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History of Transfer DRGs

1999 The Centers for Medicare and Medicaid Services (CMS) initiated a reimbursement methodology related to certain Diagnostic Related Groups (DRGs) involving transfers to post-acute care facilities (e.g., SNF or rehab facility) or to home health care.  Since it was paying the acute care facility at the full DRG rate, and then subsequently paying the post-acute care facility or home health agency a full payment as well, CMS determined that inaccurate overpayments were occurring in many instances.  Instead of receiving the full DRG, the hospital payment was based on a per diem for the DRG.  Initially, 10 DRGs were involved. 
   
2003 29 DRGs are subject to overpayments
   
2005 182 DRGs are subject to overpayments
   
2006 188 DRGs are subject to overpayments
   
2007 273 DRGs are subject to overpayments
   
  In an effort to address these inpatient overpayment issues, “Transfer DRGs” (TDRGs) were established, with corresponding edits, checks and balances incorporated into the CMS payment systems.  Known as the “transfer rule,” a hospital received a reduced reimbursement if the patient had a length of stay more than one day less than the geometric length of stay for that particular DRG, and if the patient was transferred to another post-acute care facility (such as skilled nursing or home health). 
   
2008 OIG stated in their 2008 Work Plan that they will be reviewing patient discharges that should have been coded as transfers rather than discharges.  As a result, compliance issues with Transfer DRG regulations are becoming even more prevalent and important for providers and the potential negative impact on a hospital’s reimbursement for Transfer DRGs continues to grow.
   

 

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