Home Health & Hospice Week

Get ready for another possible expansion to the post-acute transfer policy.

After a promise of stability, home care providers are likely to see a new threat to their post-hospital patient referrals.

Background: When the Centers for Medicare & Medicaid Services cut hospitals' payment rates for certain patients referred to home care upon discharge, home health agencies saw physicians reduce their referrals for those patients. And then when CMS expanded the proration from 30 to 182 DRGs in 2005, the referral reduction increased dramatically for some agencies (see Eli's HCW, Vol. XIV, No. 44).

Now CMS may want to expand the transfer policy even further, the agency says in the proposed rule for the inpatient hospital prospective payment system issued April 13. Overall, CMS proposes to increase the number of hospital inpatient DRGs from the current 528 to 745 starting in fiscal year 2008.

As part of that increase, CMS would put all the new DRGs through the test to see if they must be prorated when patients are admitted to home care or another post-acute setting after hospital discharge. To be included in the prorated DRGs, the DRG must have a geometric mean length of stay of at least 3 days; at least 2,050 post-acute care transfer cases; and at least 5.5 percent of the cases discharged to post-acute care prior to the mean length of stay for the DRG, CMS explains in the proposed rule.

Reminder: CMS doesn't prorate the hospital DRG payment unless the patient enters home care within three days of discharge. CMS pays hospitals twice the per-diem rate for the first day, then the regular per diem rate for every day after that, up to the DRG's full amount.

The last time CMS tested the DRGs for inclusion was based on 2004 data. The agency said in its 2006 IPPS rule that it didn't want to revise the transfer policy DRGs every year.

"We established this policy to promote certainty and stability in the post-acute care transfer payment policy," CMS says in the 2008 proposed rule. "Annual reviews of the list of CMS DRGs subject to the policy would likely lead to great volatility in the payment methodology with certain DRGs qualifying for the policy in one year, deleted the next year, only to be reinstated the following year," CMS explains.

Reassessment: But now that CMS wants to overhaul and expand the overall DRG system, DRGs will be back on the transfer policy testing block. CMS will use these additional criteria to select prorated categories: The total number of discharges to post-acute care in the DRG must equal the 55th percentile or above for all DRGs; and the proportion of short-stay discharges (before the GMLOS) to post-acute care to total discharges in the DRG [...]