Blog, Revenue Cycle, The Hospital Finance Podcast®

Why clinical reviews are important in 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 the importance of clinical reviews in Transfer DRG revenue recovery.

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Highlights of this episode include:

  • Background on the post-acute transfer rule, which was established in the 1990’s.
  • Reasons why the post-discharge status code is important to the post-acute transfer rule.
  • Why the common working file is insufficient by itself when determining the level of post-acute care.
  • What providers should be doing when ensuring their Transfer DRG reviews are accurate and compliant.
  • And more…

Mistakes often occur during retrospective Transfer DRG reviews that can result in compliance concerns for hospitals. Our new special report explores five common pitfalls associated with these reviews and how to avoid them.

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

Today, we’re going to be talking about Transfer DRG revenue recovery which is, I’m sure, many of you know is something that we specialize in at BESLER. And in particular, we’re going to be focusing on the importance of clinical reviews.

You know, a lot of hospitals have their own in-house recovery processes, or they contract with one or more vendors to recover Transfer DRG revenue. But of course, no two processes are the same. And at BESLER, we really focus on compliance and on clinical reviews. And we’re going to get into why we do that.

And to help me understand why we do that and share and lend her expertise to all of us in the audience, I’m joined by Mary Devine who is the Director of Revenue Cycle services here at BESLER.

Mary, welcome back to the podcast.

Mary Devine: Thanks, Mike. Happy to be back.

Mike: So Mary, for those in our audience who may not be familiar with transfer DRG’s, could you give us a brief synopsis of the post-acute transfer rule?

Mary Devine: Sure! So, the post-acute transfer rule was put in place in the ‘90s while providers were focused on shortening the length of stay. You get the DRG, and regardless of the length of stay providers were really focused on getting the patients out the door faster.

And what was happening is there were certain scenarios and certain cases where the patients were being discharged way below the geometric mean length of stay. And then, the patient was going off to receive some sort of post-acute care, whether it be SNF or home care, what-have-you.

So Medicare said, “You know, I’m paying for the rehab on the newer placement for the three days they should’ve been in the hospital, and I’m paying for rehab again once they transfer to either the skilled nursing or the in-patient rehab.”

So, Medicare said, “You know what, I don’t want to pay for the care twice. So for these certain DRG’s, if the patient is discharged beyond the geometric mean length of stay, and the discharge status code indicates post-acute care, the provider is going to receive a per diem payment.”

And so, that was originally at 10 DRG’s when it first came out. And now it’s at 280 DRG’s. So it has significantly expanded over the lifetime of the transfer rule.

Mike: And Mary, you just mentioned the post-discharge status code. Why is that so important as it relates to the rule?

Mary Devine: So, what the discharge status code indicates, that indicates the care that the patient is receiving post-discharge. And Medicare will only really look at whether the discharge status code on the claim does not indicate a transfer. Then they’re going to come back and reject your claim.

So, it really lets Medicare know what is intended for that patient post-discharge.

Mike: Mary, what are the types of post-discharge care affected by the rule?

Mary Devine: The post-acute care that is impacted by the rule would be include acute care (and that would be coded a discharge status code of an 02); skilled nursing care (which would be coded a discharge status code of an 03); home care (which is a discharge status code of 06); hospice as of 10-1-18 (and that’s either 50 or 51 for a code); in-patient rehab; long-term acute; and then, finally psychiatric care is also impacted by the rule (and that’s a discharge status code of 65).

Mike: And who’s responsible for getting the discharge status code correct?

Mary Devine: Ultimately, Medicare is very clear that it’s the provider who’s responsible to get the discharge status code correct. And again, Medicare has always been clear on that. And if it isn’t correct, unfortunately, there’s one of two things. Either their claim is going to reject—an example, coding something a discharge status code of an 01, indicating that the patient went home, but in fact that patient ended up receiving homecare. That claim would reject with C7272 indicating an overlap. And you would have to correct that claim, indicate the 06, and receive the per diem potentially if it was below the geometric mean length of stay;

Or potentially what’s going to happen is if you coded it an 06, and the patient did not receive the home care, then you’re going to receive the per diem inappropriately when the patient didn’t receive home care.

So, it’s really on the provider to get it correct. And again, if there is post-acute care providers, and Medicare knows it, you will get a rejection. But they will never, ever, ever come back and tell you, “Oops, the patient did not receive that post-acute care. Here’s your full DRG.”

