News Alert: Widespread Recoupments of Incorrect Post-Acute Transfer Claims Have Begun

At issue: hospital overpayments of $54.4 million.

There has been recent talk on an online user group that many hospitals have had recoupments of payment for inpatient admissions from 2016 to 2018 due to an “incorrect discharge status code.” This appears to be in response to a November 2019 audit by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), titled “Medicare improperly paid acute-care hospitals $54.4 million for inpatient claims subject to the post-acute-care transfer policy.” 

This audit of 18,647 claims was performed on claims for which the discharge status was listed as home or custodial care, but there was a corresponding claim for post-acute care services in the applicable time frame: one day for skilled nursing facility (SNF), inpatient rehabilitation facility (IRF), long-term acute care (LTACH), or other acute-care hospital services, or three days for home health services.

The Medicare payment rules are clear: if a patient is discharged from an acute-care hospital and admitted the same day for post-acute care to a SNF, IRF, LTACH, or another hospital, the discharge status must reflect that destination, even if the patient is discharged to home and then admitted to one of those facilities later that day. For home health services, any initiation of care in the three calendar days after discharge would lead to the discharge status code reflecting that home care has begun.

“It is not uncommon for a patient to go home without home care services being arranged and then have their primary care physician order home care, unbeknownst to the hospital,” wrote Ronald Hirsch, MD, in an email to RACmonitor. “But it is still the hospital’s duty to find that out and adjust their claim.”

“What is not clear to me,” added Dr. Hirsch, vice president of R1 RCM, “is how all 18,647 claims in the OIG audit could be paid the wrong amount. If there is a post-acute transfer, the admission is paid on a per-diem basis.”

According to Hirsch, unless the length of stay is more than one day less than the geometric mean length of stay (LOS) for that DRG, the per-diem amount is exactly the same as the DRG.

“I cannot believe all 18,647 admissions had a length of stay that short,” Hirsch said. “So, are they still recouping the full DRG when the payment amount was correct, but the discharge status code was wrong? And if the payment should have been less, why would they not simply recoup the difference? The OIG has demonstrated in the report that the calculation is relatively simple.”

Since the claims are all outside the timely filing limit of one year, the hospitals may ask the Medicare Administrative Contractors (MACs) to reopen them, as described in MLN Matters SE 1426.

“I would think that if there is no payment differential, one could make an argument that the claim should be paid in full and recoupment was wrong, and if there was an overpayment that only the differential should be recouped,” Hirsch explained. “But the MACs have discretion to reopen claims, and it is unknown if CMS or the OIG (U.S. Department of Health and Human Services Office of Inspector General) have issued special instructions for these cases.”

Programming Note: Listen to Dr. Ronald Hirsch’s live reporting on Monitor Mondays, 10-10:30 a.m. EST.