Subchapter Table of Contents Section Latest Transmittal HI 00201.001 History HI 00201.005 Additional Provisions Under the 1972 Amendments HI 00201.010 Confidentiality of Official Records and Information TN 1 11-22 HI 00201.015 The Hospital Insurance Plan (Part A) TN 2 12-23 HI 00201.020 The Medical Insurance Plan (Part B) HI 00201.025 Financing the Hospital Insurance Program HI 00201.030 Financing the Supplementary Medical Insurance (SMI) Program

The 1965 amendments added to the Social Security Act provisions for two related health insurance programs, HI and SMI, for persons age 65 or over. Health insurance coverage under one or both plans began July 1966.

The amendments of 1965 specifically provide that nothing in the health insurance provisions shall be construed as authorizing any Federal employee to exercise any supervision or control over the practice of medicine, the way in which medical services are provided, or the administration or operation of medical facilities. The amendments also specify that any individual who is entitled to health insurance benefits is free to obtain services from any participating institution, agency, or person who is willing to provide the services.

NOTE: This url provides a link to the Centers for Medicare & Medicaid Services: http://www.cms.gov

The 1972 amendments added disabled beneficiaries to the list of claimants who are entitled to both hospital (part A) and medical (part B) coverage and, for the first time, provided coverage under part A on a premium paying basis for certain uninsured claimants who were not otherwise eligible to receive this coverage. This legislation also provided that the Railroad Retirement Board (RRB) would be responsible for SMI premium collection from all RRB annuitants, regardless of whether they are, or subsequently become, SSA beneficiaries. (Prior to this, SMI premiums were collected by whichever agency processed the individual's claim first. The various methods of premium collection are fully described in HIIM 150.03.B.) The 1972 amendments also gave SSA the authority to provide certain forms of relief to enrollees whose entitlement or reentitlement rights have been prejudiced by error, misrepresentation, or inaction of an employee or agent of the Government.

The law (section 1106 of the Act) provides that records and information acquired about individuals in the administration of the Social Security Act are confidential and may be disclosed only under the conditions prescribed in Regulation No. 1 or on the express authorization of the Commissioner of Social Security. The rules and regulations of the other components of the Department of Health and Human Services regarding the confidentiality of records and information also apply to governmental and private agencies participating in the administration of the program; to institutions, facilities, agencies, and clinics, and persons providing services; and to those furnishing services under arrangements with a provider of services.

The Privacy Act of 1974 requires: ( a ) that information requested from or about an individual must be limited to that necessary to accomplish CMS’s purpose as set forth by statute or by executive order of the President; ( b ) that information about an individual should, whenever possible, be obtained from the individual rather than from a third party (a legal guardian is not considered a third party); and ( c ) when SSA requests information from a third party, and in doing so, identifies the individual by name, SSN, etc., SSA makes a disclosure for which an accounting must be maintained and made available to the individual upon request.

Information furnished specifically for purposes of a claim under the Health Insurance program is subject to these rules and regulations. Such information includes the individual’s health insurance claim number, the fact of the individual's entitlement to health insurance benefits, and medical and other information obtained from SSA or an intermediary. However, the information in the provider’s own patient medical records is not subject to these rules and regulations even though the patient receives benefits under the Health Insurance program. These records are subject to the requirements of confidentiality in the provider conditions for participation and may also be subject to State or local laws or provider rules governing disclosure.

A provider may disclose records acquired under the Health Insurance program only when the record of information is to be used in connection with a claim for Health Insurance benefits or the disclosure is necessary for the proper performance of the duties of any officer or employee of (1) the Department of Health and Human Services, or (2) any public or private agency or organization under an agreement with the Secretary of Health and Human Services.

The Health Care Financing Administration has issued guidelines for intermediaries in arranging to supply billing information to State public welfare agencies when payment of the cost of provider services is to be made under both the Health Insurance and State welfare program. State public welfare agencies which have entered into agreements with Medicare intermediaries make the necessary arrangements with the providers involved.

test Hospital insurance, part A, is the basic plan which provides protection against the cost of hospital and related care. It is normally financed through separate payroll taxes and a separate trust fund. Individuals meeting the eligibility requirements (see HIIM 130.01) are automatically covered under the plan at no cost to them.

The medical insurance plan, part B, provides protection against the cost of medical and other related services, including physician's services and home health services which are not paid for by part A. It is a voluntary plan; that is, qualified persons must be enrolled in the plan and have the right to refuse to terminate their coverage.

