Knowledge Base Article

Background

In November 2019, the Office of Inspector General (OIG) released the Report Medicare Improperly Paid Acute-Care Hospitals $54.4 Million for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy.

The OIG performed this review due to the fact that in prior reviews, they had identified almost $242 million in overpayments to hospitals that did not comply with Medicare’s Post-Acute-Care Transfer (PACT) Policy. In fact, there have been eight prior OIG related reviews dating back to the Implementation of Medicare’s Postacute Care Transfer Policy report issued on October 10, 2001.

Specifically, hospitals transferred patients to a skilled nursing facility setting, but submitted a discharge disposition as if the patient were discharged home resulting in higher reimbursement for the hospital.

Review Approach

• The audit period included claims with dates of service from January 1, 2016, through December 31, 2018.
• The review covered $212 million in Medicare Part A payments for 18,647 inpatient claims subject to the PACT Policy.
• Claims Selection:
• First, the OIG identified claims with a patient discharge status code indicating a discharged to home or certain types of healthcare institutions.
• The OIG then used beneficiary information and services dates to identify services from post-acute-care providers that began on the same date as the inpatient discharge for SNF claims or within three days of the inpatient discharge for home health claims.

Review Findings

Medicare improperly paid acute-care hospitals $54.4 million for 18,647 claims subject to the transfer policy.

Process for Determining Overpayment

Acute care hospitals discharging a Medicare beneficiary to home or certain types of healthcare institutions receive the full MS-DRG payment submitted for the hospitalization. “In contrast, Medicare pays an acute-care hospital that transfers a beneficiary to post-acute care a per diem rate for each day of the beneficiary’s stay in the hospital. The total overpayment of $54.4million represented the difference between the amount of the full MS-DRG payments and the amount that would have been paid if the per diem rates had been applied.”

OIG Recommendations

The OIG recommended that CMS direct Medicare Administrative Contractors (MACs) to do the following: 

• Recover the $54.4 million in identified overpayments,
• Identify any claims for transfers to post-acute care in which incorrect patient discharge status codes were used and direct the MACs to recover any overpayments after the audit period, and
• Ensure the MACs are receiving the post-payment edit’s automatic notifications of improperly billed claims and are taking action by adjusting the original inpatient claims to initiate recovery of the overpayments. “If all of the Medicare contractors had received the postpayment edit’s automatic notifications of improperly billed claims and had properly taken action since CY 2013, Medicare could have saved $70,011,503.”

CMS Response

CMS concurred with all of the OIG’s recommendations and provided a plan of action to the OIG to address the recommendations.

January 23, 2020 Palmetto GBA Daily Newsletter: OIG Audit Adjustments

Last week, Palmetto announced that they will be sending letters notifying Jurisdiction J and M hospitals of the OIG Audit Overpayment adjustments. The letters only state the reason for adjustment as “overpayment.” Palmetto GBA identifies the type of bill (TOB) 11K adjustments by entering verbiage in the Remarks field as “OIG AUDIT A-09-19-03007.” 

You can read the full Palmetto Article as well as sign up for Article Update Notifications specific to this issue on the Palmetto website.