Medicare and some states’ Medicaid programs have specific DRG readmission criteria. A readmission occurs when a patient is discharged/transferred from a hospital, and is readmitted to the same hospital within a day (or days) for symptoms related to, or for evaluation and management of, the prior stay’s medical condition. Most DRG programs require hospitals to adjust the original claim generated by the original stay by combining the original and subsequent stay(s) onto a single claim. DRG readmissions can include more than two claims.

Understanding a Hospital Readmission Reduction Program Audit

It should be noted that DRG readmission denials are not automatic because each federal and state readmission criteria has very specific exceptions.

Medicaid readmission days (time between the discharge and the readmit) vary from state to state. For example, Georgia Medicaid applies 3 days.

Medicare’s DRG Repeat Admission (readmission) policy is more complicated as it includes two different limits; patient readmitted within 24 hours and patient readmitted between 2 through 30 days from date of discharge.

Claims for patients who are readmitted to the same PPS Acute Care facility within 24 hours for the same or related condition, do not require QIO review. “When a patient is discharged/transferred from an acute care Prospective Payment System (PPS) hospital, and is readmitted to the same acute care PPS hospital on the same day for symptoms related to, or for evaluation and management of, the prior stay’s medical condition, hospitals shall adjust the original claim generated by the original stay by combining the original and subsequent stay onto a single claim.” (Medicare Claims Processing Manual/Chapter 3 – Inpatient Hospital Billing/40.2.5 – Repeat Admissions)

If a PPS Acute Care Facility submits two claims and are paid for a patient that was readmitted to the same hospital for a related condition within 24 hours then it is generally a billing and pricing error. FRG submits these claims advising clients that they have made a payment error as the readmit claim should have been denied requiring the hospital submit a corrected claim.

For example, if a patient is discharged from a hospital with DRG 341 (APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W MCC) and readmitted to the same hospital three hours later with DRG 338 (APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W MCC), then those claims should have been combined by that hospital’s billing department as one stay.

If both claims had been paid separately and at full for the respective DRGs, auditors would identify that the client should have denied the second claim requiring a corrected bill. This audit is not denying claims as not medically necessary. This is denying claims as billing errors. In effect, the hospital was paid twice for the same DRG.

Claims for patients that are readmitted between 2 through 30 days do require QIOs review. These types of readmissions/repeat admissions are subjective and require a QIO audit, and while they can be identified through an audit, they are often left to the client to pursue.