IPPS Transfers Between Hospitals

A discharge of a hospital inpatient is considered to be a transfer if the patient is admitted the same day to another hospital. A transfer between acute inpatient hospitals occurs when a patient is admitted to a hospital and is subsequently transferred from the hospital where the patient was admitted to another hospital for additional treatment once the patient's condition has stabilized or a diagnosis established. The following procedures apply. 

Note: CMS established Common Working File Edits (CWF) edits in January 2004 to ensure accurate coding and payment for discharges and/or transfers.

Transfers Between IPPS Prospective Payment Acute Care Hospitals

For discharges occurring on or after October 1, 1983, when a hospital inpatient is discharged to another acute care hospital, as described in 42 CFR 412.4(b), payment to the transferring hospital is based upon a graduated per diem rate (i.e., the prospective payment rate divided by the geometric mean length of stay for the specific MS-DRG into which the case falls; hospitals receive twice the per diem rate for the first day of the stay and the per diem rate for every following day up to the full MS-DRG amount). If the stay is less than l day, l day is paid. A day is counted if the patient was admitted with the expectation of staying overnight. However, this day does not count against the patient's Medicare days (utilization days), since this Medicare day is applied at the receiving hospital. Deductible or coinsurance, where applicable, is also charged against days at the receiving hospital (see §40.1.D). If the patient is treated in the emergency room without being admitted and then transferred, only Part B billing is appropriate. Payment is made to the final discharging hospital at the full prospective payment rate.

The prospective payment rate paid is the hospital's specific rate. Similarly, the wage index values and any other adjustments are those that are appropriate for each hospital. Where a transfer case results in treatment in the second hospital under a MS-DRG different than the MS-DRG in the transferring hospital, payment to each is based upon the MS-DRG under which the patient was treated. For transfers on or after October 1, 1984, the transferring hospital may be paid an outlier payment. 

An exception to the transfer policy applies to MS-DRG 789. The weighting factor for this MS-DRG assumes that the patient will be transferred, since a transfer is part of the definition. Therefore, a hospital that transfers a patient classified into this MS-DRG is paid the full amount of the prospective payment rate associated with the DRG rather than the per diem rate, plus any outlier payment, if applicable.

Effective for discharges on or after October 1, 2003, patients who leave against medical advice (LAMA), but are admitted to another inpatient PPS hospital on the same day as they left, will be treated as transfers and the transfer payment policy will apply.

Transfers from an IPPS Acute Care Hospital to Hospitals or Hospital Units Excluded from the IPPS

When patients are transferred to hospitals or units excluded from IPPS, the full inpatient prospective payment is made to the transferring hospital. The receiving hospital is paid on the basis of reasonable costs or is made at the rate of its respective payment system

A transfer payment is made to the transferring hospital when patients are transferred to a hospital that would ordinarily be paid under prospective payment, but that is excluded because of participation in a state or area wide cost control program. Also, a transfer payment is made where a patient is transferred to a hospital or hospital unit that has not been officially determined as being excluded from PPS and certain hospitals that are excluded from IPPS. These include:

• An acute care hospital that would otherwise be eligible to be paid under the IPPS, but does not have an agreement to participate in the Medicare program (Patient Status Code 02) 

• A critical access hospital (Patient Status Code 66)

Postacute Care Transfers

For discharges occurring on or after October 1, 1998, 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 42 CFR 412.4(c), to one of the qualifying Postacute MS-DRGs referenced in paragraph (D) of this section and the discharge is made under any of the following circumstances:

• To a hospital or distinct part hospital unit excluded from the inpatient prospective payment system (under subpart B of 42 CRF 412). Facilities excluded from IPPS are inpatient rehabilitation facilities and units (Patient Status Code 62), long term care hospitals (Patient Status Code 63), psychiatric hospitals and units (Patient Status Code 65), children’s hospitals, and cancer hospitals (Patient Status Code 05). 

• To a skilled nursing facility (Patient Status Code 03). 

• 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 (Patient Status Code 06).

Specific transfer cases under this paragraph qualify for payment under an alternative methodology. These include transfer cases in which the patient’s discharge is assigned, as described in 42 CFR 412.4(f)(2), (f)(5) and (f)(6), to one of the qualifying Special Pay MS-DRGs referenced in paragraph (D) of this section. For these cases, the transferring hospital is paid 50 percent of the appropriate inpatient prospective payment rate and 50 percent of the appropriate transfer payment.