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Payments for Death-Related One-Day Inpatient Admissions

Payments for Death-Related One-Day Inpatient Admissions

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Published by Casey Seiler
Audit by the NYS Office of the State Comptroller
Audit by the NYS Office of the State Comptroller

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Published by: Casey Seiler on Aug 15, 2013
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New York State Oce of the State Comptroller
Thomas P. DiNapoliDivision of State Government Accountability
Report 2012-S-5July 2013
Payments for Death-RelatedOne-Day Inpaent AdmissionsMedicaid ProgramDepartment of Health
2012-S-5Division of State Government Accountability
Execuve Summary
To determine whether the Department of Health (Department) appropriately and eecvelyimplemented and applied the new APR DRG-based hospital inpaent payment system forMedicaid services when paent deaths occur within one day of admission. The audit covers the
period December 1, 2009 through September 30, 2012.
Eecve December 1, 2009, responding to statutory changes enacted by the Legislature, the
Department implemented a change to the Medicaid reimbursement methodology used to
compensate hospitals for inpaent medical care. The new methodology, based on All PaentRened Diagnosis Related Groups (APR DRG), was implemented to provide a more equitablepayment method for hospital inpaent services and to beer reect the variable costs associatedwith individual paent treatment.
Key Findings
• Since the implementaon of the APR DRG
methodology, Medicaid has paid signicantlymore for certain claims when paent deaths occur within the rst day of admission. For
instance, Medicaidpaid $153,329on a claim with hospital charges totaling $9,685
for a paentwho died within the rst day of admission. The APR DRG-based methodology assigns addionalimportance to the reason for admission and severity of illness in calculang reimbursements.Usually, the more severe the illness, the higher the reimbursement factor. Because paentdeaths can result from more severe medical condions, Medicaid payments for death-relatedone-day admissions can be substanally higher than the hospital’s charges for treang thepaent.• For the 1,833
claims we reviewed,
Medicaid payments averaged 225 percent of the hospitals’submied charges (more than 5 mes the rate for other inpaent claims). Under the APR DRG
methodology, there is no adjustment for a ‘short stay’ except for certain paent transfers
and specialty hospitals. By modifying the APR DRG-basedreimbursement methodology to
reect the lower charges associated with one-day death-related inpaent admissions, weesmate that Medicaid could have saved as much as $31.1 million.
Key Recommendaons
• Formally assess the Department’s implementaon and applicaon of the APR DRG
system, including the inpaent reimbursement methodology, that compensates hospitals for
the cost of care when death occurs within one day of admission.
Use the results of the formal assessment to revise the APR DRG-basedreimbursementmethodology, as warranted.
Other Related Audits/Reports of Interest
2012-S-5Division of State Government Accountability
State of New YorkOce of the State ComptrollerDivision of State Government Accountability
August 15, 2013Nirav R. Shah, M.D., M.P.H.CommissionerDepartment of HealthCorning TowerEmpire State PlazaAlbany, NY 12237Dear Dr. Shah:
The Oce of the State Comptroller is commied to helping State agencies, public authoriesand local government agencies manage government resources eciently and eecvely and, byso doing, providing accountability for tax dollars spent to support government operaons. TheComptroller oversees the scal aairs of State agencies, public authories and local government
agencies, as well as their compliance with relevant statutes and their observance of good business
pracces. This scal oversight is accomplished, in part, through our audits, which idenfyopportunies for improving operaons. Audits can also idenfy strategies for reducing costs and
strengthening controls that are intended to safeguard assets.
Following is a report of our audit of the Medicaid Program entled
Payments for Death-Related 
One-Day Inpaent Admissions
. This audit was performed pursuant to the State Comptroller’sauthority under Arcle V, Secon 1 of the State Constuon and Arcle II, Secon 8 of the StateFinance Law.This audit’s results and recommendaons are resources for you to use in eecvely managingyour operaons and in meeng the expectaons of taxpayers. If you have any quesons about
this report, please feel free to contact us.
Respecully submied,
Oce of the State Comptroller Division of State Government Accountability 

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