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) 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.

4 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) - 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)

5 - 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)

6 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.

7 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)

8 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)

9 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 PPS Implementation Date - Billing Ancillary Services Under IPF PPS - Covered Costs Not Included in IPF PPS Amount - Same Day Transfer Claims - Remittance Advice - Reserved - Medicare Summary Notices and Explanation of Medicare Benefits - Benefit Application and Limits-190 Days - Beneficiary Liability - Benefits Exhaust - Periodic Interim Payments (PIP) - Intermediary Benefit Payment Report (IBPR)

10 - Monitoring Implementation of IPF PPS Through Pulse - IPF PPS System Edits - IPF PPS PRICER Software - Inputs/Outputs to PRICER 200 - Electronic Health Record (EHR) Incentive Payments - Payment Calculation - Submission of Informational Only Bills for Maryland Waiver Hospitals and Critical Access Hospitals (CAHs) - Incomplete Colonoscopies (Codes 44388, 45378, G0105 and G0121) Addendum A - Provider Specific File 10 - General Inpatient Requirements (Rev. 1, 10-01-03) HO-400, , HO-403, HO-412 The hospital may bill only for services provided. If the provider billing system initiates billing based on services ordered, the provider must confirm that the service has been provided before billing either the A/B MAC (B) or A/B MAC (A). The provider agreement to participate in the program requires the provider to submit all information necessary to support Claims for services. Failure to submit such information in an individual case will result in denial of the entire claim , the charging of utilization in inpatient cases to the beneficiary record, and a prohibition against the provider billing or collecting from the beneficiary or other person for any services on the claim .