Compliance with Post-Acute Care Transfers (Discharge Status)

The Centers for Medicare and Medicaid (CMS) MLN Matters recently published (2/25/2021) a provider compliance reminder regarding “Post-Acute Care Transfers”, often referred to as the PACT rule, and the correct coding and billing for these inpatient hospital claims. CMS quoted information from the recent Office of Inspector General (OIG) report which identified incorrect hospital inpatient claims when the patient was transferred to a post-acute level of care. This OIG report is titled, “Inadequate Edits and Oversight Caused Medicare To Overpay More Than $267 Million for Hospital Inpatient Claims With Post-Acute-Care Transfers to Home Health Services”, dated 08-05-2020, report A-04-18-04067. The report states the OIG found Medicare improperly paid inpatient claims subject to the transfer policy. Many hospitals did not properly code inpatient claims as a discharge to home when patients resumed home health services within 3 days of discharge. 

CMS recommends that hospitals visit the FY 2021 Inpatient Prospective Payment System (IPPS) Final Rule webpage to stay up to date on the latest policy changes and payment updates. In addition, hospitals should access and learn more about adjustment of claims/bills; transfer between IPPS and claim reopening and revision to visit the following:

The discharge disposition code 06 is for patients who are discharged or transferred to home under care of organized home health service organization. There are times when the hospital believes the patient was discharged “home” but starts home health services within 3 days after the hospital discharge. Other times the home health services are not related to the inpatient hospital stay and as such need a condition code on the claim/bill to identify this so the IPPS payment will not be adjusted. So, to ensure proper coding of the patient discharge status when discharged/transferred to home health. hospitals should use condition codes 42 and/or 43.

  1. Condition code 42 is used when a hospital patient is discharged to home health service and the home health treatment plan is unrelated to the inpatient stay.
  2. Condition code 43 is used when the hospital patient is discharged with home care services that do not begin until after the third day post-discharge

Hospitals ARE responsible for coding the discharge status based on the discharge plan for the patient, and if later the hospital learns 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.

Read the MLN21001: Review of Hospital Compliance with Medicare’s Transfer Policy with the Resumption of Home Health Services & Other Information on Patient Discharge Status Codes (PDF). In addition, note that, prior OIG audits also identified a compliance issue with the PACT rule. Discuss the review of compliance with discharge status (disposition) codes with your auditing team and ensure that this data element is being validated.

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