CMS MACs Recouping Payments for Incorrect Discharge Dispositions

In November 2019, the Office of Inspector General (OIG) issued a report announcing that Medicare improperly paid acute-care hospitals $54.4 million for claims that used the incorrect patient discharge status codes. The majority of the errors were claims coded as a discharge to home that were then followed by claims submitted for home health services. The claims should have been coded as transfers to post-acute care when home health services were provided after discharge.

Medicare pays for the full Medicare Severity Diagnosis-Related Group (MS-DRG) to the acute-care hospital when the patient is discharged home or to other certain institutions. However, the hospital is paid a per diem rate for each day of the inpatient admission when the patient is transferred to post-acute care, which would include discharge to home with home health services. The OIG report indicates that the $54.4 million improper payments identified during the audit that were issued by the Medicare Administrative Contractors (MAC) represent the difference between the full MS-DRG payment and the per diem payment. The report indicates that some MACs either didn’t receive automated notifications of the improperly billed claims or that they didn’t take action to adjust the claims appropriately. The OIG recommended in the report that the Centers for Medicare & Medicaid Services (CMS) direct the MACs to recoup the identified overpayments.

As the MACs began the recoupment process, there were some reports early on that at least one MAC was recouping the full MS-DRG payment instead of the difference between the full MS-DRG payment and the per diem payment. Fortunately, that process was soon corrected. Acute-care hospitals should ensure that their MAC is recouping the difference in payment appropriately. And, because CMS allows per diem payment up to the full amount of the MS-DRG, there may be some claims with incorrect discharge disposition where no recoupment should occur. In other words, the per diem payment is equal to the MS-DRG payment.

Also, in the report, the OIG recommended that CMS direct their contractors to identify and recoup monies for any claims with improper discharge status codes that occurred after the OIG audit was completed. The OIG also recommended that CMS ensure their contractors are receiving the automated notifications for these improperly billed claims and are taking action to adjust the claims.

The OIG report can be found here: https://oig.hhs.gov/oas/reports/region9/91903007.asp

As the MACs began the recoupment process, there were some reports early on that at least one MAC was recouping the full MS-DRG payment instead of the difference between the full MS-DRG payment and the per diem payment. Fortunately, that process was soon corrected. Acute-care hospitals should ensure that their MAC is recouping the difference in payment appropriately. And, because CMS allows per diem payment up to the full amount of the MS-DRG, there may be some claims with incorrect discharge disposition where no recoupment should occur. In other words, the per diem payment is equal to the MS-DRG payment.

Also, in the report, the OIG recommended that CMS direct their contractors to identify and recoup monies for any claims with improper discharge status codes that occurred after the OIG audit was completed. The OIG also recommended that CMS ensure their contractors are receiving the automated notifications for these improperly billed claims and are taking action to adjust the claims.

The OIG report can be found here: https://oig.hhs.gov/oas/reports/region9/91903007.asp

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