Blog, The Hospital Finance Podcast®

Discharge Dispositions in Readmissions [PODCAST]

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In this episode, we welcome back Mary Devine, BESLER’s Vice President of Revenue Integrity, to discuss discharge dispositions in readmissions.

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Highlights of this episode include:

  • CMS Medicare Readmissions rule
  • What patient data is reviewed
  • Impacts on readmissions
  • Recommendations on readmissions and discharge disposition

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. Today we’re joined by Mary Devine, BESLER’s Vice President of Revenue Integrity, who’s going to discuss discharge dispositions and readmissions with us. Welcome to the show, Mary.

Mary Devine: Thank you for having me.

Kelly: And we’re just going to jump right into it today. I know that the CMS Medicare Readmissions rule came out in 2012. Can you give us a little refresher on that rule and how it works?

Mary: Certainly. So, the Hospital Readmissions Reduction Program, known as HRRP, I’m not sure which is easier to say. It was designed to be a Medicare value-based purchasing program, and it was really focused on improving care coordination and it also really wanted to involve patients and caregivers in discharge planning. They felt that this was really not something that the patients or the family was involved in in the past and they really wanted to change that, thinking that it would change the outcomes of the patient’s health and ultimately reducing avoidable readmissions. And this was really a coordination with the government’s goal to improve health care for Americans by what they tried to do was tie the payment to the quality of hospital care. So, in 2013, it started with just three diagnoses readmission measures. So, it was acute myocardial infarction, heart failure, and then pneumonia. And so what would happen is for any patients that were readmitted within 30 days of those three diagnoses for any reason, and they all assume it to be unplanned, the hospital was at risk for a penalty against all readmissions, not just those three. So, it went well, just as it always does. If you think about the transfer rule, it started with 10 DRGs and moved to 283. So, in typical CMS fashion, they went ahead, and in 2015, they added COPD, and then they added a total hip and a total knee.

So those were added to the measures, and then finally, the cabbage was added for the cardiac bypass graft. And so now that is all there is. And then pneumonia, they kind of stepped back a little bit on, but it is still one of them. So, the payment penalty is somewhat complicated, and I’m not really going to go into it. That’s not really the full intent of what we’re talking about today. But it takes a provider’s readmissions percentages as compared to their peers in the same area, and then it applies a percentage reduction to develop the excessive readmissions ratio and applies that to all readmissions, not just to the excess. And the maximum reduction is 3%. So, the readmissions ratio would be 97%. So, they would time that 97% times all the readmissions, and that would be your reduction in payment. And that’s pretty much how it’s been since when it was rolled out in 2013.

Kelly: Great. Well, thank you for that very thorough review. When calculating the reduction in readmission ratio, what patient data is reviewed?

Mary: So, that’s really a great question. And due to the pandemic and COVID, some of that has somewhat changed. So typically, before the pandemic, they were planning on using three years’ worth of data, and that would be from July to June for three years’ worth, and then it would go into effect in the October starting with the fiscal year. But for 2022, again, because of the pandemic and some of the lack of healthcare or the healthcare purely focus on COVID, they cut it down to only 29 months. So, they use the data from 7/17 up through 12/1/19 for 2022, which went into effect 10/1/21. And for 2023, they’re going to go back to the three years, and that will be 7/1/18 through 6/30/21. And after the data is gathered and the calculations are done, providers will receive a report, and they have 30 days to review the calculations and send in corrections based on the calculations. You cannot argue the readmissions. That is not what the intent is. You can look at the calculations, and you can argue the calculations. You can’t correct anything else about that data sheet that you receive. So really, to talk about how much a CMS is recovering and with the Hospital Reduction Program kind of jumping into it. Over the 10 years the Readmissions Reduction Program has been in existence, there have been 2,920 hospitals that have been penalized. That represents 93% of all acute facilities. And so, again, in complete CMS fashion, of course, that’s working well, and it’s going to be continued. And they’re estimating for 2022, they’re going to save $521,000,000 based on the calculations that they go through.

