Update: Reimbursement Change for Inpatient DRG Claims When Patients Are Transferred Early

Posted 8/15/2023 Updated 10/05/2023

What’s changing:  Effective Dec. 4, 2023, Blue Cross and Blue Shield of Texas (BCBSTX) will follow the Centers for Medicare and Medicaid Services’ (CMS) transfer policy on inpatient claims reimbursed using the Medicare Severity Diagnostic Related Group (DRG) claims payment methodology.

If a member’s hospital stay is shorter than the average length of stay (ALOS) because the member is transferred to another facility, then the DRG claim will pay a prorated amount for the length of the stay. This transfer rule applies:

  • to all inpatient DRG claims when the transfer is made to a post-acute setting (with eligible DRG codes) – for the list of qualifying post-acute services, please see the list in Table 5 of the applicable fiscal year Medicare hospital inpatient prospective payment systems (IPPS) Federal Register.
  • when a member is moved from an acute care facility to another acute care or post-acute setting as denoted by the following Patient Discharge Status Codes (PDSC):
  • Transfers between acute care hospitals
  • Transfers to another acute care hospital or unit for related care (PDSC 02 or 82)
  • Transfers from acute care hospital to a post-acute setting.
  • Transfer to an inpatient rehabilitation facility or unit (PDSC 62 or 90)
  • Transfer to long term acute care facility (PDSC 63 or 91)
  • Transfer to a psychiatric care facility (PDSC 65 or 93)
  • Transfer to a children’s hospital, cancer hospital (PDSC 05 or 85)
  • Transfer to a skilled nursing facility (PDSC 03 or 83)
  • Transfer to Hospice care (PDSC 50 or 51)
  • Transfer to Critical Access (PDSC 66 or 94)
  • Transfer to home, under a written plan of care, for the provision of home health services from a home health agency (PDSC 06 or 86). Please note this does not apply when Condition Code 42 or 43 is on the transferring hospital’s claim.

Why change: The CMS transfer rule helps the member avoid paying double for services. For example, if an average length of stay is seven days, but the member is discharged from acute care and admitted to a skilled nursing facility on day five, without these adjustments, then the member would pay twice for days five, six and seven – once at the acute care facility and again at the skilled nursing facility.

More information: see 42 Code of Federal Regulations 412.4(a) and (b) and the Medicare Claims Processing Manual Pub. 100-04, Chapter 3, Section 40.2.4