CMS proposal will increase DRGs covered by transfer rule
CMS proposal will increase DRGs covered by transfer rule
Plan could cost hospitals $880 million a year
A proposal by the Centers for Medicare & Medicaid Services (CMS) to include nearly half of the existing diagnosis-related groups (DRGs) covered by the post-acute care transfer rule will cut Medicare payments to hospitals by $880 million a year, or approximately 1.1% of Medicare payments, according to the Chicago-based American Hospital Association (AHA).
The revised rule, published in the Federal Register in May, proposes expanding the number of DRGs affected by the transfer rule from 31 to 223. CMS allowed a 60-day period for comments, and a final rule is expected by Aug. 1, with the new payment rates and policies going into effect Oct. 1, 2005.
"We are working through the AHA’s comment letter and through comment letters from our members to try to push this back," says Don May, vice president for policy for AHA.
The post-acute care transfer rule applies to these types of patients:
- Those admitted on the same day to a hospital or hospital unit that is not reimbursed under the inpatient prospective payment system (PPS).
- Those admitted on the same day to a skilled nursing facility.
- Those discharged to home under a written plan of care for home health services and receive those services within three days of discharge.
In announcing the expansion of the post-acute care transfer policies, Mark McClellan, MD, PhD, CMS administrator, said the approach "makes clinical sense and is fair to hospitals, fair to beneficiaries, and fair to the taxpayer. It will make our payments more appropriate for beneficiaries who are transferred relatively quickly to post-acute care settings."
The transfer provision reduces Medicare payments to hospitals at a time when the Medicare program already is not covering the cost of treating Medicare patients, May points out.
"For more than 60% of the hospitals, the cost of Medicare is not covered by what the Medicare program pays them. On average, hospitals lose money treating Medicare patients. To take money away from hospitals at this time is going in the wrong direction," he says.
Case managers should be diligent in making sure patients’ discharge status is documented correctly so that it can be coded correctly to keep the hospital in compliance, says Deborah Hale, CCS, president of Administrative Consultant Services Inc., a health care consulting firm based in Shawnee, OK.
The Medicare claim form requires the discharge status code, but sometimes the documentation in the medical record is inadequate to tell what kind of post-hospital services were arranged.
"The biggest issue that case managers face under the transfer rule is providing documentation in the records as to the patient’s discharge status," she says.
For the hospital to be in compliance, the claim has to have information on the patient’s direct discharge status, Hale says. Patients who are discharged to the care of a home health agency do not fall under the post-acute transfer rule if they already were receiving home health services before hospitalization and the services are renewed for a condition unrelated to the hospital admission.
For instance, if a patient is having a wound managed by a home health agency and is admitted to the hospital for arrhythmia and discharged after the arrhythmia is resolved successfully, he or she still will need to continue the wound care, but that care will not be subject to the transfer definition because it’s not related to the acute care service, Hale notes.
She adds that the discharge code of "to home" is appropriate only if the patient is discharged from an inpatient PPS facility and is not admitted on the same day to a non-PPS hospital or hospital unit or a skilled nursing facility and is not discharged with a written plan of care calling for home health services within three days of discharge.
That means that in all cases when the patient was discharged with home health care, the record should show the relation of the referral to the patient’s pre-existing condition or condition that required hospitalization, Hale says.
CMS and the Department of Health and Human Services’ Office of Inspector General (OIG) have announced plans to monitor hospitals more closely and crack down on those not in compliance with the post-acute transfer rule.
The OIG’s Work Plan for 2005 includes a project to ensure hospitals are correctly reporting discharge status codes, Hale points out.
CMS has established methods in its Common Working File to compare inpatient claims with post-acute claims as a means of detecting overpayments to hospitals discharging patients who subsequently received post-acute care. The edits went into effect Jan. 1, 2004.
"CMS intends to monitor hospitals that have a high frequency of miscoded claims as identified by the new Common Working File edits and to also issue further program instruction to ensure compliance with the recently expanded post-acute care transfer policy," McClellan wrote in February.
The OIG initiative puts the burden back on fiscal intermediaries to intervene when they get a claim from an acute care facility for full payment, along with a claim from a skilled nursing facility or a home health agency for what appeared to be a transfer, Hale adds.
The initiative was begun after the OIG conducted a nationwide review of hospitals during fiscal 2001 and 2002 and found that out of 400 claims samples, 381 were coded improperly as discharges to home rather than transfers to post-acute care, resulting in potential overpayments of $1,024,588.
Based on those figures, the OIG estimated that Medicare overpaid hospitals approximately $71.3 million during the two years of the study.
During the fiscal years of the study, only 10 DRGs were subject to the post-acute care transfer policy. According to the OIG, the hospitals billed Medicare for 2.3 million discharges within the 10 DRGs during that time period.
"Hospitals’ processes did not always ensure accurate discharge status codes," the report continued. "For example, some hospitals had high levels of human and computer system errors. Also, some hospitals’ patient medical records contained conflicting information on whether the patient was being discharged to home or transferred to a post-acute care setting."
Problems in documentation may occur when a patient is transferred to a nursing home with skilled and nonskilled beds. If the medical record says, "discharged to facility X," the coder can’t tell if it’s a skilled bed or an intermediate care bed, Hale points out. That is an important issue because a transfer to an intermediate care bed is not subject to the payment reduction, she adds.
In another instance, a hospital may assess a patient and determine that he or she doesn’t need skilled care, yet the receiving facility admits the patient to a skilled bed without the hospital’s knowledge. "When the two claims hit the Com-mon Working File, it appears that the hospital was wrong," Hale says.
In other instances, the family may refuse the recommended home health arrangements initially, preferring to care for the patient themselves. After two days, they may feel overwhelmed, call the physician, and ask for home health.
"Even if the hospital has no knowledge that has occurred, the hospital is accountable," she says. "So many people believe that if a patient is transferred, the hospital has to share the DRG payment. That’s not true. The receiving hospital gets the full DRG unless they discharge after a short stay," Hale explains.
Here’s the formula for determining payment under the transfer rule:
The DRG payment is divided by the geometric mean length of stay to determine a per-diem rate. Hospitals receive double the per diem for the first day and receive an additional per diem for each day up to but not exceeding the full DRG payment. The cap is the full DRG payment.
The formula applies to all DRGs except DRGs 209-211 — the orthopedic DRGs.
For those patients, hospitals get half of the DRG rate and half of the per-diem rate for the first day and half of the per-diem rate after that, up to the full DRG payment.
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CMS Criteria for Including a DRG in Transfer Policy Previous:
Proposed:
Source: Centers for Medicare & Medicaid Services, Baltimore. |
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