Medicare Compliance & Reimbursement

Glitchy edit missed DRG prorates.

Edits designed to catch transfers from hospitals to home care haven’t been working properly.

Background: Under Medicare’s post acute transfer policy, hospitals’ DRG payments get prorated if they discharge a patient to home care before the median length of stay. The patient must go to home care within three days of discharge to trigger the proration. The Centers for Medicare & Medicaid Services (CMS) expanded the policy to 273 DRGs in 2008. When the policy began in 1999, it applied to only 10 DRGs.

Initially, to work, the proration depended on hospitals’ coding at discharge, but the HHS Office of Inspector General hammered CMS for paying for many full DRGs that should have been prorated under the policy. Then new edits went into place in 2008 that were supposed to catch the transfers, even if hospitals didn’t code them correctly.

But those edits still haven’t been catching all the DRGs that should be prorated, the OIG says in a new report. Medicare Administrative Contractor Palmetto GBA inappropriately paid 1,656 hospital claims subject to the post acute care transfer policy from 2008 through 2011, the OIG says. "The hospitals used incorrect patient discharge status codes on their claims, indicating that the patients were discharged to home rather than transferred to post acute care. Of these claims, 97 percent were followed by claims for home health services."

"Because the post-payment edits were not working properly, Palmetto did not receive the Common Working File (CWF) edit alerts or associated detail (trailer) information notifying it that the miscoded claims required payment adjustments," the OIG explains. "Consequently, Palmetto overpaid the hospitals by $10.8 million."

Palmetto has recouped the funds, it says in its comments on the report. Medicare continues to work on getting the edits to work correctly, the MAC says in the report at go.usa.gov/bP2P.