HI 00601.010 Hospital Inpatient Services - Coverage Guidelines

A. General

An individual who meets the requirements for entitlement contained in HI 00801.001 and receives inpatient hospital services in a participating hospital shall be entitled to coverage if (1) the services are not excluded from coverage for any of the circumstances listed in HI 00620.000 and (2) the individual meets the hospital level of care requirements.

Emergency services in a nonparticipating hospital may be covered.

Hospital inpatient services covered by the Medicare program represent a discrete level of care. Two criteria must be satisfied in order for the hospital level of care requirement to be met: the services the patient receives in the hospital must be medically indicated; and it must be reasonable to provide the needed care in a hospital rather than in a less costly facility or on an outpatient basis. In determining whether these criteria are met, consideration is given to factors such as the patient's condition and his need for the kinds of physician supervision, around-the-clock nursing or the facilities available only in hospitals.

B. Beneficiary not in a hospital

If an inquirer asks when an inpatient hospital stay will be covered by Medicare, supply the information as in A. above. In addition, explain that Medicare coverage determinations are made by the intermediary, and that the intermediary cannot make the determination until after the patient is admitted to the hospital and the hospital has submitted a claim for the services furnished by the hospital.

C. Denied inpatient hospital claims

Provide the beneficiary with the basic information as to what constitutes covered services. When emergency services in a nonparticipating hospital are involved, explain the medical necessity and accessibility requirements. If, after the explanation, the beneficiary indicates that he is dissatisfied, assist him in filing a reconsideration request.

(If a patient receives items or services in excess of, or more expensive than, those for which payment can be made, payment is made only for the reasonable cost of the covered items or services.)

D. Limitation on payment for inpatient services

Under the Utilization Review (UR) requirement, certain limitations on payment for inpatient hospital services and posthospital extended care services have been established. (For purposes of this section “inpatient hospital services” include inpatient hospital services and inpatient psychiatric and tuberculosis hospital services.)

1. Further inpatient stay not medically necessary

If, in the review of a continued stay case, the physician members of the UR committee decide, after an opportunity for consultation is given the attending physician, that further inpatient stay is not medically necessary, notice in writing must be given to the attending physician, the institution, and the patient (or where appropriate, his next of kin) no later than 2 days after the final decision is made. In a hospital, written notice of the finding must in no event be given later than 2 working days after the continued stay review date. In an SNF, written notices of the finding must in no event be given later than 3 working days after the continued stay review date.

While the attending physician may, if he wishes, advise the patient personally of the UR committee's decision, it is still necessary for the committee to give timely written notice of its decision to the patient or where appropriate, his next of kin.

2. Failure to notify timely

Failure or omission by the UR committee to timely notify the physician, the patient, or the patient's next of kin does not create a right to payment where, as a matter of law, none exists. Such failure does not justify payment to the institution for an expense item (e.g., custodial care) which is specifically excluded by statute. However, where the institution is notified of an adverse finding by the UR committee, the institution can be found liable under the waiver of liability provision for noncovered services it provides to the beneficiary after the expiration of the grace period (see 3. below) up to the date the beneficiary receives written notice of the noncoverage of the services. For example, the institution receives notice from the UR committee on March 1 that services were not reasonable and necessary beginning February 27, but does not advise the beneficiary until March 5 and the patient is discharged on March 6. Where both the beneficiary and the institution meet the requirements for waiver of liability program payment can be made for the noncovered service on February 27 and 28 and March 1, and also for 3 more days (March 2, 3, and 4) after the date the provider is notified of the UR finding. However, program payment for March 5 would not be made nor would the beneficiary be responsible for the charges since he did not receive notice until that date.

3. Payment limitation

Program payment can be made for up to 3 days of inpatient hospital or extended care services rendered following the date the institution receives notice of a finding by a UR committee that further inpatient services are not medically necessary. Effective with services rendered after December 31, 1972, this payment limit also extends to a finding by a UR committee, made during the course of a sample or other review of admissions, that admission to the hospital or SNF was not medically necessary. This provision is affected by the waiver of liability provision. Where it is determined that noncovered care was rendered prior to the UR committee's finding, the intermediary determines whether the waiver of liability provision applies before any payment can be made under 1. above.

Certain diagnostic tests needed in connection with a hospital admission that can be done either on an inpatient or outpatient basis may be paid for, under certain conditions, at 100 percent rather than the usual 80 percent if the tests are administered in the outpatient department of a hospital seven days before the patient's admission as a hospital inpatient. This provision may be extended to preadmission diagnostic tests done in a physician's office or on an outpatient basis in a hospital other than the hospital to which the patient is admitted, if found to be administratively practical.

E. Hospital and skilled nursing facility admission diagnostic procedures

These instructions clarify the application of the reasonable and necessary payment exclusion to diagnostic procedures, such as chest X-rays, urinalysis, etc., provided to patients upon admission to a hospital or skilled nursing facility.

The major factors which support a determination that a diagnostic procedure performed as part of the admitting procedure to a hospital or skilled nursing facility is reasonable and necessary are:

  1. The test is specifically ordered by the admitting physician (or a hospital or skilled nursing facility staff physician having responsibility for the patient where there is no admitting physician); i.e., it is not furnished under the standing orders of a physician for his patients;

  2. The test is medically necessary for the diagnosis or treatment of the individual patient's condition; and

  3. The test does not unnecessarily duplicate a test performed on an outpatient basis prior to admission or performed in connection with a recent admission.

Intermediaries consult with PSRO's to obtain information they gathered on a sample basis as to whether X-rays and diagnostic tests are specifically ordered as described in 1. above.


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HI 00601.010 - Hospital Inpatient Services - Coverage Guidelines - 04/03/2015
Batch run: 04/03/2015
Rev:04/03/2015