According to an
recently released by the Office of Inspector General of the Department of Health
and Human Services (OIG), hospitals paid under the inpatient prospective payment
system (IPPS) may have received an estimated $25 million in overpayments between
fiscal years 2003 and 2005 as a result of noncompliance with Medicare’s
post-acute transfer policy. The purpose of this policy is to provide a
disincentive for hospitals to discharge patients to another hospital, a skilled
nursing facility, or a patient’s home early in a patient’s stay in order to
minimize costs while still receiving a full diagnosis-related group (DRG)
Under this policy, Medicare pays full DRG payments to hospitals that
discharge inpatients to their homes. In contrast, for DRGs described in 42 C.F.R.
§ 412.4(d), Medicare pays hospitals that transfer inpatients to certain
post-acute care settings a per-diem rate for each day of the stay, not to exceed
the full DRG payment for a discharge. The post-acute care settings to which a
patient could be “transferred” include:
- certain hospitals and hospital units not reimbursed under the IPPS
(e.g., psychiatric hospitals, rehabilitation hospitals, children’s
hospitals, long term acute care hospitals, and cancer hospitals);
- skilled nursing facilities; or
- a patient’s home when there is a written care plan for home health
The Centers for Medicare and Medicaid Services (CMS) found during an audit
of the discharge status codes of 150 sampled claims that 92 claims were
improperly coded as discharges to home rather than transfers to post-acute care
facilities. 80 of the 92 improperly coded claims were followed by claims for
home health services or skilled nursing facility services.
Nationally, hospitals billed Medicare for over ten million discharges for
DRGs subject to the post-acute transfer policy between fiscal years 2003 and
2005. Therefore, extrapolating from the sample results, OIG estimates that
hospitals across the country may have improperly coded over 15,000 claims for
the three-year period ending September 30, 2005.
As a result of this audit, CMS previously implemented an edit in the Common
Working File for the purpose of detecting overpayments, and intends to instruct
fiscal intermediaries to recover the $137,226 in overpayments identified in the
claims sample, review additional claims during the 2003 to 2005 sampling
timeframe, and identify and recover the estimated $25 million in overpayments
from hospitals. It is important to note that fiscal intermediaries will only
seek recoupment from transferor hospitals.
Please contact one of the authors or a member of the
Senior Care Team if you
have questions about CMS’s post-acute transfer policy or upcoming fiscal
intermediary audits of hospitals.