Kelly: Wow, that is significant. Thank you for all of that information. You mentioned discharge dispositions. How do they impact readmissions?

Mary: And I think that’s kind of a tricky question. So, the discharge disposition doesn’t really impact the readmission penalties. I’m sorry. The disposition does not impact the readmission penalties, and they don’t consider the discharge status codes when they look at readmissions. They purely marry up a patient that was admitted and marry it if there were– look to see if that patient was readmitted at all, and then they would go from that. Not considering the discharge disposition. However, we know that, first off, the discharge disposition certainly would impact your potentially your DRG payment with the transfer rule. And all acute transfers or admissions are on the same day, planned or unplanned, can be impacted by the transfer rule depending on the length of stay. And so in 2013, kind of soon after they put in the readmissions, they added the additional 15 discharge status codes regarding claimed readmissions to acute care, SNF, and home care. And speaking of just the acute care, as this is what we’re talking about today, that would be a discharge status code 82. That says to CMS and to Medicare that, hey, this patient has a planned readmission. And what they were really trying to track was purely myocardial infarctions with that. They want to know what happens to that patient. Did the patient come back in with an MI again that was unplanned, or did you know that patient was coming in for some more cardiac work? But again, that discharge status code 82 does not count from a readmission perspective. They don’t say, “Oh, this patient was planning to come back in. It’s an 82. I’m not going to count it in your readmissions.” That’s not what happens.

But it does give providers the knowledge and the ability to see how many of those patients themselves, before they get that penalty, to know how many of their patients were planned or not planned from a readmission perspective, and then they can do some corrective action if needed on their end. And then the other thing that was argued, let’s not just use it for myocardial infarction, but let’s use it for all. So, they did expand it to all, not just for the myocardial infarction. And then hospitals can then again try and work with that discharge status code 82 to do some data mining and figure out where they really need to target some of their readmissions. Again, did they know they were coming in, or did they not? But I think it’s important to understand that CMS requires providers to apply the new district status codes correctly. And additionally, the American Health Information Management Association, HIMA, really has promoted standards of ethical coding that require accurate coding. That includes a present on admission indicator and the discharge status codes, and they should not be taken any lighter than a diagnoses code or any other ICD-10 codes for that matter. And these are required for external reporting and reimbursement and other administrative uses, and they must be completely accurate and in accordance with regulatory and documentation standards and requirements. And in addition to that, the Medicare Program Integrity initiatives closely monitor for inaccurate coding, and that would include as it relates to the discharge status codes.

Kelly: Wow, that is such valuable information. It’s really evident that you know a lot about this, Mary. One more thing. Do you have any recommendations on readmissions and discharge disposition?

Mary: Certainly. So, providers should, as I’m sure they are right now, take the intent of hospital readmissions reduction to the intent that it was designed. It’s designed to [inaudible] of the patient, and patients should be followed from a post-discharge perspective and involve the patients and the families and making sure that patients are actually getting what they should get. And some of this was focused on the fact that patients, from an economic perspective, the patients that couldn’t afford their medication or couldn’t afford some of that post-acute care weren’t getting it. So, they did change the readmissions reduction a little bit based on your volume of dually eligible for a Medicare/Medicaid. But again, hospitals should certainly focus on the care of their patients post-discharge. And then, I also think from a discharge status perspective, you really want to make sure that your codes are accurate and accurately reflect what happened to that patient post-discharge or was their intent for them to come back or not to the hospital. And again, those discharge dispositions will impact your reimbursement today, and those admissions will impact your discharges in three years. So, you just want to be really careful about both of them.

Kelly: Well, thank you so much for sharing all of this great information with us today, Mary. We really appreciate you being here.

Mary: Great, thanks for having me.

Kelly: And don’t miss Mary’s related webinar that she is presenting live on July 14th. You can register for that webinar on our website, The webinar recording and corresponding slides will also be available on our website after the webinar. Thank you for joining us today on The Hospital Finance Podcast.

[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit The Hospital Finance Podcast is a production of BESLER, SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.


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