OIG Work Plan 2019
In case you haven’t heard it, the Office of Inspector General (OIG) is reviewing payments under the Post Acute Transfer (PACT) policy again. Why? The OIG wants to ensure claims are properly paid by the MACs with the controls they have put into place through claim editing. The OIGs follow-up will determine whether CMS corrected the Common Working File (CWF) edits and ensured they are working properly.
What determines proper coding? Proper coding is based upon the intended services after discharge with any adjustment made where the actual treatment plan changed. An common error to watch out for is the proper use of condition code 42 where the patient is discharged home with home health services intended (Discharge Status Code – 06). The use of condition code 42 would indicate that the patient’s home health services were not clinically rated to the discharge from your facility and would bypass the current CMS edits. From a compliance point of view, it is the hospital’s responsibility to ensure that condition code 42 is only indicated on relevant claims.
During our reviews over the last 10 years, we observed several hospitals that utilized condition code 42 in error, resulting in impactful lessons learned. Improper use of condition code 42 bypasses CWF edits and allows for full DRG payments when they might not be warranted, resulting in substantial paybacks to Medicare. We suspect the current OIG efforts may be looking for instances such as this and would recommend you review your claim filings now to ensure condition code 42 is utilized appropriately.
PACT Payment Policy Background
The Post-Acute Transfer Payment Policy was implemented during federal fiscal year 1999 with only 10 DRGs initially included but has expanded over the years to include 280 MS-DRGs. Each year, Medicare examines trends in the length of stay and modifies the geometric mean length of stay that serves as a baseline to determine cases which may be subject to the regulations.
When a patient is transferred to a post acute provider and the actual length of stay is more than one day less than the geometric mean length of stay and the discharge is reimbursed under one of the current 280 MS-DRGs, the hospital will receive a reduced payment, generally on a per diem basis.
The post acute care settings to which these regulations apply are as follows:
- Discharged home with home health services intended (DSC-06) /(DSC-86)
- Transferred to a skilled nursing facility with Medicare skilled services anticipated (DSC-03) / (DSC-83)
- Transferred to a rehabilitation hospital or unit (DSC-62) / (DSC90)
- Transferred to a psychiatric hospital or unit (DSC-65) / (DSC-93)
- Transferred to a long-term care acute hospital (DSC-63) / (DSC-91)
- Transferred to a children’s hospital or cancer hospital (DSC-05) / (DSC-85)
- EFFECTIVE WITH DISCHARGES ON/AFTER October 1, 2018– Transfers to hospice (DSC-50 or 51)
PACT DRGs are published and updated annually both in the proposed and final rules impacting the Inpatient Prospective Payment System (IPPS) model and implemented for payment on October 1st each year. On a national basis, we find that on average, 6-8% of claims are impacted by the post acute transfer regulations with this percentage holding relatively consistent over that last 5-8 years. Of course, this varies based upon your patient population and case-mix.
PACT Policy Update Impact
What does this mean for you? After running simulations to include transfers to hospice under the regulations that became effective on October 1, 2018, we found that an additional 5% or more of your claims may be negatively impacted when patients transferred to hospice because of “short-stays”. CMS estimates that the reduction in payments amounts to $240M. We advise partnering with a consulting and services firm to best determine how this change impacts your specific facility, so you can evaluate and make the appropriate changes. McBee’s exclusive Post Acute Transfer team are ready to help you understand how the post acute transfer regulations are impacting your facility and recover up to the full DRG payment amount through a thorough compliant review process.