Blog, Revenue Cycle, Revenue Integrity

COVID-19 CMS Updates: Billing and Impact on Transfers

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Mary Devine

When the COVID-19 emergency began in March 2020, the Centers for Medicare and Medicaid Services issued a blanket waiver offering providers greater flexibility as they, and the nation, tried to cope with a global pandemic.


They wanted to put patients over paperwork. The blanket waiver touches many aspects of healthcare operations from documentation to care and discharge planning to staffing and locations of care. All of it has had wide-ranging impacts, including on the Post-Acute Care Transfer (PACT) rule. Because of the changes influencing the transfer rule, Medicare payments to hospitals have reduced by about $5 billion on an annual basis.

Let’s take a look at what’s been happening.

The Post-Acute Care Transfer policy states that if a patient is discharged below the geometric mean length of stay and the discharge status on the claim indicated a transfer to post-acute care, then the hospital is entitled to a per diem payment amount rather than the total amount a full DRG payment would provide.

In the early days of the pandemic, hospitals were moving non-Covid patients out of the hospital as quickly as possible in an effort to minimize spread. With shorter length of stays, hospitals bumped up against the PACT rule, which resulted in reduction in payment.

Hospitals that had a high Covid case load were not as severely impacted in this way because their Covid patients had longer stays, which meant they met the PACT rule’s geometric mean length of stay metric ensuring they got full DRG payment.

However, treatment for Covid now is different than it was in the early days of the pandemic and as a result, patients are in the hospital for shorter periods, so even hospitals with higher numbers of Covid cases are running into reduced payments. The shorter the length of stay, the more likely a claim is impacted by the transfer rule.

Add to that that many Covid cases fall under respiratory DRGs and about 280 of those DRGs are impacted by the rule because these are all discharge status codes that indicate a transfer and will cause reduction in payment. So, if you are using one of these 280 or so codes, make sure that you really mean a transfer indicating that the patient is receiving post-acute care.

For example, if a patient is going home but is supposed to come back for a test, that would not be an 02; it would be an 01. Or if a patient is going to another acute care hospital for an outpatient procedure, that would be an 01. You just want to be careful that if you use any of these codes, you mean that the patient is going to be receiving post-acute care.

Another issue is inappropriate coding or not coding a discharge status, which results in rejection, overpayment or underpayment. None of which is good.

Errors in coding are easy to make with all the changes instituted by CMS’ blanket waiver and other changes made by the agency since the pandemic began in order to better facilitate patient care and get people vaccinated quickly. Examples of some of those changes include:

  • Allowing quarterly updates of diagnosis and treatment codes, which hasn’t been allowed in the past.
  • Providers can now code from a test result without physician involvement supporting the diagnosis. And residents can now bill without a teaching physician present. Modifier GE is needed in such cases.
  • The list of codes relating to cost sharing and deductibles has also expanded greatly. The changes here save patients their copay and deductible charges, but must be coded with the CS modifier.
  • The three-day qualifying stay before getting into a skilled nursing facility has been waived as has the minimum amount of therapy needed in the acute care setting before transfer to an inpatient rehab setting.
  • And determining the right discharge code can be tricky now that CMS has opened the door to alternate care sites, which the agency did to expand capacity and service availability, and, in particular, to allow for acute hospital care at home.

It’s important to remember that even though the blanket waiver was issued by CMS with the purpose of putting patients before paperwork, paperwork hasn’t gone away, and truly, if you don’t have the proper documentation or it’s not accurate you are not likely to get paid appropriately.

Even though COVID-19 feels as if it is finally behind us, the blanket waiver and the Pandemic remain in place.  Patients continue being treated for impacts of the virus and might still require admissions that will likely be impacted by the rule. All the impacts of the waiver remain in place until called by the President.  In addition, hospitals are seeing all those elective patients that haven’t been seen for a year, which would also be subject to the rule or potential waiver items.

With all the changes brought about by the blanket waiver and the room for error associated with all that change, compliance concerns are heightened. There is now a lot of opportunity – or risk – for coding to not reflect the care provided resulting in either overpayment or underpayment.

In the past year the Office of Inspector General (OIG) has spent a lot of time focused on the transfer rule – auditing claims for accuracy – especially as it relates to patients discharged to their homes (01s), which puts pressure on CMS to be more vigilant and on hospitals to make sure claims are correctly coded and billed. 

In 2021, these audits of transfer coding remain a focus of OIG. Hospitals want to make sure they are getting ahead of overpayments, particularly, before the OIG does. Performing in-house audits should be done when possible and as frequently as possible in order to stay ahead of OIG. Claims have to be right and they have to be accurate all the time. Whether you are overpaid or underpaid, you want to make sure your claims are correct, and if they are not, that incorrect claims are fixed.

Some things to do keep on track:

  • Do not rely solely on CMS eligibility and utilization; do a clinical review. If something’s coded an 03 and it wasn’t intended to be an 03 – maybe it was intended to be an 02 – you won’t know that without reviewing the clinical information. So, make sure you are verifying with the post-acute care provider that whatever is intended by the discharge or transfer code is actually what happened.
  • Pay particular attention to claims coded with DR. You really want to make sure that you are comfortable with the discharge status of this code, because if it’s a DR, that’s indicating it was a disaster and there was COVID involved and you want to make sure that the appropriate discharge status is placed on that claim. Also pay more attention to the use of condition code 42 with a discharge status code of 06. This combo entitles providers to the full DRG, but there’s the risk of overpayment if clinical resources are not involved to determine the appropriateness of the coding.
  • Do an overpayment review. If you aren’t doing an overpayment review, at least take a look to see if there is a high use of discharge codes 69 or 70. Figure out the intended use of these codes – where that patient really went and what type of care was provided. If you’re not documenting why and where a patient is going, there’s room for error: Insufficient documentation leads to overpayments.

Learn how BESLER can help your facility with an overpayment review.  

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