Medicare contractors made roughly $19.5 million in overpayments from 2009 to 2012 to hospitals that didn't comply with the program's post-acute care transfer policy, according to an HHS Office of Inspector General report.
Medicare's post-acute care transfer policy serves to distinguish between discharges and transfers from hospitals under the inpatient prospective payment system. The program makes full Medicare Severity Diagnosis-Related Group payments to hospitals that discharge inpatients to their homes or certain institutions, such as hospice settings. For specified MS-DRGs, the program reimburses hospitals that transfer patients to post-acute care settings (such as skilled nursing facilities) a per diem rate for each day of the stay, which cannot exceed the full MS-DRG payment for a discharge. Therefore, the full MS-DRG payment for a discharge will be equal to or greater than the per diem payment, depending on the length of stay in the hospital.
The OIG reviewed approximately $84 million in Medicare payments for 6,635 inpatient claims that involved transfers to post-acute care and had dates of service between January 2009 and September 2012. According to the report, the OIG found Medicare overpaid hospitals by $19.5 million because of incorrect patient discharge status codes on the claims, which indicated patients were discharged to their homes or other types of healthcare institutions rather than transferred to post-acute care.
In 2004, CMS enacted common working file edits to identify transfers improperly coded as discharges. However, in the case of the overpayments the OIG found, the CWF edits weren't working properly, according to the report. Some contractors didn't always receive automatic adjustments, and the CWF edits failed to correctly calculate the number of days between dates of service on inpatient and home health claims. Additionally, the range of provider numbers that identify home health agencies wasn't complete, which meant the edits couldn't adequately match inpatient claims with all home health claims.
The OIG has recommended that CMS direct Medicare contractors to recover the identified overpayments, as well as identify and recover any similar overpayments that occurred after the OIG audit period. Furthermore, the OIG recommends CMS correct the CWF edits and educate hospitals on the importance of reporting correct patient discharge status codes on transfer claims.
CMS concurred with the OIG's third and fourth recommendations. The agency partially concurred with the first two recommendations, although CMS stated that some of the claims in the OIG's review had exceeded or would soon exceed the four-year claim reopening period.
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