March 16, 2009 | | Comments 2
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Hospital compliance with Medicare’s post acute transfer rules

At the end of February, the DHHS Office of Inspector General (OIG) released a report on hospitals’ compliance with Medicare’s post acute transfer policy. In that report, the OIG estimated that certain hospitals improperly coded 15,051 claims and that, as a result, Medicare overpaid $24.8 million to these hospitals for the three-year period that ended September 30, 2005. The OIG included post acute transfers as an area of focus in its FY 2008 Work Plan. In that Work Plan, the OIG indicated that it would examine hospitals’ control systems to see whether they accurately coded patients’ status at the time of discharge when those patients were being discharged to certain post acute settings, rather than to their homes.

Hospitals are ordinarily entitled to a full DRG payment when patients are discharged to their home following a covered inpatient Part A stay. Under the Medicare post acute transfer policy, however, hospitals may receive less than the full DRG payment when patients are discharged to certain post acute settings, rather than to their homes. The post acute settings which may trigger the applicability of the transfer rules include the following:

  • A non-IPPS hospital or a distinct non-IPPS unit (e.g., a facility other than a short-term, acute care hospital, including inpatient rehabilitation facilities [patient status 62], long-term care hospitals [patient status 63], psychiatric hospitals [patient status 65], children’s hospitals [patient status 05], and cancer hospitals [patient status 05]), beginning on the day of discharge
  • A Medicare certified skilled bed in a Medicare certified skilled nursing facility or SNF unit to receive skilled care (patient status 03), beginning on the day of discharge
  • Home health care (patient status 06), beginning within 3 days of discharge

The post acute transfer rules are only triggered, however, if the DRG assigned to that inpatient discharge is one of a limited number of MS-DRGs. For FY 2009, only 272 out of 746 MS-DRGs will trigger the post acute transfer rules when the patient is discharged to one of the post acute settings listed above. The DRGs that trigger these rules are identified in Table 5 of the FY 2009 IPPS final rule.

Hospitals are responsible for identifying those discharges to which the post acute transfer rules apply by reporting the appropriate patient status code in FL 17 on the UB-04. Instructions for completing the UB-04, including FL 17, are set out in the Medicare Claims Processing Manual, Chapter 25, Section 75.1 and following. CMS has also published a special edition MLN Matters Article—SE 0801—that provides additional guidance on the use of status codes.

In light of the OIG’s recent scrutiny, hospitals should review the integrity of their current control systems with regard to the following:

  • What information do coders use to identify discharge status?
  • Where does information come from—e.g., discharge summary, patient abstract?
  • What factors are in place to support accuracy of information (both before and after initial claim submission)?
  • History—have claims been accurate in the past?
  • What type of follow through is in place to assure patients were actually admitted to those post acute settings and/or to resubmit adjustment claims with appropriate status codes, when necessary?

Entry Information

Filed Under: IPPS


Judith Kares About the Author: Judith Kares is an instructor for HCPro's Medicare Boot Camp - Hospital Version. Judith has also been involved in the following:

  • Development of comprehensive compliance programs
  • Initial and follow-up risk assessments
  • Development and implementation of compliance training programs
  • Compliance audits and internal investigations
  • Research/advice regarding specific risk areas
  • Development of corrective action programs
Prior to beginning her current legal/consulting practice, Judith spent a number of years in private law practice, representing hospitals and other health care clients, and then as in-house legal counsel. In that capacity, she served first as Assistant General Counsel and Director of the Legal Department for Blue Cross and Blue Shield of Arizona (BCBSAZ) and then as Deputy General Counsel, Regulatory and Contract Compliance, with Blue Cross and Blue Shield of the National Capital Area (BCBSNCA) in Washington, D.C.

In both in-house positions, Judith had primary responsibility for contracting and regulatory compliance. The latter included oversight of federal and state health care programs. BCBSAZ was a fiscal intermediary, a Medicare risk and AHCCCS (Arizona's managed care alternative to traditional Medicaid) contractor, as well as a participating contractor under the national Blue Cross/Blue Shield Federal Employee Program.

Judith is also an adjunct faculty member at the University of Phoenix, where she teaches courses in business and health care law and ethics. She is an advocate for the use of alternatives to traditional dispute resolution, having participated in the volunteer mediation program in the Justice Courts of Maricopa County, Arizona. Judith is a frequent speaker at healthcare-related seminars. In addition to her membership in the State Bar of Arizona and the Tennessee Bar Association, Judith is a member of the American Health Lawyers Association, the Health Care Compliance Association, and the Arizona Association of Health Care Lawyers.

Judith earned her Juris Doctor degree (with high distinction) from The University of Iowa, College of Law and her B.A. (with highest distinction) from Purdue University.

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  1. My sister was visiting from the mid west, she is in a moter home. She is in her late 60s she went to the hospital in december 2009 in warm c bullhead az. She was diagnosed with pnamonia, she also has chf, diabetes, among other things. The hospital said she could be released we thought she was going to a nursing facility were she could get 24 hr care. But she was released to her small molbile home and given home care. She lasted 1 month and is back in the hospital. She was on death watch for three days, family has flown in from all over the country. By the power of god she has made a recovery now they are talking about releasing her again. Iam angry she has insurance medicare and suplemntal also. My brother n law is 70 he is not asble to take care for someone with her needs. What are our options. Please Help us. All we want is to get her healthy enough to travel home so she can be seen by her own doctors. Scared and desperate. Mrs Hart.

  2. I am a clinical liaison for Kindred Healthcare in So CA. There seems to be several interpretations of the Transfer DRG in regards to whether the STAC shares the DRG with an LTAC- Long Term Acute Care Hospital depending on the time of transfer. Can you shed some light on this topic?

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