Transfer DRG Remains Top Concern for Hospitals

Transfer DRG from Hospitals to Nursing homes
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Hospitals have kept an eye on transfer DRG reimbursements for sending patients to nursing homes for some time, but what about when they are sent from a nursing home to a hospital?

What is happening with “transfer DRG” payments in 2020?  Well, the answer is complicated. Usually understood as a focus on proper diagnosis and coding related to transferring a patient out of a hospital to a nursing facility, some hospitals are seeing nursing patients transferred back into hospitals because of the COVID-19 situation.  It’s still a top concern for revenue integrity, so let’s review some recent policies and experiences at hospitals.

In May of this year, the Tampa Bay Business Journal reports that, “Tampa Bay area hospitals are acting as nursing care facilities, now that some positive Covid-19 residents are being evacuated from nursing homes and transferred to those hospitals, and they can expect to be paid more for that service.” The article goes on to quote different hospital spokespeople stating that in some cases “swing beds” (beds that can be used when nursing home patients transfer into hospitals) allows hospitals to establish “swing beds” and bill under a Medicare rate usually applied to skilled nursing facilities.

“CMS stated in the updated guidance that the CARES Act directed the HHS Secretary to increase the IPPS weighting factor for the assigned diagnostic-related group (DRG) for an individual diagnosed with COVID-19 discharged during the public health emergency period.”

While this is good news in some cases, hospitals still have to deal with certain reductions in payments due to transfer DRG rules. In an article from 2018, Becker’s Hospital Review cites the heart of the problem:  “Under the Post-Acute Care Transfer rule, certain DRGs are subject to reduced payment if a patient is discharged early and receives qualifying post-acute care. Today, over 270 DRGs are subject to reduced payment if the patient is discharged early and receives qualifying post-acute care. Fifty-two percent of the time, hospitals may not be receiving the full reimbursement when beneficiaries are transferring to facilities or home health. A staggering 52% of Medicare Discharges are codes as TDRGs, and can average as much as $1500 in payment reductions for each inpatient account.”

A PDF from CMS on the “Acute Care Hospital Inpatient Prospective Payment System,” explains that, “Generally, Medicare pays acute care hospitals an IPPS payment on a per inpatient case or per inpatient discharge basis. The claim for the inpatient stay must include all outpatient diagnostic services and admission-related outpatient non-diagnostic services the admitting hospital, or an entity wholly owned or operated by the admitting hospital, furnished to the patient during the 3 days preceding the date of the patient’s hospital admission.

Acute care hospitals cannot separately bill these services to Medicare Part B. The Centers for Medicare & Medicaid Services (CMS) assigns discharges to diagnosis-related groups (DRGs). A DRG is a grouping of similar clinical conditions (diagnoses) and the service procedures furnished during the inpatient hospital stay. The patient’s principal diagnosis and up to 24 secondary diagnoses, including any comorbidities or complications, determine the DRG assignment. Up to 25 procedures furnished during the stay can affect the DRG. Other factors influencing DRG assignment include a patient’s gender, age, or discharge status disposition.”

But there are some new considerations for Hospitals during the COVID-19 pandemic, including new ICD-10 codes. A recent article by RevCycle Intelligence reports that, “CMS stated in the updated guidance that the CARES Act directed the HHS Secretary to increase the IPPS weighting factor for the assigned diagnostic-related group (DRG) for an individual diagnosed with COVID-19 discharged during the public health emergency period. The federal agency will determine who these individuals are based on the ICD-10-CM diagnosis codes B97.29 and U07.1, a new FAQ stated.” The article also explains that while “CMS has allowed state and local governments, hospitals, and other organizations to create alternate care sites”, the easiest path for reimbursement is to treat these sites as a “temporary expansion of their existing brick-and-mortar location.”

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