[Code of Federal Regulations]

[Title 42, Volume 2]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR412.4]



[Page 458-460]

 

                         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 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.



[[Page 459]]



    (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 a fiscal year prior to FY 2006, 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 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 years of at least 7 percent. Once a DRG initially 

qualifies, the DRG is subject to the criteria specified in 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.

    (3) For fiscal years beginning with FY 2006, for purposes of 

paragraph (c) of this section--

    (i) The qualifying DRGs must meet the following criteria using data 

from the March 2005 update of the FY 2004 MedPAR file and Version 23.0 

of the DRG Definitions Manual (FY 2006):

    (A) The DRG has at least 2,050 total postacute care transfer cases;

    (B) At least 5.5 percent of the cases in the DRG are discharged to 

postacute care prior to the geometric mean length of stay for the DRG;

    (C) The DRG must have a geometric mean length of stay greater than 3 

days;

    (D) The DRG is paired with a DRG based on the presence or absence of 

a comorbidity or complication or major cardiovascular condition that, it 

meets the criteria specified in paragraphs (d)(3)(i)(A) and 

(d)(3)(ii)(B) of this section.

    (ii) If a DRG did not exist in Version 23.0 of the DRG Definitions 

Manual or a DRG included in Version 23.0 of the DRG Definitions Manual 

is revised, the DRG will be a qualifying DRG if it meets the following 

criteria based on the version of the DRG Definitions Manual in use when 

the new or revised DRG first becomes effective, using the most recent 

complete year of MedPAR data:

    (A) The total number of discharges to postacute care in the DRG must 

equal or exceed the 55th percentile for all DRGs;

    (B) The proportion of short-stay discharges to postacute care to 

total discharges in the DRG exceeds the 55th percentile for all DRGs; 

and

    (C) The DRG is paired with a DRG based on the presence or absence of 

a comorbidity or a complication or major cardiovascular condition that 

meets the criteria specified under paragraph (d)(3)(ii)(A) and 

(d)(3)(ii)(B) of this section.

    (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



[[Page 460]]



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 for fiscal years prior 

to FY 2006. For fiscal years prior to FY 2006, 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

    (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.

    (5) Special rule for DRGs meeting specific criteria. For discharges 

occurring on or after October 1, 2005, a hospital that transfers an 

inpatient under the circumstances described in paragraph (c) of this 

section is paid using the provisions of paragraph (f)(2)(i) and 

(f)(2)(ii) of this section if the transfer case is assigned to one of 

the DRGs meeting the following criteria:

    (i) The DRG meets the criteria specified in paragraph (d)(3)(i) or 

(d)(3)(iii) of this section;

    (ii) The average charges of the 1-day discharge cases in the DRG 

must be at least 50 percent of the average charges for all cases in the 

DRG; and

    (iii) The geometric mean length of stay for the DRG is greater than 

4 days; and

    (iv) If a DRG is a paired with a DRG based on the presence or 

absence of a comorbidity or complication or a major cardiovascular 

complication that meets the criteria specified in paragraph (f)(5)(i) 

through (f)(5)(iii) of this section, that DRG will also be paid under 

the provisions of paragraph (f)(2)(i) and (f)(2)(ii) of this section.



[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; 70 FR 47484, Aug. 12, 2005]