Blog, Revenue Cycle, The Hospital Finance Podcast®

Hospice Update to the Medicare Post-Acute Transfer Policy [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by BESLER’s Mary Devine to discuss changes to how hospice reimbursement is treated under the Medicare Post-Acute Transfer Policy

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Is your hospital recovering all Transfer DRG overpayments and underpayments? For additional validation, contact BESLER about our Transfer DRG Recovery Service.

Highlights of this episode include:

  • Background on the Medicare Post-Acute Transfer policy
  • What discharge status codes will be impacted by the post-acute transfer policy
  • Estimated impact of hospice updates to healthcare providers
  • And more…

To view the transcript of this podcast episode, click HERE

How the Medicare Post-Acute Transfer Policy works

Prior to the enactment of the Bipartisan Budget Act of 2018, a hospital discharge was impacted by the Post-Acute Transfer Policy if the individual was discharged to one of the following post-acute care settings:

  • A hospital or hospital unit that is not a subsection (d) hospital.
  • A skilled nursing facility.
  • Related home health services provided by a home health agency provided within a timeframe established by the Secretary (beginning within 3 days after the date of discharge).

When a patient is transferred to another hospital and the length of stay is less than the geometric mean length of stay (GMLOS) for a DRG, the transferring hospital would be paid based on a graduated per diem rate for each day of stay, up to the full MS–DRG payment. This is true for all DRGs.

For discharges to the specific post-acute care settings listed above, this per diem payment adjustment is only for certain DRGs.

Changes to hospice reimbursement under the Medicare Post-Acute Transfer Policy

As established in the Bipartisan Budget Act of 2018 and the Final IPPS Rule 2019, discharges to hospice services provided by a hospice program will be impacted by the post-acute care transfer policy.

The discharge status codes that will be impacted by the post-acute transfer policy under the 2019 IPPS Final Rule are:

  • 50 (hospice home)
  • 51 (hospice inpatient)

In 2018 and part of 2019, providers are entitled to the full MS-DRG when 50 or 51 is used. Beginning with discharges on October 1, 2018, post-acute transfers to hospice care will receive a per diem payment rather than the full DRG payment.

The inclusion of hospice in the post-acute transfer rule was the subject of debate.

Because payment would be decreased, it was thought that this might influence physicians to delay discharging patients to hospice care. This could negatively impact patient choice and quality at the end of life.

Additionally, it was argued the original intent of the post-acute care transfer policy was to discourage hospitals from admitting and discharging patients below the GMLOS to a post-acute care setting for therapeutic care. Hospice providers do not provide treatment, only comfort care. Thus, there could never be a duplication of services or duplicate payment for the same care.

Despite these concerns, hospice is now included in the Medicare Post-Acute Transfer Policy.

Expected impact of the hospice updates

CMS has estimated the inclusion of hospice transfers to the transfer policy will result in a savings to the Medicare program in the amount of $540 million. This translates to a direct reduction in reimbursement to healthcare providers.

Further, it is estimated that this change will impact 30% of discharges to hospice care. On average, this will reduce provider reimbursement by $200,000 annually.

It is important for Medicare providers to review discharges to hospice care.

  • It should be confirmed that hospice election is on the day of discharge or the patient is returning to their existing hospice span.
  • If the hospice election is not on the day of discharge or in an existing span, coding the discharge as a 50 or a 51 will result in underpayment.

CMS is clear underpayment reviews are the responsibility of providers.

One final note to remember, if the length of stay is at or above the GMLOS, the discharge will not be impacted by the post-acute transfer policy and the full DRG amount will be received.

Transcript: “Hospice update to the Medicare Post-Acute Transfer Policy”

Mike Passanante: Hi, this is Mike Passanante and welcome back to the Hospital Finance Podcast. Recently, there had been some changes to how hospitals reimbursement is treated under the Medicare Post-Acute Transfer Policy. And to explain those changes, I’m joined by Mary Devine who is the Director of Revenue Cycle Services here at BESLER.

Mary, welcome back to the program.

Mary Devine: Thank you! Thank you for inviting me.

Mike: Mary, just to remind our audience what the Medicare Post-Acute Transfer Policy is, can you explain that for us?

Mary: Certainly! So, as a quick refresher, the Post-Acute Transfer Policy says that whenever a patient is discharged within certain DRGs, if it’s below the geometric mean length of stay, if they are transferred to a hospital or a hospital distinct part unit, a skilled nursing facility or home care within three days and hospice, 50 or 51, then the claim is paid at a per diem rate up to the full DRG payment.

And if it is above the geometric mean length of stay, it will not be impacted by the rule.

Mike: Thanks Mary. And as we started out the podcast with, hospice is going to be treated a little bit differently going forward. Can you tell us what the impact is going to be there?

Mary: Certainly! So, this started probably several years back, Medicare and CMS. CMS started investigating the potential of including hospice into the post-acute transfer rule. They’re just looking for more ways to save money. And it was really a big debate because there are thoughts that when you think about the post-acute transfer rule, it’s just that, post-acute care. And when you talk about hospice, it’s not treating. It’s comfort. So people were trying to lobby and not have it included.

And the other concern was that there were physicians that thought that if you include it into the Post-Acute Transfer rule, then it would dictate the patient’s post care when they could elect hospice and ultimately the quality of end of life. But unfortunately, it was included in the Bipartisan Budget Act in 2018 and was to be included starting with fiscal year 2019.

So, if a patient is discharged to a discharge code of 50 or a 51, hospice in-patient or hospice out-patient, then unfortunately, it will be included in the Post-Acute Transfer Rule.

Mike: And what is the expected financial impact to providers?

Mary: Well, it is expected to be a huge impact to CMS from a savings perspective. It’s roughly estimated to be about $540 million to CMS from a savings perspective. Now, of course, that savings means that that’s going to impact providers. And depending on your volume, it could be on an average $200,000 in reimbursement that you will be losing as a hospital.

Mike: Do you think that this could change the way providers offer hospice to patients in terms of the course of treatment or their in-patient stays?

Mary: You know, Mike, I think that is absolutely a big question and concern that hospice providers have. They don’t want to lose the referral of the patients in the hospice as well as focusing on the overall treatment and care of the patient.

But I think if you dug deep into some of the numbers, there aren’t a lot of hospice transfers that are below the geometric mean length of stay.

So, although it’s $200,000, I don’t think that it will impact whether a physician transfers a patient into hospice or not.

Mike: If you’d like to know more about this topic or other topics associated with transfer DRG revenue recovery, you can visit that page on our website at

Mary, thank you again for explaining these recent changes to hospice reimbursement.

Mary: Thank you.


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