Corporate Compliance

Note: Hospital compliance with Medicare's post acute transfer rules

Medicare Insider, March 17, 2009

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Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.

At the end of February, the DHHS Office of Inspector General (OIG) released a report on hospitals’ compliance with Medicare’s post acute transfer policy. In that report, the OIG estimated that certain hospitals improperly coded 15,051 claims and that, as a result, Medicare overpaid $24.8 million to these hospitals for the three-year period that ended September 30, 2005. The OIG included post acute transfers as an area of focus in its FY 2008 Work Plan. In that Work Plan, the OIG indicated that it would examine hospitals’ control systems to see whether they accurately coded patients’ status at the time of discharge when those patients were being discharged to certain post acute settings, rather than to their homes. 

Hospitals are ordinarily entitled to a full DRG payment when patients are discharged to their home following a covered inpatient Part A stay. Under the Medicare post acute transfer policy, however, hospitals may receive less than the full DRG payment when patients are discharged to certain post acute settings, rather than to their homes. The post acute settings which may trigger the applicability of the transfer rules include the following:

  • A non-IPPS hospital or a distinct non-IPPS unit (e.g., a facility other than a short-term, acute care hospital, including inpatient rehabilitation facilities [patient status 62], long-term care hospitals [patient status 63], psychiatric hospitals [patient status 65], children’s hospitals [patient status 05], and cancer hospitals [patient status 05]), beginning on the day of discharge
  • A Medicare certified skilled bed in a Medicare certified skilled nursing facility or SNF unit to receive skilled care (patient status 03), beginning on the day of discharge
  • Home health care (patient status 06), beginning within 3 days of discharge

The post acute transfer rules are only triggered, however, if the DRG assigned to that inpatient discharge is one of a limited number of MS-DRGs. For FY 2009, only 272 out of 746 MS-DRGs will trigger the post acute transfer rules when the patient is discharged to one of the post acute settings listed above. The DRGs that trigger these rules are identified in Table 5 of the FY 2009 IPPS final rule.

Hospitals are responsible for identifying those discharges to which the post acute transfer rules apply by reporting the appropriate patient status code in FL 17 on the UB-04. Instructions for completing the UB-04, including FL 17, are set out in the Medicare Claims Processing Manual, Chapter 25, Section 75.1 and following. CMS has also published a special edition MLN Matters Article—SE 0801—that provides additional guidance on the use of status codes.

In light of the OIG’s recent scrutiny, hospitals should review the integrity of their current control systems with regard to the following:

  • What information do coders use to identify discharge status?
  • Where does information come from—e.g., discharge summary, patient abstract?
  • What factors are in place to support accuracy of information (both before and after initial claim submission)?
  • History—have claims been accurate in the past?
  • What type of follow through is in place to assure patients were actually admitted to those post acute settings and/or to resubmit adjustment claims with appropriate status codes, when necessary?



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