Medicare Inpatient Hospital Prospective Payment System Transfers Incorrectly Reported as Discharges

This final report points out a continuing significant problem with hospitals incorrectly reporting prospective payment system (PPS) transfers as discharges. Since 1992 the number of incorrectly reported transfers has trended downward, but remains too high.  Hospitals incorrectly reported an average of 1,132 PPS transfers per month in 1992 with this average decreasing to about 495 per month in 1999.  We identified over 153,000 claims for incorrectly reported transfers during the period January 1992 through June 2000.  The potential overpayments related to these transfers totaled nearly $233 million. Causes which have contributed to this ongoing problem include misapplication of the PPS transfer policy by the Centers for Medicare and Medicaid Services (CMS) regional offices and the fiscal intermediaries (FIs), problems with computer systems interfaces at hospitals, and breakdowns in communication between hospitals' medical and billing staffs.  We recommended that CMS (1) issue instructions to and work with FIs to initiate the collection of the overpayments identified to date, (2) issue clarifying instructions or bulletins to the FIs and hospitals, and (3) instruct FIs and hospitals to review all internal procedures and processes related to claims submission and payment to assure that PPS transfers are properly reported. The CMS generally concurred with our recommendations.