Facility Discharge Status Codes – PACT Policy Update
Incorrect patient discharge status codes have been identified by the Recovery Audit Contractors (RACs) as a contributor to hospital underpayments and overpayments. The solution is an understanding of the Medicare Post Acute Care Transfer (PACT) policy.
CMS requires patient discharge status codes for hospital inpatient claims, skilled nursing claims, outpatient hospital services, and all hospice and home health claims. It is vital to enter the correct discharge status code, as errors can result in delayed payment, incorrect payment, or the claim being rejected. Inaccurate discharge status codes for Medicare post-acute care transfers can affect proper claim processing and may be a compliance issue.
The two-digit discharge status codes identify where the patient is going upon transfer from the acute inpatient setting. The most common discharge status codes are:
- Inpatient hospital (02)
- Nursing home that accepts Medicare and/or Medicaid (03, 61 or 64)
- Home Health Agency (06)
- Rehabilitation facility (62)
- Long-term care hospital (63)
When the PACT was put into place in 1998, there were only 10 DRGs that were affected by the discharge status codes. As of 2015, the list of MS-DRGs impacted by the discharge status code has grown to 273. The challenges with discharge status codes are lack of documentation in the medical record for the coder to accurately reflect the discharge status of the patient and misunderstanding of the application of discharge status codes by the coders. In addition, many organizations may not have system edits in place to identify when an incorrect discharge status code has been selected.
The Medicare transfer policy reimburses organizations at a per-diem rate amount which is calculated by dividing the full DRG reimbursement by the DRG specific geometric mean length of stay so accurate discharge status is vital.
To address discharge status code errors, organizations should consider developing an internal action plan involving case managers, coders, and billers. A focus should be on the most common discharge status codes with a length of stay of at least 1 day less than the MS-DRG LOS.
The accurate assignment of the discharge status code is a relatively simple process which may be subject to errors that lead to inappropriate payments or even contribute to compliance risks. The best approach to avoid these pitfalls is an education plan for revenue cycle staff with ongoing communication on identified errors and corrective actions.
References: MLM Matters Number: SE0801; Medicare Post Acute Care Transfer Policy (42 CFR 41)
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