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MCare Solutions

Profile of Success: Memorial University Medical Center

Hospital’s Transfer DRG Reimbursement Recovery Program Brings
Additional Revenue to Southeast Academic Medical Center

Organizational Overview
Memorial University Medical Center (MUMC), located in Savannah, Georgia, is a non-profit, 530-bed tertiary care academic medical center serving a 35-county area in southeast Georgia and southern South Carolina. The facility typically treats over 250,000 patients per year, and employs more than 5,000 staff members from the area. MUMC has been named a Distinguished Hospital by J. D. Power and Associates four years in a row, and is the only hospital in the country to have received both the Distinguished Hospital award and one of the "100 Best Companies to Work For" by Fortune magazine.

MUMC management became aware of the opportunity for additional reimbursement recoveries through their association with HSI Financial Services, LLC (, with whom the medical center had a long-standing business partner relationship. HSI, a Georgia-based revenue cycle management services company, had partnered with MCare Solutions, Inc. ( in January 2007 to provide Transfer DRG Reimbursement Recovery Services to its client hospitals, due to the growing number of Transfer DRGs (which started at 10 in 1999 and grew to 29, then 188, and now 273) and the associated underpayments potentially lost to hospitals that might be recovered through retrospective reviews of applicable prior discharges.

When Transfer DRGs (TDRGs) were first established, the Centers for Medicare and Medicaid Services (CMS) implemented edits in the Medicare payment system to avoid overpayments for patients discharged from an acute care facility and admitted shortly thereafter to a post-acute care provider—such as a skilled nursing facility, hospice, or home health agency. However, no such edits exist for possible underpayments to acute care providers. With TDRG reimbursements dependent upon complicated formulas involving geometric lengths of stays and numerous other variables, as well as what actually happened with specific patients post-discharge, MUMC recognized that a retrospective review of its applicable discharges might turn up additional reimbursement opportunities.

With over 8,200 Medicare inpatient discharges each year, and being able to go back several years in reviewing accounts, there were more than 30,000 discharges that potentially had to be reviewed at the outset for any discharge status code errors if additional reimbursements were to be realized, as well as correcting any overpayments. “HSI’s projections for recoveries on this population of accounts was in the range of 1%–3% of the total number of accounts reviewed at an average of $2,000 per account, so this represented a significant bottom line improvement for us in a short period of time,” said Darcy J. Davis, Vice President and Associate CFO for MUMC. “However, for us to take on this project internally would have required us to redirect scarce resources already committed to current-day tasks and operations.”

With that in mind, MUMC contracted with HSI to perform a retrospective review of its Medicare inpatient, rehab, Medicare managed care, and TriCare accounts. The project was initiated by MUMC’s providing a multi-year data file of accounts for HSI’s/MCare’s review and follow-up. MCare screened the initial data files for all accounts having a Transfer DRG, using its proprietary software system to identify potential discharge status code variances. MCare’s system, with its built-in payment algorithms and work-flow processes, then presented potential discharge status code variances to MCare’s staff for further review and follow-up, including not only the analysis of account information, but contact with individual post-acute care providers and Blue Cross/Blue Shield of Georgia, the Medicare fiscal intermediary for MUMC. When errors were determined, based upon what actually happened (or didn't happen) with a patient’s post-acute care treatment and associated filing of claims, MCare corrected the discharge status code and resubmitted the claim for corrected payment. Subsequent payments were received directly by MUMC and matched with MCare’s patient-level detailed reports of expected payments for confirmation.

Of all accounts assigned, 58% had an associated TDRG, of which 35% warranted follow-up to determine the accuracy of prior payments. Of the total assigned, 2.9% resulted in additional incremental payments, at an average of $3,287 each. 

The initial assignment of accounts took MUMC’s IT staff only a few hours to prepare and submit to HSI/MCare for follow-up work. “From there, we added over $985,000 in positive differential payments in just a few months,” commented Ms. Davis. “Obviously, we’re delighted with the results, and are continuing to outsource this program to complement our own resources. It’s a great fit for us.”