grwi emphais on contimiity of ca is

OEI-07-05.00340 CONSECUTIVE MEDICARE STAYS INVOLVING INPATIENT AND SKILLED NURSING FACILITIES

22
A P PEN D x D 

fage 2 :- Danel R Levi 

in all settgs and OD, Ing:tberateöfevelr su ashospita1ressons. Infìct we ar 

CoIiiderig InCorprå Ineptionsto addres thispIhleiIn theupmig9i1 Ståtement of

Work förthe QIÖ PrOŠf 

We plac gteiiìsÖÌlworkgwitbprvid~to i1prove ca,whereproblei ate ideedand1hsreviewreiiorcetlømpluiS Forexple,we have worke witlithe 

AienC8cPllegeof l'hysiciato leamore ahOlit its "ieitahomi:" t(nct, Inwlchca


is cordte fOlapati"tÌittfUg aSìe site. We havecoideredfoiding such concts Il


di€: QIO prgr becus€:'we:hfIïeveths coneetcouldlead to greatecontiuityofcafor


beeficiäes 

Finy, we 8gi tl the próblem of ckenon is imrtt. We beieve th our new
 emphas on communcaona.ss caseings'forpaei wicol1veepiS(de of ßa 

wilIcontibut to impi;ving tbprblei In addon, theCMSsUey proces enforc 
 hospita coiiitioIiof piuèion, whchre. bnth 
 th asent ofil nC( for dise plil and th prviil)nofplangtQJhose withn~ Wear as QIOstocagonzcomplants
 by ty,whch.wilgiVe tI beeulii on laes in ca co1Uty and how we ca imroVi from
 . abeefcíii pe. 

Conclusion 

We appreat thQIG's effol1 in cond,qcits:invegaonofconscutvestysfor.MedCae 

beeñciares and ex toni sign pr0Bls onprblemidentied


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23 
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ΔAPP E N D I X ~ B ACKNOWLEDGMENTS 

This report was prepared under the direction of Brian T. Pattison, 

Regional Inspector General for Evaluation and Inspections in the 

Kansas City regional office, and Gina C. Maree, Deputy Regional 

Inspector General. 

Brian Whitley served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the Kansas City regional 

office who contributed to the report include Linda Paddock and Zula 

Crutchfield; central office staff who contributed include Doris Jackson 

and Kevin Farber. 

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