Part B is financed by a monthly premium paid by the enrollees or “third parties” on their behalf (see HIIM chapter 400) and a matching amount paid from general revenues. A separate trust fund has been established for part B receipts and disbursements.

The Hospital Insurance program is financed through payroll contributions paid by employees, employers, and self-employed persons. The cost of providing hospital insurance benefits to persons who meet the deemed insured requirements is met by appropriations to the Federal Hospital Insurance Trust Fund from general revenues. Individuals enrolled in the Premium-HI program pay a monthly rate.

The contribution rate for employees, their employers, and the self-employed, is .90 percent of covered earnings through 1977. It then increases gradually reaching a maximum of 1.45 percent in 1986 and subsequent years. These amounts are added to, and are paid at the same time as the other social security contribution rates (FICA).

The contributions collected become part of a trust fund from which all Part A payments are made. This fund is administered by a Board of Trustees consisting of the Secretary of the Treasury (who is the Managing Trustee), the Secretary of Labor, and the Secretary of Health and Human Services all ex-officio. The Managing Trustee is authorized to invest trust funds only in interest-bearing obligations of the United States, or in obligations guaranteed as to both principal and interest by the United States not need for current withdrawals, and to make payments from the fund for purposes of Part A, including administrative expenses.

The medical insurance plan is financed by the monthly premiums of those who enroll under the plan and contributions from general revenues.

All Part B premiums collected and the general revenue payments become part of the Federal Supplementary Medical Insurance Trust Fund.

This fund is administered by a Board of Trustees consisting of the Secretary of the Treasury (who is the Managing Trustee), the Secretary of Labor, and the Secretary of Health and Human Services all ex-officio. The Managing Trustee is authorized to invest trust funds only in interest-bearing obligations of the United States, or in obligations guaranteed as to both principal and interest by the United States not needed for current withdrawals, and to make payments from the fund for purposes of Part B, including administrative expenses.

Subchapter Table of Contents Section Latest Transmittal HI 00204.001 Title XVIII Safeguards TN 1 10-22 HI 00204.005 Title VI, Civil Rights Act of 1964 HI 00204.010 Executive Order 11246 HI 00204.015 Office for Civil Rights Responsibility in Prohibiting Discrimination

Title XVIII contains safeguards that certain relationships will not be disturbed.

Title XVIII specifically provides that it shall not be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person.

Any individual entitled to benefits under title XVIII may obtain health services from any institution, agency, or person qualified to participate under title XVIII if such institution, agency, or person undertakes to provide the individual such services.

Title XVIII does not preclude any State from providing, or any individual from purchasing, or otherwise securing, other protection against the cost of any health services.

Title VI states that no person shall, on the grounds of race, color, or national origin be excluded from participation under any program or activity receiving Federal financial assistance. All federal departments and agencies extending such financial assistance are required to ensure that institutions or activities participating in these Federally-assisted programs do not discriminate against beneficiaries or hospital personnel on the grounds of race, color, or national origin. All hospitals and other Part A providers participating in Medicare are subject to the provisions of title VI. Thus, a hospital may meet all the technical requirements pursuant to Title XVIII of the Social Security Act, and yet not be eligible to participate in the Medicare program because of failure to comply with Title VI of the Civil Rights Act.

Title VI does not apply to physicians and other providers of medical services under Part B for the reason that the voluntary insurance system created by Part B is contractual in nature. The system, therefore, even if it might otherwise fall within the scope of title VI, is excluded as a contract of insurance.

Investigating complaints of noncompliance with title VI is a function of the Office of Civil Rights of HHS.

The Part A intermediaries and Part B carriers, as contractors with the Federal Government, are governed by Part II of Executive Order 11246 which prohibits such contractors from discriminating against employees or applicants on the basis of race, creed, color, sex, or national origin. CMS has the responsibility for insuring that the intermediaries and carriers are in compliance with EO 11246. The OMBP carries out this responsibility. District managers may occasionally be contacted by OMBP personnel for assistance in intermediary and carrier compliance surveys.

The Secretary of HHS has delegated to the Office for Civil Rights (OCR) the primary responsibility to see that all Part A providers (hospitals, SNF's, and HHA's), and some independent laboratories that receive Federal funds are in compliance with title VI. DO's may be called upon from time to time to assist OCR in determining the compliance status of providers participating or desiring to participate in Medicare.

