Determining Covered/Noncovered Days and Charges

40.2 - Determining Covered/Noncovered Days and Charges (Rev. 1231; Issued: 04-27-07; Effective: 12-03-07; Implementation: 12-03-07) The CMS must record a day or charge as either covered or noncovered because of the following: Beneficiary utilization is recorded based upon days during which the patient received hospital or SNF accommodations, including days paid by Medicare and days for which the provider was held liable for reasons other than medical necessity or custodial care. Days denied as not medically necessary or as custodial care are not charged against a beneficiary's utilization record when the provider is determined to be liable. The provider may claim credit on its cost report only for covered accommodations, days and charges for which actual payment is made, i.e., provider liable days and charges are not included. Data from the bill payment process are used in preparing the cost report. The number of days and charges provided to the Pricer program affects the day and cost outlier determinations and the DRG payment amount. Non-PPS provider days are excluded from Pricer consideration. It is possible to use a different number of days on a single bill for each of the above purposes, although the same number of days will generally apply in actual practice. For example, if the beneficiary had at least 1 day of eligibility remaining at admission, days that occur after benefits are exhausted up through the day outlier threshold for the applicable DRG are counted for cost reporting purposes under IPPS (see section190.12.1 for IPF and section 150.17 for LTCH benefits exhaust claims processing). A. - General Rule on Counting of Days These following are general rules for counting days. However, these rules are also subject to special rules for determining day of admission, discharge, death, beginning a leave of absence, same day transfer, guarantee of payment days, provider liability issues and outlier days for PPS outliers. See §40.1 and §40.1.G for an explanation of these special rules. The provider calculates and enters on the bill the number of claimable Medicare patient days on the cost report. (Medicare patient days always refer to cost report days.) For PPS facilities the A/B MAC (A) counts, for the cost report, utilization and Pricer purposes, all days for which Part A payment may be made to the hospital. This includes days for which the provider is not liable under the limitation of liability provision. It does not count days for which no Part A payment may be made for cost report, utilization or Pricer purposes. For non-PPS providers, the A/B MAC (A) does not count the days for Pricer purposes, because DRG payment or outlier calculations are not made. B. - Medically Unnecessary Days for Which the Provider May Charge the Beneficiary Days on which the hospital furnished no covered Part A services are not charged to utilization and are not counted as Medicare patient days. If the hospital or SNF stay includes any medically unnecessary days for which the provider has met the requirements of §§40.2.2 C or D for charging the beneficiary, the A/B MAC (A) counts those days as noncovered under Part A for cost report, utilization and Pricer purposes. Since the provider may not be aware of the date benefits are exhausted or when the outlier threshold is reached, the A/B MAC (A) verifies the provider's counts. If, for any reason, the A/B MAC (A) or the QIO determines fewer days are claimable (e.g., if the A/B MAC (A) or the QIO indicates that benefits are exhausted), the A/B MAC (A) will adjust cost report days for its PS&R system. If the A/B MAC (A) or the QIO determines fewer days are claimable for the cost report, it determines the proper number of days of utilization to charge the beneficiary and the proper number of days for the length of stay used by Pricer. It uses the factors in §40.1 and §40.1G to make these calculations. C. - Medically Unnecessary Outlier Costs for Which the Hospital May Not Charge If the hospital requests payment for cost outlier, and the Medicare covered charges converted to cost exceed the cost outlier threshold, the services which are not reasonable and necessary (or constitute custodial care) which are noncovered, but for which the hospital may not charge the beneficiary are determined as follows: • The hospital determines the lesser of the following: ° The cost of the medically unnecessary services (converting the charges for the medically unnecessary services to cost); or ° The amount by which the adjusted cost of the stay exceeds the cost outlier threshold. Ancillary services, which are not required to be furnished on an inpatient basis, are treated as medically unnecessary, but nevertheless may be covered under Part B. • If the costs in excess of the outlier threshold exceed the cost of the medically unnecessary services, the cost of all of the medically unnecessary services are treated as noncovered costs. If these costs exceed the costs in excess of the cost outlier threshold, beginning with the cost of the last medically unnecessary service in the stay, the hospital must identify, and add on, in reverse order, the cost of other medically unnecessary services until the total cost of medically unnecessary services reaches the costs in excess of the cost outlier threshold. If the cost of the last service to be added on in this manner brings the cost of medically unnecessary services over the amount of costs in excess of the cost outlier threshold, only the portion of the cost of that last medically unnecessary service (in the order of the addition) needed to bring the total of the medically unnecessary costs up to the costs in excess of the cost outlier threshold is added on. In this case, the costs in excess of the cost outlier threshold are treated as the noncovered costs. • Once the costs of medically unnecessary services to be treated as noncovered are determined, convert them to charges for each applicable service/revenue category, e.g., accommodations, radiology, pharmacy, by dividing the costs treated as not medically necessary in each category by 72 percent. The medically unnecessary charges determined are treated as noncovered charges. Days for which all costs are found to be noncovered are treated as noncovered days. • The hospital determines which medically unnecessary services and days treated as noncovered are services and days for which the beneficiary can be charged under §40.2.2C or E. The remainder of the services and days are the medically unnecessary services and days treated as noncovered even though the hospital may not charge the beneficiary. However, the distinction between medically unnecessary services and days for which the hospital may charge, and those for which it may not, will not be reflected in the charges shown on the inpatient hospital billing. Both are combined and shown as noncovered services and days. The determination of medically unnecessary cost outliers is not affected by non-entitlement days or days after benefits are exhausted. If the stay is covered or treated as covered, the beneficiary is treated as entitled to Part A, and as having benefits available throughout the stay.