How to talk your way out of transfer-discharge case
How to talk your way out of transfer-discharge case
With the Justice Department poised to investigate hospitals for transfer-discharge billing, take advantage of the Justice Department’s new and gentler approach to the False Claims Act, says health care consultant Andrew Quinn. You might be able to convince the government that your mistakes don’t rise to the level of false claims.
Quinn knows better than most. He’s the former head of a special investigative team at the U.S. Attorney’s Office for the Middle District of Pennsylvania, in Harrisonburg. That’s the nerve center of such notorious nationwide probes as the 72-hour DRG crackdown, and now the transfer-discharge investigation that DOJ has designated as a nationwide project.
Among other things, prosecutors are now supposed to consider mitigating circumstances when deciding whether a case is a false claim or simply an overpayment to be handled by a fiscal intermediary. Quinn suggests a hospital could sit down with a U.S. Attorney and explain why it billed patients as discharges when they technically should have been billed as transfers.
Prosecutors believe many hospitals billed Medicare for DRGs related to patients who were ostensibly discharged from those institutions. In reality, some of those patients were transferred to other hospitals, say to recuperate at smaller facilities closer to their homes. But that’s a red flag to Medicare, which pays the full DRG only to the hospital that accepts the transferee. The first hospital just gets a smaller per diem rate. Yet a hospital could point out that under Medicare rules, the open heart surgery it performed would only net it a per diem fee while the community hospital that kept the patient afterwards for four days would get a full DRG payment. "Tell them it’s just not common sense," Quinn adds.
Quinn does concede that under that scenario, a prosecutor would still be within his rights to seek damages, but he believes that the government will choose only to go after the more egregious violations. "They will be looking for patterns, like someone who billed every transfer as a discharge," he says.
Tom Peifer, reimbursement director for the Pennsylvania Hospital Association in Harrisburg, agrees that the government will most likely go after outliers in its transfer-discharge probe. For example, take a hospital that had a pattern of admitting patients for a single day and then discharging them. If investigators analyzing claims data notice that many of those patients were quickly readmitted to other institutions, they might conclude that those claims should have been billed as transfers.
Yet Peifer claims that an OIG audit of 160 Pennsylvania hospitals two years ago — which helped justify the current transfer-discharge probe — found few such errors. Indeed, most hospitals in the data analysis had fewer than 10 errors. None of the hospitals has yet received an individual audit, nor has the government yet sought repayment.
OIG won’t comment on ongoing investigations, but a position paper presented at a recent conference sponsored by the Chicago-based American Hospital Association notes that OIG and HCFA recovered more than $200 million in transfer-discharge overpayments made between 1985 and 1991. OIG estimates an additional $185 million in overpayments occured between 1992 and 1997, which could be a hefty sum if the government seeks double and triple damages. OIG acknowledges that only a "small percentage" of hospitals will be investigated, but it won’t disclose the thresholds for fear that providers will game the system.
Nevertheless, Quinn, who was heavily involved in the 72-hour window probe, believes that hospitals will end up paying far stiffer damages than the earlier probe. Damages in the 72-hour settlements varied widely, from $2,000 to $2 million, according to Quinn, now a consultant at Compliance Concepts Inc. in Philadelphia. Because the DRGs in the transfer-discharge area tend to be pricier, Quinn expects penalties will be higher.
DOJ is just beginning to put the transfer-discharge investigation together. But in the meantime, every hospital should immediately audit its transfer-discharge claims, Quinn recommends. Look for instances of undercoding that will mitigate any overpayments, and return to the FI any overpayments you do find.
Hospitals also need to be familiar with the transfer-discharge rules, says Quinn. For example, a patient who receives home health care within three days of leaving the hospital should be billed as a transfer rather than a discharge. It will be tough for hospitals to track this unless they call patients four days after they leave the facility, Quinn says.
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