Subchapter Table of Contents Section Latest Transmittal Administration of the Program HI 00208.001 General Assignment of Responsibilities HI 00208.005 Responsibilities for the Health Insurance Program HI 00208.010 Role of the Centers for Medicare & Medicaid Services (CMS) HI 00208.015 Role of the Social Security Administration (SSA) HI DAL00208.015 Assignment Of Responsibilities HI 00208.020 Responsibilities of the Centers for Medicare & Medicaid Services Regional Offices HI 00208.025 Role of the HSQ RO in Certification HI 00208.030 Role of the Division of Claims Processing, Bureau of Support Services HI 00208.035 Role of the Division of Reimbursement, Recovery and Reconsideration Evaluation, Bureau of Program Operations HI 00208.050 Health Facility Complaint Memorandum TN 8 02-21 HI 00208.055 DO Role in the Public Disclosure of Survey Information TN 12 11-22 HI 00208.060 DO Handling—Complaints of Discrimination TN 12 11-22 HI 00208.066 The Medicare Advantage (MA) Program TN 12 11-22 HI 00208.067 Eligibility and Elections in Medicare Advantage Plans TN 14 07-26 HI 00208.069 Disenrollment From A Medicare Advantage or 1876 Cost Plan TN 13 02-23 HI 00208.070 Appeal Rights TN 12 11-22 HI DAL00208.070 Proper Coding of the State and County (SCC) of Residence for Medicare Beneficiaries Who Elect Medicare Advantage (MA) Plans HI DEN00208.070 Proper Coding of the State and County (SCC) of Residence for Medicare Beneficiaries Who Elect Medicare Advantage (MA) Plans HI 00208.071 Disenrollment from Medicare Advantage (MA) and 1876 Cost Plans Through Social Security Field Offices TN 12 11-22 HI 00208.072 Handling Medicare Advantage (MA) Inquiries and Problem Cases TN 12 11-22 HI 00208.073 CMS Regional Offices and State Information TN 8 02-21 HI 00208.075 Role of State Agencies HI 00208.080 Role of Professional Standards Review Organizations (PSRO's) HI 00208.085 Role of the Railroad Retirement Board TN 12 11-22 HI 00208.090 Role of the Part A Intermediaries and Part B Carriers HI 00208.095 Group Practice Prepayment Plans HI 00208.100 Change of Provider Ownership

The overall responsibility for the administration of title XVIII rests with the Secretary of HHS. In exercising this responsibility, the Secretary has delegated certain administrative functions to various components of the Dept. In addition, as provided by the Social Security Act, a major role in the administration of title XVIII has been given to public and private organizations.

The Public Health Service (PHS), the Centers for Medicare & Medicaid Services (CMS), and the Social Security Administration (SSA), are the agencies involved in administering the Health Insurance program.

CMS is responsible for policy formulation and various operational aspects of the program. These duties are the responsibility of various components.

1. Develops, interprets and implements health quality and safety standards and evaluates their impact on the utilization, quality, and cost of health care services;

2. Develops, interprets, implements, and evaluates the conditions and standards of participation by and monitors and validates certification activities for providers and suppliers of health services under the Medicare and Medicaid programs;

3. Develops, interprets, implements, and evaluates policies for professional standards review, related peer review, utilization review, and utilization control programs under Medicare and Medicaid;

4. Develops and manages grants with PSRO’s and contacts with statewide Professional Standards Review Councils and develops policies regarding operational aspects of peer and utilization review programs, including their monitoring and evaluation;

5. Develops and evaluates health care and health-related policies related to implementation of the End Stage Renal Disease (ESRD) provision and coordinates with Medicare the implementation and monitoring of their policies;

6. Determines information and data reporting, collection and systems requirements for the PSRO and provider certification programs;

7. Serves as the CMS focal point in the agency’s interface with the Assistant Secretary for Health and the Public Health Service on Medical Care Standards Quality Assurance, and other health-related matters.

The Centers for Medicare & Medicaid Services has the primary responsibility for the Health Insurance program. However, nearly every major bureau or office of SSA is involved in some way in carrying out CMS responsibilities.

This responsibility involves the development of policies, guidelines, and procedures used by the intermediaries, carriers, and components of CMS in carrying out their responsibilities for administering the Health Insurance provisions of the Social Security Act.

The Medicaid Bureau has the primary responsibility for administering title XIX of the Social Security Act. As such, it develops and promulgates appropriate policies.

The Bureau of Quality Control has responsibility for insuring the integrity of the Medicare program and investigating all complaints of fraud or abuse against the program. In the furtherance of these objectives, BQC has occasion to work closely with carriers and intermediaries, the CMS regional and central office components, and DO’s among other units.

NOTE: By law and regulation, the Inspector General’s Office of Investigations, (OI), has the responsibility to supervise, coordinate and provide direction for Medicare fraud cases.

