Think you are covered with Transfer DRGs? Think again.

There are many ways that hospitals can lose money these days, including during patient discharge.

The planning and documentation for those discharges can be very complex. That's especially the case when a patient needs medical care post-discharge. Ensuring that the patient is being sent to the right facility and has the right paperwork can save hospitals money. But too often, that’s not the case; Medicare and Medicaid underpaid hospitals $68.8 billion in 2016, according to the American Hospital Association.

The challenge of keeping track of such information is why there has been a rise in Transfer Diagnosis-Related Groups (DRG) underpayment recovery vendors. But as much as many Transfer DRGs assure that "we've got this covered," that's often not the case. Knowing where revenue leaked and where "things are covered,” separates the top Transfer DRG partners from the rest.

What are Transfer DRGs?

 The 1999 Post-Acute Care Transfer Medicare rule changed the reimbursement for certain DRGs (known as “Transfer DRGs”). In particular, it cut payment for any of the following scenarios:

• The patient’s length of stay is at least one day less than the mean length of stay.
• The patient received qualifying treatment from a post-acute provider within a specified time period following the patient’s discharge from the treating hospital.
• The patient is transferred to a hospital that does not have an agreement to participate in the Medicare program (effective October 1, 2010).
• The patient is transferred to a Critical Access Hospital.

The Health Care Financing Administration created this rule to avoid paying hospitals “full” DRG case rates when patients are discharged early and post-acute care providers complete the treatment.

The rule makes hospitals responsible for both discharging the patient according to the appropriate treatment plan. But hospitals also need to follow up with the patient, post-acute provider and Medicare to confirm that the treatment occurred in a manner that qualifies as a transfer.

The risk to revenues

Under the Post-Acute Care Transfer rule, certain DRGs are subject to reduced payment if a patient is discharged early and receives qualifying post-acute care. Today, over 270 DRGs are subject to reduced payment if the patient is discharged early and receives qualifying post-acute care. Fifty-two percent of the time, hospitals may not be receiving the full reimbursement when beneficiaries are transferring to facilities or home health.”

A staggering 52% of Medicare Discharges are codes as TDRGs, and can average as much as $1500 in payment reductions for each inpatient account.1

But in some cases, patients do not receive the expected post-acute care for reasons out of hospitals’ control. When patients do not receive this case, the hospital is entitled to receive increased reimbursement for Transfer DRGs. An analysis conducted by TransUnion Healthcare found that the average underpayment is $3,200, but has ran as high as $70,000 per account.

Transfer DRG vendors vary
It’s hard for hospitals to determine if their internal team or vendor has recovered all available Transfer DRG underpayments. Many solutions fail to account for cases where post-acute care was delivered in a manner that doesn’t qualify for Transfer DRG payments. Since Medicare pays for these accounts, and they are often closed with a zero balance, it is challenging for providers to ensure that they have been paid for all their earned revenue.

To help meet these challenges and avoid getting subpar results when evaluating Transfer DRG partners it is important to look at key attributes:

 The business partner’s track record. What is the typical yield regenerated for a hospital of comparable size? Are there accounts found after a team or another vendor already performed their sweep?
 Does the solution isolate the most commonly underpaid Medicare discharges with the largest potential yield?
 Can the business partner find underpayments on historical accounts going back four Medicare fiscal years, even when coming in behind other vendors?
 Does the team understand clinical complexities and can they handle all the validation, claim correction and appeal workflows with Medicare?
 Can the partner ensure minimal disruption and risk– does it have a 100% contingency fee and does not get paid unless its clients do?

The latter point is perhaps the best safeguard to ensuring the best results. But even then, hospitals need to execute due diligence. With revenues sapped elsewhere, making sure that you can recoup every dollar is imperative. Ensuring patients are being sent to the right facility and that they have the right paperwork can save substantial revenues. Part of managing this process is making sure you have a Transfer DRG vendor you can trust.

It is important to monitor your performance and your vendor’s yield closely as selecting the right process, with the right business partner can have a significantly impact up to hundreds of thousands of dollars annually. Protect your earned revenue from leakage through data-driven decisions and recovery workflows, ensuring that the business partner you have has a proven track record of finding reimbursement, even behind an incumbent process or vendor. It’s your earned revenue, make sure it is covered the way you want it.


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