Home Health & Hospice Week

Isn’t 275 DRGs enough to prorate?

You could see favorable hospital referrals slow if Medicare adopts a new recommendation from a federal watchdog agency.

Recap: The Centers for Medicare & Medicaid Services prorates hospitals’ MS-DRG payment amounts if they discharge patients “early” to post-acute care settings including home health and hospice, the HHS Office of Inspector General reviews in a new report on the topic. That way CMS doesn’t overpay hospitals for care. CMS began prorating hospital DRG payments back in 1999 for home health (see HHHW, Vol. XIII, No. 22) and 2018 for hospices.

That move did seem to have a dampening effect on hospital referrals when first implemented. And that effect could grow if CMS starts applying the proration to all DRGs, as the OIG recommends. The agency estimates that Medicare would have saved $694 million from 2017 through 2019 if it had expanded its hospital transfer policy to include all MS-DRGs.

CMS started out prorating only 10 DRGs back in 1999, but now is up to 275 DRGs, notes software vendor MD Clarity on its website.

In a comment letter on the report, CMS Administrator Chiquita Brooks-LaSure “reiterates that our longstanding policy … is to limit the hospital post-acute care transfer policy to MS-DRGs with a high volume of post-acute discharges,” she says.

The 21-page report is at https://oig.hhs.gov/oas/reports/region1/12100504.pdf.