Accuracy of Hospital Discharge Codes in Medicare Claims for Knee and Hip Replacement Patients

Background Despite the importance of the hospital discharge destination field ("discharge code" hereafter) for research and payment reform, its accuracy is not well established. Objectives The aim of this study was to examine the accuracy of discharge codes in Medicare claims. Data sources 2012-2015 Medicare claims of knee and hip replacement patients. Research design We identified patients' discharge location in claims and compared it with the discharge code. We also used a mixed-effects logistic regression to examine the association of patient and hospital characteristics with discharge code accuracy. Results Approximately 9% of discharge codes were inaccurate. Long-term care hospital discharge codes had the lowest accuracy rate (41%), followed by acute care transfers (72%), inpatient rehabilitation facility (80%), and home discharges (83%). Most misclassifications occurred within 2 broad groups of postacute care settings: home-based and institutional care. The odds of inaccurate discharge codes were higher for Medicaid-enrolled patients and safety-net and low-volume hospitals. Conclusions Inaccurate hospital discharge coding may have introduced bias in studies relying on these codes (eg, evaluations of Medicare bundled payment models). Inaccuracy was more common among Medicaid-enrolled patients and safety-net and low-volume hospitals, suggesting more potential bias in existing study findings pertaining to these patients and hospitals.