Blog, Revenue Cycle, The Hospital Finance Podcast®

Maintaining compliance during Transfer DRG revenue recovery [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Mary Devine, Director of Revenue Cycle services at BESLER, to discuss compliance issues related to Transfer DRG revenue recovery.

Learn how to listen to The Hospital Finance Podcast® on your mobile device. 

Highlights of this episode include:

  • Reasons why not to initiate revenue recovery efforts close to the discharge date of a claim.
  • Issues with Medicare overpayments that can cause compliance concerns.
  • Why some MACs take longer than others to interpret discharge status codes when reopening a claim.
  • And more… 

Listen to a related episode of our podcast as BESLER’s Mary Devine discusses an issue that is not getting much attention but should concern providers: Medicare overpayments.

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast®. 

Recently, we’ve talked about compliance issues related to transfer DRG revenue recovery specifically as they relate to clinical reviews. But there are other areas that are worth noting.

And to discuss those areas with me today, I’m joined by Mary Devine who is the Director of Revenue Cycle Services here at BESLER. Mary, welcome back to the show.

Mary Devine: Thank you for having me.

Mike: So Mary, you recently authored a paper entitled 5 Compliance Pitfalls that Impact Medicare Transfer DRG Review. And we’ve talked about some of those areas in the past. But today, I thought we’d cover a couple of the items that we haven’t.

And the first area that we talked about (or want to talk about) is starting your revenue recovery efforts too close to the discharge date of the claim. Tell us about that.

Mary Devine: So, as you know, BESLER is a big proponent of post-acute care calls. And when you begin working a discharge status review that is too close to the date of discharge, you’re not allowing the post-acute care provider to do their thing.

So, if you think about it from the perspective that you as the acute care hospital has 12 months to get those claims into Medicare, well, the post-acute care provider has 12 months as well. And if you think about the concept of a home health claim or a skilled nursing facility claim, they’re billed in 60-day increments. So they have 12 months and 60 days basically from when that patient was admitted and discharged into the post-acute care provider.

So, if you start utilizing the common working file three months after the data of discharge, it’s highly likely, you will not see any type of utilization. And you might be then recommending a discharge status code based on the common working file. And again, as we’ve mentioned in our previous podcast, you should never, ever do that.

We generally would even recommend not working something until it’s 9 months to 12 months from the date of discharge, allowing that presence of utilization in the common working file, allowing you then to determine what type of post-acute care calls you need to make.

Mike: So there’s always an urgency to try to recover money as quickly as possible, but that isn’t always the most sound approach necessarily?

Mary Devine: Absolutely! As a matter of fact, I would absolutely not recommend doing that. So if you work data, let’s say it’s six months out, you might end up placing a lot more calls out to the post-acute care provider than you would if you waited 12 months because you would be able to confirm that utilization.

At six months, again, those post-acute care providers still probably have another three-quarters of a year to get their claims into Medicare before it would go untimely.

Mike: And of course, there are different types of provider in that chain that we’ve talked about.

Mary Devine: Sure! Absolutely. And we’ve talked about home health care. We talked about the skilled nursing facility.

And there are patients who—and I’ll use the example of a patient who’s coded an 06, but you can tell by the utilization that there could be some skilled care in there. So you would not just want to place a call out to the home health agency, but you’d also want to place a call out to the skilled nursing facility looking to confirm that it did not occur post-discharge; and if it did, what was the level of care that was received.

Mike: Yeah, it certainly is rather complex. And Mary, you’ve done podcasts as well on over-payments. And we’ve talked about that quite extensively. But why don’t you briefly talk about some of the issues that could cause compliance concerns there.

Mary Devine: Well, you know, Mike, I think that when you talk about an over-payment, it really plays into the hands we were just talking about working a claim too close to discharge and recommending it for a discharge status change. So, if you work a claim, and there is nothing in the common working file, you may submit an adjustment to Medicare. And we know that the edits only work about 85% of the time, so you’re at risk of that 15%  not being caught by the edits in the system, as well as the potential risk that the claim for the post-acute care provider does not exist, so you will end up being overpaid in both of those scenarios.

