Corporate Compliance

Note from the instructor: Update to the CMS Post-Acute Transfer Policy Qualifying DRGs

Medicare Insider, December 9, 2014

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, regulatory specialist for HCPro.  
 
This week CMS released Transmittal 3138. This transmittal rescinded and replaced Transmittal 3066 regarding technical errors cited in the FY 2015 IPPS final rule correction notice published in the Federal Register on October 3, 2014. Recently, I have received several questions regarding CMS’s Post-Acute Transfer and Special Payment Policy so I thought it would be a good time to review how a PPS hospital’s payment may be affected by it.
 
A “post-acute transfer” is a discharge by a PPS hospital to one of several specific settings. The final DRG has been assigned by CMS to a “Qualifying DRG”. For FY 2015, there are a total of 753 Medicare Severity (MS)-DRGs and 279 of those are listed as “Qualifying DRGs”, affected by the post-acute transfer policy. The list of current MS-DRGs and if they qualify for payment under the policy can be found in Table 5 of the IPPS Final Rule
 
Certain post-acute settings reported on the UB-04 claim form may trigger the post-acute payment policy. MLN Matters MM4046and MLN Matters SE0801 provide detailed information to help hospitals select the most appropriate discharge setting. The effect on the DRG payment to the discharging/transferring hospital will depend on if the Qualifying DRG falls into the “post-acute DRG” category or the “special pay DRG” category as designated in Table 5.
  • When a discharge is paid as a transfer
    • The patient was discharged to one of the specific post-acute settings and the payment will be made under one of the Qualifying DRGs identified as a “post-acute DRG”.
    • A “per diem” rate is determined by dividing the full payment for the discharge DRG by the geometric mean length of stay (LOS) for the discharge DRG listed in Table 5.
    • The first day of the admission is paid at twice the per diem rate in recognition of the extra expenses incurred on the day of admission.
    • All subsequent days are paid at the per diem up to the full DRG amount.
 
  • When a discharge is paid under the special payment methodology
    • The patient was discharged to one of the specific post-acute settings and the payment will be made under one of 35 Qualifying DRGs identified as one that exhibits exceptionally high costs early in the hospital stay-called a “special pay DRG”.
    • A “per diem” rate is determined by dividing the full payment for the discharge DRG by the geometric mean LOS for the discharge DRG listed in Table 5.
    • The discharging hospital is paid 50% of the full DRG payment plus 50% of the calculated per diem rate for the first day.
    • All subsequent days are paid at 50% of the per diem up to the full DRG amount.
 
According to CMS, for a DRG to qualify for the special payment methodology under the post-acute transfer policy, the geometric mean LOS must be greater than four days and the average charges of 1-day discharge cases in that DRG must be at least 50% of the average charges for all cases within the DRG.  Also, DRGs that are part of an MS–DRG group will qualify under the special payment policy if any one of the MS–DRGs sharing that same base MS–DRG falls into the special payment methodology. The special payment rules only apply to post-acute transfers and do not apply to discharges or transfers to short-term acute care hospitals.
 
For FY 2015, five new MS-DRGs were added to the Qualifying DRG list subject to the post-acute care transfer and special payment policy. The following DRGs will be paid under the special payment policy:
  • 266 and 267 - Endovascular Cardiac Valve Replacement with and without MCC respectively; and,
  • 518, 519 and 520 - Back & Neck Procedure Except Spinal Fusion with MCC or Disc Device/Neurostimulator, with CC, and without MCC/CC respectively.
 
MS-DRG 483 - Major Joint/Limb Reattachment Procedure of Upper Extremities was removed from the “Qualifying DRG” list because it was merged with MS-DRG 484 and the severity of illness level was reduced.   
 
Facilities should pay special attention to discharge status codes 03-Discharged/Transferred to a Skilled Nursing Facility (SNF) with Medicare Certification in Anticipation of Skilled Care and discharge status code 06 - Discharged/Transferred to Home Under Care of Organized Home Health Service Organization in Anticipation of Covered Skilled Care. According to CMS and the OIG, these particular discharge status codes have created both overpayments and underpayments over the years in relation to the post-acute transfer and special payment policy. More information can be found in a recent OIG audit report.



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