Medicare Claims Processing Manual

1 Medicare Claims Processing Manual Chapter 3 - inpatient Hospital Billing Table of Contents (Rev. 11059, Issued: 10-21-21) Transmittals for Chapter 3 10 - General inpatient Requirements - claim Formats - Focused Medical Review (FMR) - Spell of Illness - Payment of Nonphysician Services for Inpatients - Hospital inpatient Bundling 20 - Payment Under Prospective Payment System (PPS) Diagnosis Related Groups (DRGs) - Hospital Operating Payments Under PPS - Hospital Wage Index - Outliers - Cost to Charge Ratios - Statewide Average Cost to Charge Ratios - Threshold and Marginal Cost - Transfers - Reconciliation - Time Value of Money - Procedure for Medicare contractors to Perform and Record Outlier Reconciliation Adjustments - Specific Outlier Payments for Burn Cases - Medical Review and Adjustments - Return Codes for Pricer - Computer Programs Used to Support Prospective Payment System - Medicare Code Editor (MCE)

2 - Paying Claims Outside of the MCE - Requesting to Pay Claims Without MCE Approval - Procedures for Paying Claims Without Passing through the MCE - DRG GROUPER Program - PPS Pricer Program - Provider-Specific File - Additional Payment Amounts for Hospitals with Disproportionate Share of Low-Income Patients - Clarification of Allowable Medicaid Days in the Medicare Disproportionate Share Hospital (DSH) Adjustment Calculation - Clarification for Cost Reporting Periods Beginning On or After January 1, 2000 - Hold Harmless for Cost Reporting Periods Beginning Before January 1, 2000 - Disproportionate Share Hospital (DSH) Policy Changes Effective for Cost Reporting Periods beginning on or after October 1, 2009 - Disproportionate Share Hospital (DSH) Policy Changes Effective for Cost Reporting Periods beginning on or after October 1, 2012 - Updates to the Federal Fiscal Year (FY) 2001 - inpatient Hospital Payments and Disproportionate Share Hospital (DSH) Thresholds and Adjustments - Prospective Payment Changes for Fiscal Year (FY) 2003 - Prospective Payment Changes for Fiscal Year (FY) 2004 and Beyond - Hospital Capital Payments Under PPS - Federal Rate - Hold Harmless Payments - Blended Payments - Capital Payments in Puerto Rico - Old and New Capital - New Hospitals - Capital PPS Exception Payments - Capital Outliers - Admission Prior to and Discharge After Capital PPS Implementation Date - Market Basket Update - Rural Referral Centers (RRCs)

3 - Criteria and Payment for Sole Community Hospitals and for Medicare Dependent Hospitals - Billing Applicable to PPS Stays Prior to and Discharge After IPPS Implementation Date - Split Bills - Payment for Blood Clotting Factor Administered to Hemophilia Inpatients - Cost Outlier Bills With Benefits Exhausted - Payment to Hospitals and Units Excluded from IPPS for Direct Graduate Medical Education (DGME) and Nursing and Allied Health (N&AH) Education for Medicare Advantage (MA) Enrollees 30 - Medicare Rural Hospital Flexibility Program and Critical Access Hospitals (CAHs) - Requirements for CAH Services, CAH Skilled Nursing Care Services and Distinct Part Units - Payment for inpatient Services Furnished by a CAH - Payment for inpatient Services Furnished by an Indian Health Service (IHS)

