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Increased Payments For Transfer Claims With Outliers

While the transfer rule reduces the Diagnosis Related Group (DRG), Disproportionate Share Hospital (DSH), and Indirect Medical Education (IME) payments on a Medicare beneficiary's claim, the methodology for calculating cost outlier payments can result in such payments being higher than what would have been paid in a nontransfer context. Under the transfer rule, CMS reduces the DRG payment by applying a graduated per diem payment on the Medicare claim of the hospital transferring the patient to another setting early in the patient's hospital stay. Because DSH and IME payments are determined as a percentage of the reduced DRG payment, they are also reduced. By contrast, by reducing the threshold above which a claim qualifies as an outlier, the application of the outlier methodology at 42 CFR Sec. 412.80(b) can result in an increase in the outlier payment in transfer cases. We will produce a report describing the extent to which additional Medicare outlier payments negate the reduction in DRG, DSH, and IME payments of transfer claims.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Completed Centers for Medicare & Medicaid Services Increased Payments For Transfer Claims With Outliers Office of Audit Services A-05-19-00019;