News: CMS could save $694 million with adjustment to post-acute transfer policy, OIG says

The Office of the Inspector General (OIG) recently concluded an audit aimed at determining whether significant cost savings could be realized for the Medicare program in post-acute care (PAC) discharge policy, according to a press release.

The OIG conducted a random sampling of 100 acute care inpatient hospital claims occurring between 2017 and 2019. It found that, of the 100 patients sampled, 99 could have had transfer payments based upon a “reduced per diem rate (rather than the full payment),” resulting in a net Medicare cost savings of $1 million.

According to the OIG, this amount “represents the difference between the amount paid to the hospitals under the current policy for discharges to PAC and the amount that would have been paid if the policy had been expanded to include the Medicare Severity Diagnosis-Related Groups (MS-DRGs) associated with our sampled claims.”

However, the OIG noted that while this policy change could negatively impact hospital revenue, the transfer payment “would have exceeded hospital costs for an estimated 65 percent of all claims that hospitals submit to Medicare.”

In total, if the hospital transfer policy had been extended to all MS-DRGs, the OIG estimated that Medicare could have saved approximately $694 million, or an average of $6,407 per claim.

As such, the OIG recommended that CMS “conduct an analysis of its hospital transfer payment policy for discharges to PAC” and to “expand the policy as necessary.”

Editor’s note: To read the OIG press release, click here. To read the OIG summary report, click here. To read the OIG full report, click here.