Hospitals Reimbursed Under Prospective Payment System

30.4.2 - Hospitals Reimbursed Under Prospective Payment System (Rev. 1, 10-01-03) The rules described in §30.4.1 apply, and also for PPS discharges on and after October 1, 1997, and involving cost outlier status, a beneficiary whose 90 days of benefits are exhausted before cost outlier status is reached must elect to use lifetime reserve days for the hospital to be paid cost outlier payments. Cost outlier status is reached on the day that charges reach the cost outlier status for the applicable DRG for inpatient PPS or CMS in the case of IRF PPS. Use of reserve days must begin on the day following that day, to permit payment for outlier charges. If the beneficiary elects not to use lifetime reserve days where benefits are exhausted the hospital may charge the beneficiary for the charges that would have been paid as cost outlier. For discharges before October 1, 1997, cost outlier status has no impact on reserve days, but the following rules applied for day outlier claims. Day outliers were discontinued for discharges on and after October 1, 1997. See the Medicare Claims Processing Manual, Chapter 1, “Inpatient Hospital Services,” for billing and payment requirements.