This final report provides the results of our analysis, made at the request of the Health Care Financing Administration (HCFA), of Medicare claims in which a beneficiary was discharged and subsequently readmitted on the same day to the same hospital during Calendar Years 1996 and 1997. The review disclosed over 34,500 readmissions nationwide in these 2 years with payments totaling about $226.6 million for the second hospital stays. Based on certain trends and patterns among providers, beneficiaries, and diagnostic related groups (DRG), we found same day readmissions are a cause of concern regarding quality of care issues in addition to billing and overpayment problems. We recommended that HCFA: (1) make the data in our report available to peer review organizations for use in determining the scope of their peer review activities; (2) perform reviews at hospitals having a larger than average number of same day readmissions; (3) perform beneficiary-specific reviews on the claims of beneficiaries who had multiple continuous same day readmissions; and (4) review a sample of same day readmission claims in which the same day readmission was coded with the same DRG as the first hospital stay. The HCFA generally concurred with our recommendations.