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Recovery Auditor Finding: Post-Acute Care Transfer

Published on 

Monday, October 24, 2016

The October 2016 release of the Medicare Quarterly Provider Compliance Newsletter included two issues specific to hospitals. This article focuses on the Recovery Auditors automated review performed to identify discharge status codes that had been improperly submitted under the IPPS Post-Acute Care Transfer (PACT) Policy.

Recovery Auditor Finding

“Analysis of discharge status codes and secondary claim data identified improper payments. Where a hospital used discharge status code 01, but should have shown a transfer to another care setting with a different discharge status code, the hospital may be overpaid for the inpatient services. It is crucial that hospitals place the correct discharge status code on claims to avoid subsequent overpayment identification and recovery.”

Transfer Policy Background

MLN® Acute Care Hospital Inpatient Prospective Payment System Fact Sheet (ICN 006815) indicates that under the Transfer Policy DRG payments are reduced when:

  • The patient’s LOS is at least 1 day less than the geometric mean LOS for the DRG;
  • The patient is transferred to another hospital covered by the Acute Care Hospital IPPS or, for certain MS-DRGs, discharged to a post-acute setting (PACT Policy);
  • The patient is transferred to a hospital that does not have an agreement to participate in the Medicare Program (effective October 1, 2010); and
  • The patient is transferred to a CAH (effective October 1, 2010)

PACT Policy and Discharge Status Codes

Cases with a length of stay less than the Geometric Mean Length of Stay (GMLOS) for a PACT DRG will not reimburse the full Diagnosis Related Group (DRG) payment if the patient was transferred to a post-acute care (PAC) setting. This policy involves the following patient discharge status codes:

Discharge Status CodeDischarge Status Description
01Discharge to home or self-care (Routine Discharge
03Discharged/transferred to skilled nursing facility (SNF) with Medicare certification in anticipation of covered skilled care
05Discharged/transferred to designated cancer center or children’s hospital
06Discharged/transferred to home under care of organized home health service organization in anticipation of covered skilled care
62Discharged/transferred to designated inpatient rehabilitation facility including distinct part units of a hospital
63Discharged/transferred to a long term care hospital (LTCH)
65Discharged/transferred to a psychiatric Hospital or psychiatric distinct part unit of a hospital

When a patient is discharged with the status code of 01, Medicare’s overpayment edit will look for:

  • “The presence of a transfer claim to a Skilled Nursing Facility, Cancer Hospital, Psychiatric Hospital, Children’s Hospital, Inpatient Rehab Facility, or Long Term Care Facility that commences or continues within one day of the acute care discharge, or
  • A transfer claim to Home Health Care that commences or continues within three days of the acute care discharge.”

How to Avoid this Problem

Medicare advises that “hospitals should take steps to assure claims coders understand that the patient discharge status code is a crucial data element in determining payment for inpatient stays.” They go on to provide links to resources providing more information on how to avoid these errors.

MMP, Inc. advises that key stakeholders in your facility read and share the October 2016 issue of the Medicare Quarterly Compliance Newsletter.

Article Author: Beth Cobb, RN, BSN, ACM, CCDS
Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Protection Assessment Tool.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.