Effective for accounting periods beginning after December 31, 1971, CMS regulations
provide for apportionment of routine service costs on the basis of average per diem
cost under both the Departmental and the Combination methods of cost apportionment.
Thus, the program will pay the same amount for routine services whether the patient
has a private room not medically necessary, a private room medically necessary (Medicare
does not pay for deluxe accommodations in any case), a semiprivate room (two, three,
or four-bed accommodations), or ward accommodations, if its ward accommodations are
consistent with program purposes (see C. below).
A provider having both private and semiprivate accommodations may nevertheless charge
the patient a differential for a private room if:
The private room is not medically necessary; and
The patient (or relative or other person acting on his behalf) has requested the private
room and the provider informs him at the time of the request of the amount of the
The private room differential may not exceed the difference between the customary
charge for the accommodations furnished and the most prevalent semiprivate accommodation
rate at the time of the patient’s admission.
When the provider bills for a private room as a covered service, the intermediary
deems the private room to have been medically necessary. When the provider shows a
private room differential as a non-covered charge, the intermediary assumes that the
private room was not medically necessary.
If the beneficiary (or his representative) protests a charge for the private room
on the grounds that the privacy was medically necessary, or that the provider did
not inform him of the charge, assist him in filing a reconsideration and forward it
to the intermediary. The intermediary will develop the facts and make a specific determination
regarding the medical necessity of the private room.
When it is necessary to develop the medical necessity of a private room, the guidelines
in subsection B. apply.