4 Or tribal CAH - Payment for Post-Hospital SNF Care Furnished by a CAH - Costs of Emergency Room On-Call Providers - Costs of Ambulance Services 40 - Billing Coverage and Utilization Rules for PPS and Non-PPS Hospitals - "Day Count" Rules for All Providers - Determining Covered/Noncovered Days and Charges - Noncovered Admission Followed by Covered Level of Care - Charges to Beneficiaries for Part A Services - Determining Covered and Noncovered Charges - Pricer and PS&R - IPPS Transfers Between Hospitals - Repeat Admissions - Leave of Absence - Outpatient Services Treated as inpatient Services - Billing Procedures to Avoid Duplicate Payments 50 - Adjustment Bills - Tolerance Guidelines for Submitting Adjustment Requests - claim Change Reasons - Late Charges 60 - Swing-Bed Services 70 - All-Inclusive Rate Providers - Providers Using All-Inclusive Rates for inpatient Part A Charges 80 - Hospitals That Do Not Charge - Medicare Summary Notice (MSN) for Services in Hospitals That Do Not Charge 90 - Billing Transplant Services - Kidney Transplant - General - The Standard Kidney Acquisition Charge - Billing for Kidney Transplant and Acquisition Services - Billing for Donor Post-Kidney Transplant Complication Services - Heart Transplants - Stem Cell Transplantation - Allogeneic for Stem Cell Transplantation - Autologous Stem Cell Transplantation (AuSCT) - Liver Transplants - Standard Liver Acquisition Charge - Billing for Liver Transplant and Acquisition Services - Pancreas Transplants With Kidney Transplants - Pancreas Transplants Alone (PA)

5 - Intestinal and Multi-Visceral Transplants 100 - Billing Instructions for Specific Situations - Billing for Abortion Services - Payment for CRNA or AA Services - Resident and Interns Not Under Approved Teaching Programs - Billing for Services After Termination of Provider Agreement - Billing Procedures for a Provider Assigned Multiple Provider Numbers or a Change in Provider Number - Review of Hospital Admissions of Patients Who Have Elected Hospice Care - inpatient Renal Services - Lung Volume Reduction Surgery - Replaced Devices Offered Without Cost or With a Credit Requirements for Processing Non Veterans Administration (VA) Authorized inpatient Claims 130 - Coordination With the Quality Improvement Organization (QIO) 140 - inpatient Rehabilitation Facility Prospective Payment System (IRF PPS)

6 - Medicare IRF Classification Requirements - Criteria That Must Be Met By I npatient Reha bilitation Facilities - Additional Criteria That Must Be Met By inpatient Rehabilitation Units - Verification Process Used to Determine if the inpatient Rehabilitation Facility Met the Classification Criteria - New IRFs - Changes in the Status of an IRF Unit - New IRF Beds - Change of Ownership or Leasing - Mergers - Retroactive Adjustments For Provisionally Excluded IRFs or IRF Beds - Payment Provisions Under IRF PPS - Phase-In Implementation - Payment Adjustment Factors and Rates - Case-Mix Groups - Case-Level Adjustments - Facility-Level Adjustments - A rea Wage A djustments - Rural Adjustment - Low-Inc ome Patient (LIP) Adjustment: The Supplemental Security Income (SSI)/ Medicare Bene ficiary D ata for inpatient Reha bilitation Facilities ( IRFs) Paid Unde r the Prospective P ayment System (PPS) - T eaching Status Adjustment - F TE Resident Cap - Outliers - Cost-to-Charge Ratios Use of a National Average Cost-to-Charge Ratio Reconciling Outlier Payments for IRF Value of Money - Procedure for Medicare Contractors to Perform and Record Outlier Reconciliation Adjustments for IRFs Quality Reporting Program - Billing Requirements Under IRF PPS - Shared Systems and CWF Edits - Actions When a claim Does Not Match the inpatient Rehabilitation Facility- Patient Assessment Instrument (IRF-PAI) - IRF PPS Pricer Software - Remittance Advices 150 - Long Term Care Hospitals (LTCHs)

7 PPS - Background - Statutory Requirements - Affected Medicare Providers - Revision of the Qualification Criterion for LTCHs - Payment Provisions Under LTCH PPS - Budget Neutrality - Budget Neutrality Offset - Beneficiary Liability - Patient Classification System - Relative Weights - Payment Rate - Case-Level Adjustments - Short-Stay Outliers - Interrupted Stays - Payments for Special Cases - Payment Policy for Co-Located Providers - High Cost Outlier Cases - Facility-Level Adjustments - Phase-in Implementation - Requirements for Provider Education and Training - Claims Processing and Billing - Processing Bills Between October 1, 2002, and the Implementation Date - Billing Requirements Under LTCH PPS - Stays Prior to and Discharge After PPS Implementation Date Patients in New LTCHs - System Edits - Billing Ancillary Services Under LTCH PPS - Benefits Exhausted - Assumptions for Use in Examples Below - Example 1: Coinsurance Days < Short Stay Outlier Threshold (30 Day Stay) - Example 2: Coinsurance Days Greater Than or Equal to Short Stay Outlier Threshold (30 day stay) - Example 3: Coinsurance Days Greater Than or Equal to Short Stay Outlier Threshold (20 day stay) - Example 4: Only LTR Days < Short Stay Outlier Threshold (30 day stay) - Example 5.

