Home Health & Hospice Week

Policy would cut Medicare spending by nearly $1 billion — and likely cool referrals.

Reducing hospital payments when they discharge patients to home health “early” in the DRG episode isn’t far enough for one federal watchdog agency. The HHS Office of Inspector General wants Medicare to implement the early discharge penalty for patients in inpatient rehabilitation facilities as well, according to a new report.

The OIG audited more than 230,700 claims from 2017 and 2018 with payments totaling $4.8 billion for stays that ended in early discharges to home health, the new report says. The OIG defines “early discharges” as ones where “the length of the IRF stay was more than 3 days but less than the case-mix group average length of stay and the actual HHA claim date of service was within 3 days of the IRF discharge date.” The three-days-from-discharge timeframe is what CMS uses for the hospital proration policy, too.

“Medicare could have saved approximately $993 million in CYs 2017 and 2018 if CMS had expanded its IRF transfer payment policy to apply to early discharges to home health care,” the OIG maintains in the report. The agency urges CMS to do so.

CMS replies with a maybe. It “will consider the OIG’s recommendation when determining appropriate next steps for the IRF PPS,” CMS Administrator Chiquita Brooks-LaSure says in a comment letter on the OIG’s draft report. “Expanding the IRF transfer payment policy would require notice and comment rulemaking, and the policy developed during a notice and comment period would ultimately determine any potential savings,” Brooks-LaSure points out in the letter.

The 18-page report is at https://oig.hhs.gov/oas/reports/region1/12000501.pdf.