But as it relates to the responsibility within the hospital, it really should be a collaboration. The physician should get it right in the discharge summary on where that patient is going with a little bit of detail wrapped around it. Utilization management or case management should include in their notes the needs of the patient at the time of discharge and where that patient is heading to, whether it be home or home services or whatever the case may be.

Again, with enough documentation, at the point where HIM is involved and coding is involved, coding can get it right based on the information in the chart.

Mike: Got it! And Mary, at the top of the podcast, we talked about retrospective reviews for transfer DRG, recovery and insuring accurate reimbursement and compliance and the idea that not all reviews are created the same essentially. In your opinion, what do many reviews lack?

Mary Devine: You know, the number one thing that many of the retro-reviews lack is the clinical review piece. They purely rely on the common working file. And definitely, that’s the piece that is missing and puts the recommendation of a discharge status code at risk for being non-compliant.

Mike: So, the common working file is something that every hospital and anyone who works with claims is used to working with. Why is that insufficient by itself to determine the level of post-acute care provided?

Mary Devine: The common working file is insufficient for several reasons and it leaves a significant room for error.

The lack of a claim in the common working file or the actual presence of a claim in a common working file really does not dictate the appropriate discharge status code that’s on the claim. And I’ll give you some examples with that.

So, in the example of a discharge status code of an 03, there are many reviews that are done where they will rely on the utilization in the common working file to determine whether the patient receives skilled care or not. So, when you look at the span of care, that includes the in-patient stay. If, by chance, they do not see a claim post the inpatient discharge, they might say, “Oh, the patient did not receive skilled care. Let’s code it an 04 or an 01 because the patient did not receive the skilled care.”

Unfortunately, most skilled nursing facilities do not submit a zero pay claim if the skilled care is not covered by Medicare. So if there isn’t that qualifying stay, or if benefits exhaust and Medicare is not going to pay for the skilled care provided, then there would not be that presence there.

And potentially, the patient did receive skilled care. So again, in that scenario, you would never, ever, ever want to rely solely on the common working file.

And then, the example of a patient that has a discharge status code of an 06 indicated on their claim, and when you look at the common working file, and you look in HIQA, you see that the patient did in fact receive home care, and that they were in a home care span prior to being admitted to the hospital. But without a clinical review on that and reaching out to the post-acute care provider, you can’t tell whether that care was related or not, or whether if it started post three days of discharge to determine whether you should appropriately append a condition code of 42 or 43 and receive that full DRG in that scenario.

So, again, whether there’s a claim or utilization within the common working file, that does not dictate the discharge status code and should never dictate the discharge status code.

Mike: Mary, what would you say providers should either be doing on their own or asking of their vendors when it comes to ensuring their transfer DRG reviews are completed accurately and in a compliant manner?

Mary Devine: If they’re using a vendor, providers should always ask their vendor if they have clinical resources that work on the reviews and are they placing calls out to the post-acute care providers. They should ask what the steps are they take to validate the appropriateness of a discharge status code.

And if it’s something that providers are doing internally, it should be the same. They should be utilizing clinical resources to review the case management notes, the review the physician notes.

And all of these is to determine the needs of the patient post-discharge, and then reaching out and speaking to that post-acute care provider to determine the type of care that patient received. And that’s just not isolated to calling the skilled nursing facility, but you should call home health agencies. And if the patient is intended to be transferred to an acute care facility, speak to that post-acute care facility and determine was the patient admitted or not. And if they were, “Did you bill Medicare?” so on and so forth. Make sure you’re asking the appropriate questions prior to recommending a discharge status change.

And again, if you do not take those necessary steps from a clinical review perspective, your discharge status is at risk for being non-compliant.

Mike: Yeah. And no hospital wants to be there.

As I mentioned, again, at the top of the podcast, Transfer DRG revenue recovery is something that we specialize in here at BESLER. And if you’d like to learn more about how we do it, you can go to and just click on the Services tab at the top, and you’ll see Transfer DRG Revenue Recovery there. You can read all about it, look at some articles, check out a video that we have there and understand more about what a complete and compliant process looks like.

Mary, thanks again for shedding some light on this topic and helping us understand more about compliant Transfer DRG revenue recovery.

Mary Devine: Great! Thanks for having me.

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