Home Health & Hospice Week

List of prorated DRGs jumped from 30 to 182 on Oct. 1.

Your local hospital may reduce your referrals to a trickle, thanks to a major change to the facilities' inpatient prospective payment system.

In May, the Centers for Medicare & Medicaid Services proposed increasing the number of diagnosis-related group payments that are reduced when patients are discharged to post-acute settings, including home care. While in previous years the number of prorated DRGs increased modestly from 10 to 30, CMS proposed to expand the policy to a whopping 231 DRGs starting Oct. 1 (see Eli's HCW, Vol. XIV, No. 22).

In response to vociferous opposition, mainly from hospitals, CMS pared that number to 182 DRGs in its final hospital IPPS rule published in the Aug. 12 Federal Register. "The purpose of this policy is to protect Medicare from paying for the same care twice: once as part of the hospital's payment for the DRG, and then as a separate payment to the post-acute facility," CMS says in a release.

"We are taking this step because in many cases of incomplete hospital stays when patients are transferred, it is not appropriate to pay for a full hospital stay," CMS Administrator Mark McClellan says in the release.

Hospitals are furious with the development. "Neither patient nor provider are well-served when a hospital is penalized for working to ensure that a patient receives efficient care in the right place ... and in the most appropriate setting," blasts the Illinois Hospital Association in a message to members.

True story: But home health agencies may feel the effects of the provision most keenly. One Oklahoma HHA tells Eli that the local hospital is telling physicians not to discharge patients to home care "because the hospital has to split the DRG with home health."

As a result, a cardiovascular surgeon referral source who formerly referred patients to the agency "quite often" has now stopped referring patients altogether, the HHA reports.

Some Home Care Association of New York State members "are concerned about their hospital referrals going forward because of this issue," reports the association's Pat Conole. "In one or two cases the hospital mentioned it to them," he notes.

The newly expanded policy "will have an adverse effect on HHA referrals," warns Gene Tischer with Associated Home Health Industries of Florida. "Many more patients will be staying longer in hospitals and therefore needing less home care," he predicts. Beware Hospitals With Extra Beds Many HHAs didn't see much impact from the old policy, notes consultant Betty Gordon with Simi-one Consultants in Hamden, CT. That could be be-cause the patients weren't discharged early enough to trigger the proration or because hospitals hadn't taken the time to notice a billing rule that affected such a small percentage [...]