8 Only LTR Greater Than or Equal to Short Stay Outlier Threshold (30 day stay) - Provider Interim Payment (PIP) - Interim Billing - Intermediary Benefit Payment Report (IBPR) - Remittance Advices (RAs) - Medicare Summary Notices (MSNs) - LTCH Pricer Software - Inputs/Outputs to Pricer - Determining the Cost-to-Charge Ratio - Statewide Average Cost-to-Charge Ratios - Reconciliation - Time Value of Money Procedure for Medicare contractors to Perform and Record Outlier Reconciliation Adjustments 160 - Necessary Changes to Implement Special Add-On Payments for New Technologies - Special Add-On Payments For New Technologies - Identifying Claims Eligible for the Add-On Payment for New Technology - Remittance Advice Impact 170 - Billing and Processing Instructions for Religious Nonmedical Health Care Institution (RNHCI) Claims - RNHCI Election Process - Requirement for RNHCI Election - Revocation of RNHCI Election - Completion of the Notice of Election for RNHCI - Common Working File (CWF)

9 Processing of Elections, Revocations and Cancelled Elections - Billing Process for RNHCI Services - When to Bill for RNHCI Services - Required Data Elements on Claims for RNHCI Services - RNHCI Claims Processing By the Medicare Contractor with RNHCI Specialty Workload - RNHCI Claims Not Billed to Original Medicare - Informing Beneficiaries of the Results of RNHCI Claims Processing 180 - Processing Claims For Beneficiaries with RNHCI Elections by Contractors without RNHCI Specialty Workloads - Recording Determinations of Excepted/Nonexcepted Care on claim Records - Informing Beneficiaries of the Results of Excepted/Nonexcepted Care Determinations by the Non-specialty Contractor 190 - inpatient Psychiatric Facility Prospective Payment System (IPF PPS) - Background - Statutory Requirements - Affected Medicare Providers - Federal Per Diem Base Rate - Standardization Factor - Budget Neutrality - Budget Neutrality Components - Annual Update - Calculating the Federal Payment Rate - Patient-Level Adjustments - Diagnosis-Related Groups (DRGs) Adjustments - Application of Code First - Comorbidity Adjustments - Age Adjustments - Variable Per Diem Adjustments - Facility-Level Adjustments - Wage Index - Rural Location Adjustment - Teaching Status Adjustment - Full-Time Equivalent (FTE) Resident Cap - Reconciliation of Teaching Adjustment on Cost Report - Emergency Department (ED) Adjustment - Source of Admission for IPF PPS Claims for Payment of ED Adjustment - Cost-of- Living Adjustment (COLA)

10 For Alaska and Hawaii - Other Payment Policies - Interrupted Stays - Outlier Policy - How to Calculate Outlier Payments - Determining the Cost-to-Charge Ratio Outlier Reconciliation Time Value of Money - Procedures for Medicare Contractors to Perform and Record Outlier Reconciliation Adjustments - Electroconvulsive Therapy (ECT) Payment - Stop Loss Provision (Transition Period Only) - Transition (Phase-In Implementation) - Implementation Date for Provider - Definition of New IPF Providers Versus TEFRA Providers - New Providers Defined - Claims Processing Requirements Under IPF PPS - General Rules - Billing Period - Patient Status Coding - Reporting ECT Treatments - Outpatient Services Treated as inpatient Services - Patient is a Member of a Medicare Advantage Organization for Only a Portion of a Billing Period - Billing for Interrupted Stays - Grace Days - Billing Stays Prior to and Discharge After