Hospice Transfer Seen as a Reduction in Hospital DRG Payment

Providers should consider how to optimize the patient’s health status prior to discharge to hospice.

In his RACmonitor article of Aug. 8 regarding the recent proposed final rule for inatient amission orders, Dr. Ronald Hirsch reported that the Centers for Medicare & Medicaid Services (CMS) added inpatient transfers to hospice to those admissions subject to a reduced DRG payment if their length of stay is less than the geometric mean minus one day, effectively including transition to hospice as a transfer DRG situation.

Authority for CMS to do this comes from the 2018 budget (Section 4.12.4 c of the Bipartisan Budget Act of 2018). Per the article, “in the commentary, CMS said that commenters objected to this change because ‘such payment policies would dissuade transfers to hospice care.’”

The commenters’ objections are telling. And frankly, there must be change.

First, let’s look at potential exposure.  The latest list from CMS of MS-DRGs for 2018 includes the geometric and arithmetic lengths of stay for each.  A quick perusal reveals that for many DRGs the GMLOS is shorter than previous years.  The most common ones are in the 3.5-day range with the higher weighted DRGs only in the 12 to 13-day range.  To my mind this creates an exposure that can be overcome with thoughtful Day 1 discharge planning. 

Let’s ask ourselves why hospice referrals are made, for what purpose. Why a rush? If death is imminent, why refer to hospice at all? Are acute medical interventions that could strengthen chances of success with hospice given consideration? And why are many hospices so willing to enroll patients when death is expected in a day or two? Hospices face penalties for too short overall lengths of stay. 

Referrals to hospice are frequently the result of misunderstandings of the purpose of hospice. I can say this now, as my own understanding has evolved. If the aforementioned rule becomes final, more thoughtful action in discharge planning will also have to become the rule in a revenue-sensitive environment.

A story to illustrate my inquiries: my mother was admitted to hospice for end-stage chronic obstructive pulmonary disease (COPD). For two years, until her passing, they kept her at home, without a single hospitalization. “Don’t make me have to see you die on a ventilator,” I pleaded, although the decision to enter hospice was hers and her doctor’s alone. Imagine, no family consultation! I objected until I understood the end-stage COPD program objectives.

Another example: a family that insisted that their loved one, near death, die at home. Hospice enrolled the fragile patient. The patient died, en route, alone. This happened over my objections. The outcome was foreseeable.      

Both illustrate the CMS concerns about hospice transitions of care: one positive, one not. 

We should expect better of ourselves, and hospices. Hospitals can develop palliative care that will meet patient and family needs without hospice. Family aftercare needs can be met in many ways. Perhaps another day or two of acute care will optimize the patient’s health status, positively impacting the hospice experience.

I am a true believer in hospice. Not one of my patients referred for end-stage disease management has returned to the hospital in the last six months. Under the new rule, hospice enrollment for those near death will be revealed as problematic. Referrals intended to save patients from frequent crisis and hospital utilization will become more common.   

Do the hospices seeking your referrals offer open-ended disease management programs? Are we planning for the transition to hospice, or just throwing in the towel?

Demand better of hospice, and ourselves.    

 

Comment on this article

Facebook
Twitter
LinkedIn

Marvin D. Mitchell, RN, BSN, MBA

Marvin D. Mitchell, RN, BSN, MBA, is the director of case management and social work at San Gorgonio Memorial Hospital, east of Los Angeles. Building programs from the ground up has been his passion in every venue where case management is practiced. Mitchell is a member of the RACmonitor editorial board and makes frequent appearances on Monitor Mondays.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

AI, Audits, and the Future of the Revenue Cycle

Artificial intelligence is rapidly transforming healthcare revenue cycle operations, from coding and auditing to compliance and denials. Join industry leaders Pam Warren (MaineHealth) and Raemarie Jimenez (AAPC) for a live fireside chat exploring how AI is changing workflows, workforce roles, payer-provider dynamics, and compliance risk—and what organizations should be doing now to prepare.

June 17, 2026

Trending News

Featured Webcasts

Ask Dr. Hirsch: Clarifying Medicare’s Most Misunderstood Rules – Part 2

Medicare regulations are complex and even seasoned professionals struggle to apply them consistently. Due to overwhelming demand, Dr. Hirsch returns for Part 2 of Ask Dr. Hirsch: Clarifying Medicare’s Most Misunderstood Rules to answer even more of Medicare’s most misunderstood questions, covering inpatient status, observation, SNF access, Medicare Advantage denials, and more. Join Dr. Hirsch as he provides clear, referenced answers to real-world questions submitted by your peers, helping you navigate Medicare compliance with confidence and clarity.

June 18, 2026

Reengineering Utilization Management: Building an Adaptive Model for the New Payer Era

Traditional utilization management models can no longer keep pace with regulatory shifts, payer scrutiny, and operational pressures. In this webcast, Tiffany Ferguson, LMSW, CMAC, ACM, ACPA-C, introduces an Adaptive Model strategy that modernizes UM through role specialization, technology-driven workflows, and proactive, team-based processes. Attendees will learn how to restructure programs to improve efficiency, strengthen clinical collaboration, and enhance financial performance in a rapidly changing healthcare environment.

May 20, 2026

Compliance for the Inpatient Psychiatric Facility (IPF-PPS): Minimizing Federal Audit Findings by Strengthening Best Practices

Federal auditors are intensifying their focus on inpatient psychiatric facilities, using advanced data analytics to spotlight outliers and pursue high‑dollar repayments. In this high‑impact webcast, Michael Calahan, PA, MBA, Compliance Officer and V.P., Hospital & Physician Compliance, breaks down what regulators are really targeting in IPF-PPS admissions, documentation, treatment and discharge planning. Attendees will learn practical steps to tighten processes, avoid common audit triggers and protect reimbursement and reduce the risk of multimillion-dollar repayment demands.

April 9, 2026

Mastering MDM for Accurate Professional Fee Coding

In this timely session, Stacey Shillito, CDIP, CPMA, CCS, CCS-P, CPEDC, COPC, breaks down the complexities of Medical Decision Making (MDM) documentation so providers can confidently capture the true complexity of their care. Attendees will learn practical, efficient strategies to ensure documentation aligns with current E/M guidelines, supports accurate coding, and reduces audit risk, all without adding to charting time.

March 31, 2026

Trending News

Celebrate Lab Week with MedLearn! Sign up to win one year of our Laboratory All Access Pass! Click here to learn more →

Have a Medicare regulation question you’d love Dr. Hirsch to answer? Now is your chance! CLICK HERE to learn more→

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

This Memorial Day, we honor those who gave all for our freedom. Take 20% off sitewide through May 29 with code MEMORIAL26 at checkout

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 1 with code CYBER25

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24