Home Health & Hospice Week

If you think including discharges to hospice in Medicare’s proration policy for hospital discharges is adversely affecting hospice referrals, an influential advisory body to Congress does not agree.

Reminder: The Bipartisan Budget Act of 2018 ex­panded the inpatient prospective payment system post-acute care transfer policy to include hospital transfers to hospice beginning in fiscal year 2019. That means when a hospital discharges a patient to hospice “early,” the hospital receives a prorated DRG payment for that patient.

“Short stays are defined as lengths of stay that are more than one day below the geometric mean length of stay for a given diagnosis under Medicare’s … diagnosis related groups,” the Medicare Payment Advisory Commission explains in its annual March report to Congress. “The PAC transfer policy applies to a subset of MS–DRGs that have a relatively high prevalence of short stays followed by discharge to PAC.” In 2019, that was 279 of 761 DRGs, according to the report.

Congress charged MedPAC with examining any potential adverse impact of the PAC transfer policy for hospice patients. Opponents of the PAC transfer expansion to hospice argued that “the original intent of the post-acute care transfer policy was to discourage hospitals from admitting and discharging patients below the GMLOS to a post-acute care setting for therapeutic care,” notes hospital financial consulting firm Besler in New Jersey. “Hospice providers do not provide treatment, only comfort care. Thus, there could never be a duplication of services or duplicate payment for the same care,” Besler points out in online analysis of the policy.

The Commission examined only five quarters’ worth of data, it says, from October 2018 through December 2019, the new report shows.

MedPAC staff did find some indications that the policy is affecting hospice referrals from hospitals. “For both medical and surgical MS–DRGs that are subject to the transfer policy, the share of inpatients discharged to hospice who had ‘long’ inpatient stays increased modestly between first quarter 2018 and first quarter 2020,” the report says. That could indicate that hospices are keeping patients longer in order to avoid the prorated payments from the PAC transfer policy — and delaying access to hospice care.

However, the increase “remains within the historical range,” MedPAC maintains. And “the share of inpatients discharged to hospice with long inpatient stays oscillates over time, which suggests that caution should be taken in interpreting any quarter-to-quarter changes,” the report adds.

As for hospital referrals to hospice in general, “the share of fee-for-service (FFS) Medicare hospital inpatients discharged to hospice has increased or remained stable in the first five quarters of the policy,” MedPAC observes. “For medical MS–DRGs, discharges to hospice appear to have increased slightly in the first five quarters under the new policy, both for those MS–DRGs that are subject to the transfer policy and for those that are not,” the report specifies. “For surgical DRGs, the share of patients discharged to hospice has remained stable both for MS–DRGs that are and are not subject to the transfer policy.”

For the 10 MS–DRGs with the greatest number of discharges to hospice, “the share of inpatients discharged to hospice increased or changed little between first quarter 2018 and first quarter 2020,” MedPAC adds. This “suggests that the PAC transfer policy has not adversely affected hospice referral rates,” the report concludes.

Overall, “this evaluation of data on hospice referrals from inpatient hospitals and on inpatient length of stay for FFS Medicare beneficiaries referred to hospices finds no evidence of adverse effects on beneficiary access to hospice care over the first five quarters of the new policy expanding the PAC transfer policy to hospice,” MedPAC determines.

PAC Transfer Proration Crackdown Ahead

The effect on hospital referrals to hospice may become more pronounced if Medicare cracks down on providers evading the proration policy, as a 2020 HHS Office of Inspector General report called for.

Back in August, the OIG said “Medicare improperly paid most inpatient claims subject to the transfer policy when beneficiaries resumed home health services within 3 days of discharge,” according to the report.

Why? “The hospitals failed to code the inpatient claim as a discharge to home with home health services or … the hospitals applied condition codes 42 (home health not related to inpatient stay) or 43 (home health not within 3 days of discharge),” the OIG charged. “Of the 150 inpatient claims in our sample, Medicare properly paid 3; however, it improperly paid 147 with $722,288 in overpayments.”

Based on that sample, “we estimated that Medicare improperly paid $267 million during a 2-year period for hospital services,” the OIG claimed.

The OIG urged CMS to have its contractors recover the overpayments it identified, identify other similar overpayments, and adjust Common Working File edits to catch such errors going forward. The agency agreed to take those steps. It also agreed to look into using data mining to target and investigate hospitals that are most likely violating policy rules.

However, CMS did not agree to get rid of condition code 42 for unrelated services altogether. The OIG wanted CMS “to deem any home health service within 3 days of discharge to be ‘related’ (which would have saved an estimated $46.6 million during our two-year audit period),” it said.

“The Social Security Act requires complex clinical judgment to determine whether home health care services ‘relate’ to the condition or diagnosis,” CMS highlighted in its response to the report.

With hundreds of millions of dollars hanging in the balance, the OIG, Recovery Audit Contractors, Medicare Administrative Contractors, and more may focus more on this hot topic going forward, experts warn.

Note: The PAC transfer analysis is in Chapter 3 of the report at http://medpac.gov/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf The August 2020 report on the PAC transfer policy and home health discharges is at www.oversight.gov/sites/default/files/ oig-reports/A-04-18-04067.pdf.