Feb. 20—Medicare should lump more services into its standard inpatient payments, a federal watchdog agency recommended this week.

The Office of Inspector General (OIG) urged the Centers for Medicare & Medicaid Services (CMS) to combine additional outpatient treatment in the standard “DRG window” of outpatient services paid in combination with inpatient services because they are related.

The recommendation would expand lump-sum Medicare-severity diagnosis related group (DRG) payments to include more than just outpatient services provided within three days of an inpatient admission in a setting owned by the admitting hospital. The investigative agency urged including within the lump sum payments outpatient services provided by hospitals with the same owner as the inpatient facility and services provided prior to the three-day window preceding inpatient admission.

The recommendations, including changing the statutorily set three-day window, were rejected by CMS. The agency had agreed with a 2003 OIG recommendation that it seek congressional authority to expand the DRG window, although that was never obtained.

The recommendation stemmed from OIG’s study of 2010 and 2011 claims to identify the number of related outpatient services delivered both on the days prior to the DRG window at settings owned by admitting hospitals and on the days prior to the inpatient admission at affiliated hospital groups.

Savings Identified

The change would provide “substantial savings,” OIG concluded, including an estimated $263 million Medicare and beneficiaries paid in 2011 for outpatient services provided at settings owned by admitting hospitals in the 11 days prior to the DRG window. More than 4 million related outpatient services were performed at the admitting hospital's outpatient department between four and 14 days prior to the hospital stay, OIG found. 

Additionally, Medicare and beneficiaries paid an estimated $45 million for outpatient services provided at hospitals affiliated with, but not owned by, admitting hospitals during the three days prior to inpatient admissions. The watchdog agency identified 900,000 related services performed during the two weeks immediately prior to admission at hospitals that shared a corporate owner with the admitting hospitals.

Lisa Minich, a team leader for OIG, said during a podcast that expanding the DRG window to include related services performed more than three days before the hospital stay would prevent Medicare paying “twice for the same service.”

“Expanding the DRG window would reduce these duplicate payments,” she said.

Publication Date: Thursday, February 20, 2014