DRG Coding Advisor: OIG sounds alarm on transfer coding errors

Correct use of PPS transfer policy will help

Numerous hospitals continue to incorrectly report prospective payment system (PPS) transfers as discharges, and that has translated into potential overpayments of nearly $233 million, warns the Department of Health and Human Services Office of Inspector General (OIG). Since 1992, the number of incorrectly reported transfers has trended downward, the OIG says.

According to the OIG, the primary reasons for this ongoing problem include the misapplication of the PPS transfer policy by the Centers for Medicare and Medicaid Services regional offices and the fiscal intermediaries, problems with computer system interfaces at hospitals, and breakdowns in communication between hospitals’ medical and billing staffs.

The last of those areas, and perhaps the most significant, is where case managers come in, says Beverly Cunningham, MS, RN, director of case management at Medical City Dallas Hospital.

"This is a big issue, because sometimes it is very difficult to find in the chart exactly where the patient went," she asserts.

It is also an area that can save hospitals a tremendous amount of money if done correctly, she adds.

According to the OIG, hospitals incorrectly reported an average of 1,132 PPS transfers per month in 1992.

That number declined to about 495 per month in 1999. All together, the agency says it identified more than 153,000 claims for incorrectly reported transfers during the period January 1992 through June 2000. Hospitals provided three primary reasons why they had incorrectly reported PPS transfers as discharges. The first was problems in interfaces within hospital computer systems, most notably between medical records and billing components, which led to the submission of claims as discharges rather than transfers.

The second problem area dealt with assumptions that the receiving hospital is excluded from PPS based on the type of patients accepted and services rendered. According to the OIG, hospitals often reported transfers to long-term care hospitals using discharge code 05 (discharged/ transferred to another type of institution) without confirming that the receiving hospital was, in fact, excluded from PPS.

The third area involved breakdowns in communication between hospitals’ medical and billing staffs. The OIG reports that, in some cases, the hospital’s rate of incorrectly reported PPS transfers declined significantly or ceased after internal reviews detected the problem and steps were instituted to prevent the incorrect reporting of PPS transfers.

On the other hand, the OIG reports that none of the hospitals that detected problems had taken steps to determine the significance of the problem and repay Medicare for the overpayments received.

One of the implications here for case managers is that there must be a clear discharge plan that is documented on the chart, Cunningham says.

"That goes hand in hand with the Joint Commission’s new standard that says hospitals will provide timely discharge planning for their patients that includes the patient and their family," she adds.

"If medical records looks at a chart and is unable to determine if a patient is going to home health or if they fall under one of the transfer DRGs, then somewhere we have missed the boat in providing a clear discharge plan on the chart," she explains.

Case managers should not necessarily assume all of the responsibility in this area, Cunningham says. But she says it does point out the importance of case managers working closely with nursing.

"There are going to be patients who get discharged after hours unexpectedly," she warns. "It behooves all of us to figure out a way that we can be very clear in that discharge plan."