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Transfer DRG Services – Payment Analysis of Medicare Discharges to Post-Acute Care

Posted 11:10 PM by

When a Medicare patient is discharged from a hospital for a post-acute care transfer, the hospital receives a prorated DRG payment (Transfer DRG). Following are examples of post-acute care discharges:

  • To a hospital or distinct part hospital unit excluded from the prospective payment system (i.e. rehab or psych)
  • To a Medicare-certified skilled nursing facility
  • To a home under a written plan of care for the provision of home health services from a home health agency and those services begin within three days after the date of discharge

Medicare pays the hospital based on the Transfer DRG code used for the patient at his/her discharge. If the patient did not actually receive the post-acute care as instructed, the hospital should have been entitled to the full DRG payment from Medicare instead of the prorated amount.

Claims may be miscoded for a discharge subject to the Transfer DRG policy for the following reasons:

  • Patient is discharged from hospital with expectation of transfer to psych facility and leaves discharge area against medical advice
  • Patient went to assisted living or a bed other than a Medicare-certified bed
  • Patient went home and refused any treatment except from spouse
  • Patient went home, but did not start home health services within three days of the date of discharge

It is important that potential Medicare claims be reviewed for appropriate additional reimbursement. 

The following is an estimated example of potential results we see from a Transfer DRG analysis for a 12-month period:                                                                       

Total Medicare FFS Discharges12,00812,008
% of Claims with Issue.5%1.5%
Estimated # of Claims with Issue60180
Avg. Recovery Per Claim$2,000$2,000
Estimated Opportunity$120,080$360,240

KSM can assist in this analysis and quantify the financial impact. We will also assist the hospital in recapturing identified Medicare reimbursement via our analysis and provide detailed tracking of adjudicated claims.

The hospital’s role in this analysis is:

  • Complete and sign authorization forms (including form for Medicare and CWF)
  • Provide the data extracts for the analysis (Medicare discharges and detailed PS&Rs)
  • Re-bill the patient accounts identified in the Transfer DRG analysis.

About the Author
Lisa Curry is a partner in Katz, Sapper & Miller’s Healthcare Resources Group. Lisa works closely with her healthcare clientele to devise and implement tax and accounting strategies to help them minimize tax liability and thoughtfully plan for the future. Connect with her on LinkedIn.

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