And if Medicare is utilizing MACs to do over-payments, you don’t want the MAC coming in and finding those over-payments and taking that money back.

The other thing you’re at risk for is the OIG is now beginning to—as I’ve mentioned in a previous podcast as well, they are really focusing in on some of the home care over-payments and not just the 06 to an 01, but the 06 to a condition code 42. And if you’re not doing proper reviews on that, you could end up overpaid in those scenarios. And the OIG is going to take their sample and apply it across your entire population of Medicare claims assuming that there is that volume of overpayments throughout your entire Medicare payments.

So, you really want to be careful when you are recommending those adjustments, that they are absolutely 100% validated through a strong validation process.

Mike: And much like anything, when you’re dealing with regulation, compliance is up for interpretation.

Mary Devine: Always, always…

Mike: It’s depending on who you’re talking to.

Mary Devine: That’s right, that’s right.

Mike: You’ve got several MACs across the country, you’ve got hospitals and health systems that straddle across MACs. How do you handle that issue?

Mary Devine: You know, that is such a great question. When you talk about a claim that’s within timely filing, it goes through, and it goes through the standard edit process. And nobody really has to touch that claim. It does its thing. And again, there are times, 15% of the time, that it may pass through and be inappropriately paid, overpaid.

But when you are talking about a claim reopening, and it becomes a 11q when you’re putting the condition codes on it, a MAC representative has to get involved to push that claim past timely filing. They need to read your remarks which are key to getting past that timely filing as well as making sure that all the appropriate condition codes are on there. And then, apply a little bit of thought to whether the reason you want to bypass timely filing and recommend a discharge status change as well.

So MACs may interpret the discharge status change slightly different. We know that there are some MACs that really, really struggle with the claim reopening for an unrelated home care claim, a condition code 42. They really struggle. They make it as simple as a condition code is not a sound reason for a claim reopening. So there’s certain you have to do in order to get past that.

And then, there are other MACs who don’t really apply any logic to it. They just pass those through providing that everything is present on the claim.

So, it just depends on the MAC on how that claim reopening goes through.

And the other thing is some MACs take a lot longer to process those claim reopenings than others. We have MACs, we work with all the MACs here at BESLER.  And some MACs, they will process a claim reopening within three to four days; others, they can take up to 60 days to review it. They put it through a medical review. So it just depends on the MAC. But the most important thing is understanding the appropriate remarks that need to go on that claim to get past the timely filing.

And you want to make sure that the reason for submitting the claim reopening is actually valid. Otherwise, you could end up with rejections and potential take-backs of the full claim, not just the difference between the DRG and the per diem.

Mike: So Mary, some hospitals do recover on their own. Some have one vendor helping them. Some have multiple vendors helping them. If you’re at a hospital, how do you take all this information and begin to synthesize it in a process. So you either understand it on your own, or you’re asking your vendors the right questions to ensure that they’re doing things the right way.

Mary Devine: You know, that’s a tough question because if you think about all that goes on within a revenue cycle within a hospital, and all the priorities, the transfer rule is an important rule, and it is a costly rule, but sometimes, the actual intricacies of applying the transfer rule and understanding the transfer rule can be a little difficult.

But I always recommend understanding the SC0801 and understanding what discharge status code to use and when. And then, certainly taking the time to understand who is actually assigning the discharge status code, that goes a long way—you know, getting case management involved in placing the discharge status code and understanding what that discharge status code really means. 

What we find across a lot of our providers is there is a real lack of understanding of some of the discharge status codes. So again, utilizing the SC0801 as a real source for the understanding of that…

Mike: And if you’d like to get our paper, 5 Compliance Pitfalls that Impact Medicare Transfer DRG Review, just go to and click on the revenue cycle button there, and you’ll get access to that paper and a whole lot more.

Mary, thanks again for joining us on the podcast today and sharing your insights around this topic.

Mary Devine: Thank you for having me.


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