More DRG Reductions Coming? Opening an Artery Creates an Opening for Auditors

Tired of me talking about the Medicare Advantage (MA) plans? Me too, so in this article I am not going to mention them. So, let’s talk about other things. But do not worry, I will have more to say before Jan. 1.

First up, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) must listen to Monitor Mondays. Two weeks after I talked about transfers of Medicare patients, they released a report on the Centers for Medicare & Medicaid Services (CMS) transfer payment adjustment system that I discussed. As I described in my segment, there is a select number of Diagnosis-Related Groups (DRGs) where if the patient is transferred to another hospital or for post-acute care, the payment to the hospital is subject to a payment adjustment based on the length of stay and the geometric mean length of stay (GMLOS) of the billed DRG.

In this review, the OIG used extrapolation to determine that if CMS applied that transfer DRG payment reduction to every DRG instead of limiting it to specific DRGs, the Medicare Trust Fund would save about $350 million per year. Now, I am not going to criticize their conclusion or their need to work to protect the Trust Fund, but I will criticize three things.

First, I am sure every one of us can create ways for CMS to pay less and protect the Trust Fund. I will start by suggesting they hold the MA plans financially accountable for their years of knowingly reporting invalid diagnoses. In a 2012 audit of Pacificare, which was owned by UnitedHealth Group, the OIG found they were overpaid $423 million. One single MA plan that provided coverage to 344,000 beneficiaries in one state accounted for improper payments of over $400 million. Was that ever collected? How many billions of Trust Fund dollars could be saved if CMS actually collected all overpayments to MA plans over the last 15 years from over-coding?

Next, the basis of the DRG payment system is, simplistically, that hospitals win some and lose some. I can understand making a payment adjustment for the transfer of an inpatient from a hospital to another inpatient facility, including inpatient rehabilitation facilities and long-term acute care hospitals, for treatment of the same condition, but discharging a patient to receive home care or to a skilled nursing facility (SNF) does not warrant a payment reduction, as the care is much less intense.

In comparison, the inpatient outlier payment system would need to be modified to provide additional payments for any patient who exceeds the GMLOS by two days instead of only paying additional payments when costs exceed the DRG payment by tens of thousands of dollars.

I will also criticize the OIG’s math in this audit. They found 109,000 admissions from 2017 to 2019 that would have had a payment adjustment based on length of stay compared to the GMLOS, and then randomly selected 100 claims for review. Is that a statistically valid sample, when 0.09 percent of claims were audited? I doubt it.

Also, they seem to have made a significant error that just last month they criticized hospitals for making. They found these claims by looking at the DRG and the coding on the claim for the discharge destination.

What they did not do was query the common working file to determine if the patient actually received that care. As they pointed out in their previous audit, patients are often referred to a SNF or for home care but never receive that service, and the hospital claim is never corrected. Here, the OIG assumed that the care was received, and therefore a payment adjustment was justified when it may not have been appropriate.

Now, of course, the OIG only makes recommendations, and CMS has committed to performing their own analysis at some point in the future. I would not hold my breath waiting for this, as it has been four years since CMS updated their discharge planning conditions of participation, and we still have no interpretive guidelines.

Now, let me be clear that I do not fault CMS for this. As I have repeatedly said, CMS’s handling of the COVID-19 public health emergency was nothing short of miraculous, and they now have a lot of catching up to do, likely with the same staffing limitations that all of us still face.

Another topic that might be more pertinent: if your hospital performs carotid artery stents or your doctors want to perform them, you must go online and get the new National Coverage Analysis that outlines when CMS will cover the procedure. There are significant changes to coverage that may broaden use while also imposing new requirements.

Up until now, CMS required facilities to register and be approved to perform the procedure. This will no longer be required. Next, in the past only, patients at high risk for carotid endarterectomy could be considered for stenting. CMS is now removing that requirement, allowing standard-risk patients to have this procedure covered.

But most importantly, CMS is adding the requirement for a shared decision-making visit between a health professional and the patient. That discussion must include the options of endarterectomy, stenting, and optimal medical therapy, the risks and benefits of each of those options, what the clinical guidelines state, and then of course the patient’s preferences and priorities.

Now, while requiring shared decision-making is not new, in this case, it is the first procedure where there are not any published tools that can be used, as there are for defibrillators or Watchman. That means you will need to either develop your own tool or count on your doctors to document all the required elements. Remember, the auditors thrive on denying due to technical omissions, so don’t ignore the new requirements. Create a checklist and require it prior to any scheduled carotid artery stent.