Transfer DRG underpayments happen for a variety of reasons. An important factor in the Transfer Rule and Medicare’s calculation of hospital reimbursement is the discharge status code.
The discharge status code is assigned by the hospital based on the expected treatment, if any, planned after the patient leaves the care of the hospital. The proper discharge status code is determined after consultation with the patient and the patient’s family, their physician and hospital personnel. It can indicate, among other scenarios, that a patient will be discharged to:
- A nursing home
- Home health care
- A rehabilitation facility
- A psychiatric facility, or
- Another acute care hospital
Only certain discharge status codes are impacted by the Transfer Rule. Unfortunately, reality dictates that not everything that is planned after discharge actually occurs.
In some of the cases impacted by the Transfer Rule, the care the patient receives after discharge from the original acute care hospital doesn’t correlate with the discharge status that was assigned, and the hospital may be underpaid as a result.
There are several significant causes of Transfer DRG underpayments.
When assigning the discharge status code to the patient’s bill, the hospital does not always have enough information available to make the proper assignment. The discharge plan may lack the level of care specificity that is needed in order for the proper assignment to occur. In this situation, assumptions may be made based on the name of the post‐discharge care provider.
Many post‐acute providers furnish multiple disciplines of care. Without accurate documentation, the wrong discharge status code may be selected, leading to an underpayment. Sometimes, home health care is planned post‐ discharge, but the patient or family makes other arrangements or delays care.
For example, instead of home health care by a licensed home health agency, the patient’s family may cancel the care plan and decide to take care of the patient at home themselves. The hospital is unaware that the plan of care has changed, is reimbursed at a lower level, and an underpayment has occurred.
Finally, some discharge status codes are used infrequently, and occasionally a hospital billing system is missing a particular code. In this case, the “next best” code will likely be assigned, and this code may inappropriately trigger the Transfer Rule when CMS determines the hospital’s reimbursement for that claim.
Download Transfer DRGs: Approaches to Revenue Recovery to continue reading about:
- The financial impact of the Medicare Transfer Rule
- Provider options for recovering Transfer DRG underpayments