By Rebecca Mayo, J.D.
An OIG review found that $54.4 million had been overpaid to acute-care hospitals due to improper billing of claims subject to the post-acute-care transfer policy.
Improper billing resulted in acute-care hospitals being reimbursed for the full Medicare Severity Diagnosis-Related Group (MS-DRG) payment rather than the per diem amount for 18,647 claims, totaling $54.4 million. The HHS Office of Inspector General (OIG) reviewed claims and found that inpatient stays that resulted in patients being transferred to certain post-acute-care settings were billed as though the patients were discharged to home in order to claim a higher reimbursement rate. The OIG further found that the Common Working File (CWF) did not always notify Medicare contractors of postpayment edits and when it did, contractors did not always act to make the adjustments to recover the overpayment (OIG Report, No. A-09-19-03007, November 12, 2019).
Payment rules. Generally, an acute-care hospital will transfer a beneficiary to a post-acute-care setting, such as a skilled nursing facility (SNF), when the beneficiary’s acute condition is stabilized and the beneficiary requires further treatment. Under the post-acute care transfer policy, a transfer occurs when a hospital stay was classified within specified MS-DRGs is discharged and on the same day is admitted to a SNF, hospice, or a hospital that is not reimbursed under the inpatient prospective payment system (IPPS) or receives home health services related to the condition within three days. An acute-care hospital that discharges an inpatient to home or certain types of healthcare institutions receives a full MS-DRG payment. If the patient is transferred to post-acute care, the hospital receives a per diem rate for each day of the beneficiary’s stay in the hospital, which is intended to cover the inpatient costs. However, the total per diem payment cannot exceed the full MS-DRG payment that would have been made if the beneficiary had been discharged to home.
Prior reviews. CMS’s CWF system processes all inpatient claims for verification, validation, and payment authorization. The CWF includes prepayment and postpayment system edits that should prevent or detect overpayments for an inpatient claim subject to the post-acute-care transfer policy when there is a subsequent post-acute-care claim. Prior reviews identified almost $242 million in overpayments to hospitals that did not comply with Medicare’s post-acute-care transfer policy. CMS established edits to prevent or detect overpayments, but a subsequent review found that the edits were not working properly. The review found that Medicare contractors did not always receive the automatic notifications of improperly billed claims, the edits incorrectly calculated the number of days between the dates of service on an inpatient claim and a home health claim, and the edits could not properly match inpatient claims with all home health claims because the range of provider numbers that identified home health agencies was not complete. The OIG recommended that CMS correct the edits, and CMS agreed.
Current review. The OIG reviewed $212 million in Medicare Part A payments for 18,647 inpatient claims with specified MS-DRGs in which beneficiaries were transferred to post-acute care. The OIG also looked at inpatient claims for the three years before the audit period to determine whether the prepayment and postpayment edits were working properly to detect and prevent overpayments during that period.
The OIG found that from January 1, 2016 through December 31, 2018, Medicare improperly paid acute-care hospitals for 18,647 inpatient claims subject to the post-acute-care transfer policy. The hospitals improperly billed the claims by using the incorrect patient discharge status codes, and were reimbursed the full MS-DRG payment rather than the per diem payment they should have received. This resulted in $54.4 million in overpayments to acute-care hospitals. Most of these claims were for beneficiaries who began home health services within three days of the date of discharge from the acute-care hospitals. The review also found that Medicare contracts were not always receiving the postpayment edit’s automatic notifications and some that did receive the notifications, did not immediately take action. If the Medicare contractors had received the notifications since 2013 and had taken action, Medicare could have saved $70 million.
Recommendations. The OIG recommended that CMS direct the Medicare contractors to recover the $54,372,337 in identified overpayments. The OIG also suggested that CMS should identify any claims for transfers to post-acute care in which incorrect patient discharge status codes were used, and direct Medicare contractors to recovery any overpayments made after the OIG audit period. CMS should also ensure that Medicare contractors are receiving the postpayment edit’s automatic notifications of improperly billed claims and are taking action by adjusting the original inpatient claims to initiate recovery of the overpayments. CMS concurred with the recommendations and indicated that it planned to take actions to address the recommendations.
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