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IT IS A well known fact that ICD-9-CM diagnosis and procedure codes impact hospital reimbursement and compliance. But there is an additional code that often flies under the radar-the discharge status code. Inaccurate discharge status code assignments for Medicare post-acute care transfers can lead to underreimbursement, as well as compliance issues.
In 1998, Medicare enacted the post-acute care transfer (PACT) payment methodology in response to prospectively paid hospitals' attempts to reduce the cost of care by early transfer of patients to post-acute care facilities such as skilled nursing facilities and home health agencies. Because of this, the Centers for Medicare and Medicaid Services (CMS) concluded Medicare was "overpaying" for inpatient care as it was paying the acute care hospital the full DRG reimbursement, as well as a separate payment for the post-acute care transfer facility or agency within the same healthcare encounter.
Initially, only 10 DRGs (or approximately nine percent of Medicare discharges) were selected for the PACT policy. However, due to its financial success, for fiscal year 2015 the DRG list was expanded to 273 MS-DRGs (or approximately 65 percent of Medicare discharges). The discharge status codes impacted by the PACT policy are listed in Table 1 on page 59 and the discharge status codes not impacted by the PACT policy are listed in Table 2, also on page 59.
PACT Payment Methodology
Hospitals are reimbursed a per diem payment under the PACT methodology (see Table 3 on page 60). The per diem payment is determined by dividing the full DRG reimbursement by the DRG specific geometric mean length of stay (GMLOS). The first hospital day receives double the per diem payment followed by the per diem payment for the remainder of the hospital length of stay (up to the full DRG reimbursement). If the DRG is a "special-pay" DRG, the hospital receives 50 percent of the expected DRG payment on the first hospital day followed by the per diem payment for the remainder of the hospital length of stay (up to the full DRG payment).
Challenges with Discharge Status Codes
The two most common reasons for incorrect discharge status code assignments are lack of communication between the hospital and the transferring facility, and incomplete understanding of the...