SSA has responsibility for general management and operational aspects of the Medicare program. This includes:

A. Determinations of an individual's entitlement to benefits; hearings and appeals resulting from these determinations, and the maintenance of eligibility and utilization records;

B. Through the network of district, branch and teleservice centers, providing the locations where the public can readily acquire program information.

The Centers for Medicare & Medicaid Services RO is responsible for a wide range of administrative activities. These include administrative coordination and operational appraisals as well as program interpretation and evaluation. Accordingly, the RO role in coordination of operational activities and assessment of program effectiveness involves direct contact with intermediaries and carriers. The RO also works closely with all other agencies and organizations which have direct or indirect involvement in the Medicare program.

The RO is empowered to exercise the necessary authority, not prohibited by other specific delegations, for effective implementation of the Medicare program in its geographic area. It has the responsibility, for example, to emphasize and reiterate program instructions emanating from central office when it believes that circumstances so warrant. It also makes current appraisals of specific program or operational issues. This may require compilation and reporting of selective data within designated time periods. While various CMS components are involved in the administration of the Medicare program, the CMS RO is the focal point for control and liaison between intermediary, carrier, and SSA activities in the field. This role also applies to policy interpretation and the referral to central office of issues which may require the establishment or revision of policy. Through these appraisals and recommendations, the RO directly participates in the development of policy at the central office level.

The RO's handle all matters relating to the survey and certification program at the regional level. Their principal activities are:

A. Review certification recommendations made by State agencies for Medicare purposes and issue provider agreements to those which meet the requirement. In making a decision of substantial compliance and eligibility to participate, the HSQ RO relies on the evidence submitted by the provider or supplier, the State agency, the Office of Civil Rights, the Bureau of Quality Control and the PSRO's.

B. Terminate those providers and suppliers that, on resurvey, are found not to be in substantial compliance.

The responsibilities of the Division of Claims Processing, Office of Direct Reimbursement (ODR) are basically the same as those of intermediaries and carriers as outlined in HI 00208.090 .

The Claims Operation Branch (COB), is that part of ODR which processes claims for those hospitals, SNF’s, and HHA’s which have elected to deal directly with CMS and process claims for provider-based physician services in governmental facilities.

Because COB is located so far from most of the providers it serves, certain functions usually handled by an intermediary (e.g., the transmission of admission and start of care data to OCRO) are handled by or with the assistance of DO’s.

The Division of Reimbursement, Recovery, and Reconsideration Evaluation is primarily responsible for directing the processing of CMS appeals and overpayments, and planning, directing and coordinating the monitoring of Medicare and Medicaid Program guidelines designed to review and evaluate CMS reimbursement and accounting policy. Some of the Division’s specific functions are as follows:

A. The adjudication of requests for reconsideration of Part A claim denials initially processed by intermediaries, which are unable to conduct their own reconsiderations.

B. The evaluation of intermediaries’ performance in processing Part A appeals and the preparation of reports from which intermediaries are rated for Contractor Performance Evaluation Program purposes.

C. The review of all Medicare, Medicaid, and PSRO decisions on which a hearing before the Office of Disability Adjudication and Review (ODAR) has been requested.

D. The final review of all Part A Medicare and Medicaid decisions by ODAR on health insurance appeals.

E. The evaluation and review of Medicare beneficiary, provider, and physician /supplier overpayment cases, and the determination and adjudication of recovery actions.

If a person wants to lodge a complaint regarding quality of care via a Field Office they should be directed to their local Quality Improvement Organization (QIO). They can locate their state by clicking on the link : QIO.

Members of the public have the right to inspect information obtained from surveys of Medicare and Medicaid providers and suppliers. This includes completed survey forms, statements of deficiencies, plans of correction, comments submitted by the institutions, and State agency revisit report. Survey data is made available for inspection only after it has been reviewed and approved by the HSQ RO.

Each DO, excluding metropolitan branch offices, is required to establish and maintain a file containing the current CMS-2567, Statement of Deficiencies and Plan of Correction, on all providers and suppliers in their service area. The HSQ RO and the Medicaid State agency forward the CMS-2567 to the servicing DO, and an identical copy to the local public assistance offices. When a subsequent CMS-2567 is received from the RO, discard any earlier material concerning the provider's deficiencies and file the new CMS-2567 in place of the old material.

