More hospitals billing at highest severity level; HHS suggests targeted reviews

Hospitals are increasingly billing inpatient stays at the highest severity level, also the most expensive one, according to a recent report from the HHS Office of Inspector General. 

The inspector general found that the number of Medicare beneficiary hospitalizations billed at the highest severity level increased nearly 20 percent from fiscal year 2014 to fiscal year 2019. During the same study period, the number of stays billed at the other severity levels decreased. 

In addition, the average length of stay decreased for hospitalizations with the highest severity level, while the average length of stay remained unchanged for other severity levels. 

The inspector general said that while the shorter length of stay is not inherently problematic, the increased number of stays billed at the highest level raises questions about the accuracy and appropriateness of billing and suggests that hospitals may be upcoding Medicare claims. Upcoding is a practice of billing at a level that is higher than warranted.

"Although the complications billed suggest sicker beneficiaries, the shorter lengths of stay point to beneficiaries who are less sick. For this reason, these stays suggest potential upcoding," the inspector general said. 

The office is recommending that CMS start targeted reviews of Medicare Severity Diagnosis Related Groups, stays that are vulnerable to upcoding and the hospitals that frequently bill for the highest severity code. 

Access the full report here. 

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