[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR412.4]

[Page 396-398]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
PART 412_PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES
--Table of Contents
 
                      Subpart A_General Provisions
 
Sec. 412.4  Discharges and transfers.

    (a) Discharges. Subject to the provisions of paragraphs (b) and (c) 
of this section, a hospital inpatient is considered discharged from a 
hospital paid under the prospective payment system when--
    (1) The patient is formally released from the hospital; or
    (2) The patient dies in the hospital.
    (b) Acute care transfers. A discharge of a hospital inpatient is 
considered to be a transfer for purposes of payment

[[Page 397]]

under this part if the patient is readmitted the same day (unless the 
readmission is unrelated to the initial discharge) to another hospital 
that is--
    (1) Paid under the prospective payment system described in subparts 
A through M of this part; or
    (2) Excluded from being paid under the prospective payment system 
described in subparts A through M of this part because of participation 
in an approved statewide cost control program as described in subpart C 
of part 403 of this chapter.
    (c) Postacute care transfers. A discharge of a hospital inpatient is 
considered to be a transfer for purposes of this part when the patient's 
discharge is assigned, as described in Sec. 412.60(c), to one of the 
qualifying diagnosis-related groups (DRGs) listed in paragraph (d) of 
this section and the discharge is made under any of the following 
circumstances:
    (1) To a hospital or distinct part hospital unit excluded from the 
prospective payment system described in subparts A through M of this 
part under subpart B of this part.
    (2) To a skilled nursing facility.
    (3) To home under a written plan of care for the provision of home 
health services from a home health agency and those services begin 
within 3 days after the date of discharge.
    (d) Qualifying DRGs. (1) For purposes of paragraph (c) of this 
section, and subject to the provisions of paragraph (d)(2) of this 
section, the qualifying DRGs must meet the following criteria for both 
of the 2 most recent fiscal years for which data are available:
    (i) The DRG must have a geometric mean length of stay of at least 3 
days.
    (ii) The DRG must have at least 14,000 cases identified as postacute 
care transfer cases.
    (iii) The DRG must have at least 10 percent of the postacute care 
transfers occurring before the geometric mean length of stay for the 
DRG.
    (iv) If the DRG is one of a paired DRG based on the presence or 
absence of a comorbidity or complication, one of the DRGs meets the 
criteria specified under paragraphs (d)(1)(i) through (d)(1)(iii) of 
this section.
    (v) To initially qualify, the DRG must meet the criteria specified 
in paragraphs(d)(1)(i) through (d)(1)(iv) of this section and must have 
a decline in the geometric mean length of stay for the DRG during the 
most recent 5-year period of at least 7 percent. Once a DRG initially 
qualifies, the DRG is subject to the criteria specified under paragraphs 
(d)(1)(i) through (d)(1)(iv) of this section for each subsequent fiscal 
year.
    (2) For purposes of paragraph (c), a discharge is also considered to 
be a transfer if it meets the following conditions:
    (i) The discharge is assigned to a DRG that contains only cases that 
were assigned to a DRG that qualified under this paragraph within the 
previous 2 years; and
    (ii) The latter DRG was split or otherwise modified within the 
previous 2 fiscal years.
    (e) Payment for discharges. The hospital discharging an inpatient 
(under paragraph (a) of this section) is paid in full, in accordance 
with Sec. 412.2(b).
    (f) Payment for transfers. (1) General rule. Except as provided in 
paragraph (f)(2) or (f)(3) of this section, a hospital that transfers an 
inpatient under the circumstances described in paragraph (b) or (c) of 
this section, is paid a graduated per diem rate for each day of the 
patient's stay in that hospital, not to exceed the amount that would 
have been paid under subparts D and M of this part if the patient had 
been discharged to another setting. The per diem rate is determined by 
dividing the appropriate prospective payment rate (as determined under 
subparts D and M of this part) by the geometric mean length of stay for 
the specific DRG to which the case is assigned. Payment is graduated by 
paying twice the per diem amount for the first day of the stay, and the 
per diem amount for each subsequent day, up to the full DRG payment.
    (2) Special rule for DRGs 209, 210, and 211. A hospital that 
transfers an inpatient under the circumstances described in paragraph 
(c) of this section and the transfer is assigned to DRGs 209, 210 or 211 
is paid as follows:
    (i) 50 percent of the appropriate prospective payment rate (as 
determined under subparts D and M of this part) for the first day of the 
stay; and

[[Page 398]]

    (ii) 50 percent of the amount calculated under paragraph (f)(1) of 
this section for each day of the stay, up to the full DRG payment.
    (3) Transfer assigned to DRG 385. If a transfer is classified into 
DRG 385 (Neonates, died or transferred) the transferring hospital is 
paid in accordance with Sec. 412.2(b).
    (4) Outliers. Effective with discharges occurring on or after 
October 1, 1984, a transferring hospital may qualify for an additional 
payment for extraordinarily high-cost cases that meet the criteria for 
cost outliers as described in subpart F of this part.

[63 FR 41003, July 31, 1998, as amended at 65 FR 47106, Aug. 1, 2000; 67 
FR 50111, Aug. 1, 2002; 68 FR 45469, Aug. 1, 2003; 69 FR 49240, Aug. 11, 
2004]