Home Health & Hospice Week

Arm yourself and your referring hospitals with facts about the hospital transfer policy.

You could see dwindling hospital referrals--unless you take steps now to protect yourself against the effects of the hospital post-acute care transfer policy.

Last fall, the Centers for Medicare & Medicaid Services expanded its post-acute care transfer policy for hospitals' inpatient prospective payment system from only 30 diagnosis related groups to 182 DRGs. That means for hospitalized patients in those DRGs, CMS prorates the hospital's payment if the patient gets discharged to post-acute care--including home care--before the national mean length of stay (see Eli's HCW, Vol. XIV, No. 44).

But figuring out when proration kicks in under the policy isn't as easy as it may seem. "Where can I determine these mean length of stays?" one Pennsylvania home health agency asks.

Do this: Agencies need look no further than the hospital IPPS rule, a CMS spokesperson explains. Table 5 in the rule lists the DRGs, indicates whether the transfer policy applies to them and lists the length of stay.

Watch out: But the tricky part is that the table lists two different LOS figures. It's the geometric mean length of stay in the next-to-last column that determines when proration applies to DRGs.

Another pitfall is that the geometric mean LOS is listed in partial days because it's a national average, but hospitals can only count the patient's stay in full days. So you'll have to round up to find the proration trigger day.

Example: "In a DRG that has a $10,000 payment and a five-day GMLOS, if the patient is transferred on the first day of the stay, the per diem payment to the transferring hospital should be $4,000 (double the per diem amount)," the CMS official explains. If the patient is transferred after that, the payments to the hospital would be $6,000 for a transfer on day 2, $8,000 for a transfer on day 3 and $10,000 for a transfer on day 4.

Notice the full DRG payment is actually reached one day before the GMLOS, the CMS spokes-person explains. In other words, you can subtract a day from your proration trigger day.

3 Steps to Preserve Your Referrals

Armed with this knowledge, HHAs can take these steps to protect their referrals from hospitals worried about the transfer policy:

• Calculate your impact. Agencies can figure out if the transfer policy affects their referral stream, advises consultant Judy Adams with LarsonAllen Health Care Group based in Charlotte, NC. First, calculate your historic admission day for patients in the most common DRGs you're serving. In other words, ask yourself on what post-admission day you have been receiving those patients and compare it to the GMLOS listed in the table.

"Depending on practice patterns in [your] area, patients may have already been starting home health after the LOS mean," Adams says. That means your referrals should be safe--as long as your referring hospital also understands that calculation.

Don't forget: Also, determine whether you've been admitting patients more than three days after hospital discharge. This is more likely if the referral is coming from non-hospital sources like physicians or family, or if you can't initiate care immediately due to a shortage of therapists. The transfer policy applies only when patients go to home care within three days, Adams notes.

• Stress careful analysis. Once you've determined which patients are affected, help hospitals understand the most cost-effective practices for those patients. For example, because hospitals receive an extra portion of the DRG payment up front, "they may be able to discharge patients before the geometric mean and not lose any money on the case," Adams offers.

This is especially true if the in-hospital costs of the stay are high or if the hospital is full, Adams points out. "Look at the average census of the hospital," she urges. "If the hospital is full most of the time, do they actually earn more by discharging some patients slightly ahead of their average LOS to allow new patients to be admitted?"

Likewise, hospitals may benefit by letting patients in lower-paying DRGs go home so they can admit new patients in higher-paying categories, Adams notes. "From the larger picture, would earlier discharge of those patients actually result in a better financial picture for the hospital because they would have space for patients at higher DRGs?"

• Reap unexpected benefits. If you work with your referring hospitals to ensure patients stay in the hospital until the proration trigger day is met, you may see a financial bonus yourself, Adams adds. "Transfer-ring patients a day or two later to home health may actually be a win-win situation for both the hospital and the HHA," she explains. "The hospital gets a larger proration of the DRG amount and the HHA may have less cost associated with the episode." 

Note: For a copy of the post-acute transfer policy and DRG table included in the IPPS final rule, email editor Rebecca Johnson at rebeccaj@eliresearch.com with "Transfer Policy" in the subject line.