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Medicare Policy Clarification: Partial Episode Payment

Homecare Insider, September 12, 2011

The Medicare Claims Processing Manual addresses the issue of partial episode payments in Section 10.1.14. That guidance has recently been clarified by the Centers for Medicare and Medicaid Services (CMS).

If a homecare agency discharges a patient because they have met their goals or the patient no longer qualifies for Medicare coverage, the episode ends and if the patient is referred back to the agency within that 60 day episode, a new episode of care must be established. The first episode will result in a partial episode payment (PEP). On the other hand, if a patient is hospitalized during an episode and the services resume during the same episode, whether or not the agency has discharged the patient upon transfer, those services must be billed as part of that episode. In other words, the agency cannot establish a new episode/start of care.

If an agency chooses to discharge a patient upon transfer to the hospital because, for example, they don’t expect the patient to resume services, the discharge is not recognized (for payment purposes) if the patient does return to the agency within the same 60-day episode of care. All services provided both before and after hospitalization must be billed on the one claim.

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