OIG Recommends Policy Change for Hospital Discharges to Hospices
Tuesday, June 11, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

In a May 29 report, the Department of Health and Human Services Office of Inspector General (OIG) recommended that legislative or regulatory changes be made to bring hospital transfers to hospice care in line with other settings.

Under its transfer policies, Medicare pays hospitals a per diem rate for early discharges when beneficiaries are transferred to another prospective payment system hospital or to post-acute care settings, including home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and psychiatric hospitals. The per diem payment cannot exceed what the hospital would have received had the patient not been discharged.
This is based on the assumption that hospitals should not receive full payments for beneficiaries discharged early and then admitted for additional care in other clinical settings. An early discharge is defined as more than 1 day earlier than the Medicare-established geometric mean length of stay for an applicable diagnosis-related group (DRG).
In contrast, Medicare makes full payments to hospitals that discharge patients to their homes or hospice care. The report found that 30 percent of all hospital discharges to hospice were earlier than expected. These discharges would have received the per diem payment rather than full payment if hospice were included under the hospital transfer payment policy. (Ten percent of early discharges to hospice were Septicemia DRG with another 30 percent being DRGs related to respiratory, nervous, heart or hemorrhage conditions.)

The OIG report that states that the Centers for Medicare and Medicaid Services (CMS) could have saved roughly $600 million in 2009 and 2010, if it changed its transfer policies for hospice.

In its response, CMS said that it would like to study the recommendation further and noted concerns that adopting a transfer policy for hospice might produce lower than expected savings as hospitals would be discouraged from making transfers to more appropriate and cost effective care settings until the end of a patient’s length of stay. Additionally, CMS said it needs to explore whether it has the authority to make such a change.

OIG responded that a majority of hospital officials it contacted for the audit report did not believe a reduction in hospital payments resulting from the a hospice transfer policy would alter medical practice in a way to increases health risks for beneficiaries or creates an incentive for hospitals to extend hospital stays.
To review the full OIG report on the hospice transfer policy, click here.

For more information on another recent OIG report on hospice and general inpatient care click here.
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