A report from the HHS Office of Inspector General revealed that Medicare paid $5,142 per short inpatient stay in 2012, compared with $1,741 on average per observation stay. Short inpatient stays were usually more costly than observation stays when patients were treated for the same reasons, the report said. Use of short inpatient stays was highly variable, with some hospitals categorizing more than 70% of stays as short inpatient, while the category represented less than 10% of hospitalizations at other facilities.

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