OIG: Medicare improperly paid hospitals more than $50 million for post-acute transfers

Wednesday, December 11, 2019

Medicare made $54.4 million in improper payments to acute care hospitals for post-acute transfers that did not comply with Medicare’s policies, according to a November 1 report from the Office of Inspector General (OIG). Previous OIG reviews have identified long-standing compliance issues with Medicare’s post-acute transfer policy and millions in overpayments.

Under Medicare’s post-acute transfer policy, a full MS-DRG payment is made to an acute care hospital that discharges an inpatient to home or certain types of healthcare institutions. If an inpatient is discharged to a post-acute facility, Medicare pays the acute care hospital a per diem rate for each day of the patient’s stay in the hospital.

Prior OIG reviews of acute care hospital claims subject to the post-acute transfer policy revealed almost $242 million in overpayments to hospitals that failed to comply with the policy. For this review, the OIG followed up on its previous findings by looking at claims submitted from 2016–2018. Of the 18,647 claims it included in this review, none should have received the full MS-DRG payment—all should have instead received the per diem payment. These claims were incorrectly coded as discharges to home or to certain types of healthcare institutions when they should have been coded as transfers to post-acute care. A total of 83% of the claims it reviewed were followed by claims for home health services and 17% were followed by claims for services in other post-acute settings including skilled nursing facilities.

The CMS Common Working File (CWF) contains prepayment and postpayment edits that are supposed to catch these errors. CMS responded to this OIG review by saying that its edits appropriately detected inpatient claims subject to the post-acute transfer policy. However, four Medicare contractors stated that they did not receive automatic postpayment edits and notifications to take action on improperly billed claims. Two contractors reported that although they did receive the automatic notifications, they did not address them until April 2017. Only one Medicare contractor received the automatic notifications and took action to address them in a timely manner.

The OIG recommended that CMS direct its contractors to recover the $54.4 million in improper payments, identify any affected claims submitted after 2018, and recover those improper payments. The agency also recommended that CMS ensure that its contractors are receiving postpayment edit notifications and acting on them in a timely manner. CMS concurred with the OIG’s recommendations and plans to address them.

Organizations should review internal policies to ensure that they are complying with Medicare’s post-acute transfer policy. Internal audits can help identify weaknesses and guide education and internal controls.