From the CMS OIG, without comment:
This inspection found that 20 percent of sequences of three or more consecutive Medicare inpatient stays were associated with quality of care problems and or unnecessary fragmentation of healthcare services across multiple inpatient stays.
Quality of care problems were defined as patient care that did not meet professionally recognized standards, medical errors, or accidents. Unnecessary fragmentation of services involved cases in which care provided across sequences of multiple inpatient stays may have been necessary and appropriate but should have been consolidated to fewer stays. Medicare paid an estimated $267 million for these sequences of stays in fiscal year 2002. This inspection also found that 10 percent of individual stays within consecutive inpatient stay sequences were associated with poor quality of patient care. OIG recommended that CMS direct quality improvement organizations and fiscal intermediaries, as appropriate, to monitor the quality, medical necessity, and appropriateness of inpatient services provided within this types of sequences of consecutive Medicare inpatient stays that we included in our review.
CMS concurred with OIG's case findings but stated that periodic reviews are sequences of consecutive inpatient stays are not warranted.
Here's the full report (PDF).