OIG: Early Hospital Discharge to Hospice Warrants Transfer Payment Policy: Medicare Could Save Millions
June 4, 2013 10:11 AM
The Department of Health and Human Services (HHS) Office of the Inspector General (OIG), in “Medicare could Save Millions by Implementing a Hospital Transfer Payment Policy for Early Discharges to Hospice Care," (https://oig.hhs.gov/oas/reports/region1/11200507.asp) issued May 28, 2013, is recommending a regulatory or legislative change establishing a hospital transfer payment policy for early discharges to hospice care.
The OIG estimates that during calendar years (CYs) 2009 and 2010 Medicare could have saved over $600 million with such a policy in place.
Discharges from acute-care hospitals to hospice care increased 66 percent between CY2007 and CY2010 while Medicare hospital payments for services to beneficiaries discharged to hospice care increased 80 percent - from $1.5 billion to $2.7 billion - over the same time period.
OIG’s examination indicates that about 30 percent of all hospital discharges to hospice care were early discharges. Since Medicare does not have an early discharge policy in the case of patients transferred to hospice, hospitals were paid the entire Diagnosis-Related Group (DRG) rate. In cases where an early transfer policy is in place- transfer to another hospital for continued treatment or early discharge of patients with specific diagnoses to post-acute settings - hospitals are paid on a per-diem basis. Early discharge is defined as a discharge occurring more than one day earlier than the geometric mean length of stay for an applicable hospital DRG.
The most common DRG for early discharge to hospice care during the study period, as identified by the OIG, was 871 (Septicemia), which accounted for more than 10 percent of all the billed DRGs. Nine other DRGs, related mainly to respiratory, nervous, heart, or hemorrhage conditions, accounted for 30 percent of the DRGs for early discharges to hospice care.
The OIG has recommended, as part of the report, that “CMS change its regulations or pursue a legislative change, if necessary, to establish a hospital transfer payment policy for early discharges to hospice care.” CMS commented that the agency wants to study the recommendations further, but also expressed concern that such a policy could discourage hospitals from making transfers to more appropriate and cost-effective care settings until the patient’s length of stay would no longer result in a reduced payment rate.