Acute Care Hospital Transfer Policy

The Office of Inspector General (OIG) has conducted several reviews identifying Medicare overpayments to hospitals that didn’t comply with Medicare’s post-acute care transfer policy. The OIG found that some hospitals transferred inpatients to certain post-acute care settings but coded the patient discharge status as a discharge to home. To assure proper payment under the Medicare Severity-Diagnosis Related Group (MS-DRG) payment system, hospitals must be sure to code the discharge/transfer status of patients accurately to reflect the patient’s level of post-discharge care. Prior OIG audits identified over $563 million in overpayments to hospitals that did not comply with Medicare’s post-acute-care transfer policy. These hospitals transferred patients to certain post-acute-care settings, such as skilled nursing facilities (SNFs), but claimed the higher reimbursements associated with discharges to home.

Under the transfer policy, a transfer occurs when a beneficiary’s hospital stay has ended and discharged from an acute-care hospital to a post-acute care setting or if the patient is going home with home health or hospice. A 'post-acute care transfer' occurs when a Medicare beneficiary in an IPPS hospital stay is grouped to one of the MS-DRGs.

To comply with this policy, hospitals must assign the correct patient status code. A patient status code is a two-digit code that identifies where the patient is at the conclusion of a health care facility encounter (this could be a visit or an actual inpatient stay) or at the end of a billing cycle (the 'through' date of a claim). CMS requires patient status codes if the patient is discharged to a post-acute care setting, home, home with home health or home with hospice. 

The patient status code belongs in Field 22 on the UB-04 claim form (or its electronic equivalent) in the Health Insurance Portability and Accountability Act (HIPAA)-compliant, 837 format for all Part A inpatient, SNF, hospice, HHA, and outpatient hospital services. This code indicates the patient’s status as of the 'Through' date of the billing period (Form Locator 6 (FL 6)). For providers who file claims in the Fiscal Intermediary Shared System (FISS), the patient status code is entered on claim page 1. It is important to select the correct patient status code, and if two or more patient status codes could apply, then code to the highest level of care known. Omitting the code or submitting a claim with the incorrect code is a claim billing error and could result in your claim being rejected, or your claim being cancelled, and payment taken back.

Providers are responsible for coding the discharge bill based on the discharge plan for the patient, and if you later learn that the patient received post-acute care, the hospital should submit an adjustment bill to correct the discharge status code following Medicare’s claim adjustment criteria located in the Medicare Claims Processing Manual, Chapter 1, Section 130.1.1, and Chapter 34 (PDF). Patient discharge status codes are part of the Official UB-04 Data Specifications Manual and are used nationwide by institutional, private, and public providers, and payers of health care claims. The National Uniform Billing Committee (NUBC) develop and maintain the data elements and codes. To assist in the proper coding of patient discharge status code, you may access data elements, codes, and FAQs by referring to the UB-04 Data Specifications Manual.

Resources

• Medicare Improperly Paid Acute-Care Hospitals for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy Over a 4-Year Period, but CMS's System Edits Were Effective in Reducing Improper Payments by the End of the Period 
   
• Medicare Hospital Payments for Claims Involving the Acute- and Post-Acute-Care Transfer Policies 
   
• SE21001 (PDF)
   
• Medicare Claims Processing Manual, Chapter 1 (PDF)
   
• Medicare Claims Processing Manual, Chapter 34 (PDF)
   
• Post-Acute Care Transfers: Bill Correctly