The DO can assume it is authorized to release to the public any material received from the HSQ RO or the Medicaid State agency relating to provider deficiencies. Interested members of the public may inspect the CMS-2567 at either the DO or the public assistance office. Should survey data other than the CMS-2567 be requested, request it from the HSQ RO (or the Medicaid State agency, if this is more practical). The HSQ RO will probably reply directly to the inquirer that the information is available for inspection.

DO's may receive inquiries about facilities located in another DO's service area. Offer to telephone the servicing DO for copies of its file. Do not refer the requester to the other DO unless the requester prefers to get the information himself.

Although public or beneficiary complaints of provider discrimination may be filed directly with OCR, they may also be filed with the DO. Complaints of provider discrimination on the basis of race, color, or national origin received in the DO should be routed to the RO of OCR at the address indicated in HI 00208.060C. Under no circumstances should complaints not related to discrimination under title VI be forwarded to OCR. If more than one type of complaint against the same provider is involved, only the one relating to provider discrimination on the basis of race, color, or national origin should be forwarded to OCR.

CMS and SSA should protect the identity of individuals filing complaints of discrimination and of instructions against which charges are made. Should an individual be reluctant to reveal histhe individual's identity, accept an anonymous complaint. DO’s should keep in mind that disclosure of identity of a person filing a charge of discrimination could result in the individual's economic or even personal harm. Similarly, the reputation of a provider could be unjustly impaired by disclosure that a complaint had been filed against it.

The following basic information should be obtained and recorded on an SSA-5002, Report of Contact:

1. The name and address of the facility where the incident occurred;

2. The date the incident occurred;

3. The basis for the complaint (race, color, or national origin);

4. The services or facilities about which the complaint is being made (admissions, bed assignment, dual standards for the cost of medical service, dual standards in assignments to or use of hospital facilities, visiting privileges, etc.) including a complete narrative description concerning the nature of the practices alleged to be discriminatory. When possible, names and titles of persons involved should be given.

5. The name, address, and telephone number, if any, of the complainant. This information may be needed to contact the person for more information and to notify the person of the results of the investigation. If the complainant appears to be reluctant to identify himself explain that the information will be kept confidential and will not be released to anyone without the complainant consent. If the individual refuses to give this information, accept the complaint and indicate that the complainant prefers to remain anonymous.

6. If a complaint has been made to the provider or the State health or welfare department, indicate to whom the complaint was made, the date, and the outcome if known.

A single copy of the complaint should be routed directly to the Regional Director for OCR, DHHS, who has jurisdiction for the region in which the provider is located.

The envelope should bear the legend “Confidential-Administrative Mail.” and be addressed to the “Regional OCR Director, Department of Health and Human Services,” at the addresses shown below:

DHHS Region I - John Fitzgerald Kennedy Federal Building Boston, MA 02203 DHHS Region II - 26 Federal Plaza New York, NY 10007 DHHS Region III - PO Box 12840 Philadelphia, PA, 19108 DHHS Region IV - 50 Seventh St NE Atlanta, GA 30323 DHHS Region V - 200 S Wacker Dr Chicago, IL 60606 DHHS Region VI - 1114 Commerce St Dallas, TX 75202 DHHS Region VII - 601 East 12 St Kansas City, MO 64106 DHHS Region VIII - 721 19 St. Denver, CO 80202 DHHS Region IX - 50 Fulton St. San Francisco, CA 94102 DHHS Region X - Arcade Plaza Bldg. Seattle, WA 98101

When an individual files a complaint, the individual should be informed that it will be forwarded to OCR which will acknowledge receipt and after investigation, notify the individual of the outcome. The processing time of such complaints varies, so advise the individual that further contacts regarding the matter should be made with OCR at the address shown in HI 00208.060C.

CAUTION: Do not attempt to provide detailed responses to questions about the MA program or counsel individuals in their choice of MA plan. Instead, refer individuals to 1-800-MEDICARE or to the State Health Insurance Assistance Program.

The Balanced Budget Act of 1997 (BBA) created a new Part C of the Medicare program, known as Medicare+Choice (M+C), that significantly expanded the health care options available to Medicare beneficiaries. Beginning 01/01/99, eligible individuals could begin to receive Medicare benefits through enrollment in one of an array of private health plan choices beyond the Original Medicare Program or the plans that were available through Managed Care Organizations under section 1876 of the Social Security Act (referred to as 1876 cost plans).

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) revised Medicare Part C, including a program name change from Medicare+Choice to Medicare Advantage (MA), and added a voluntary outpatient prescription drug benefit under a new “Part D” of Medicare. The MA program retains many provisions of the M+C program while updating and improving choice of plans for beneficiaries and restructuring how plans are paid. Under the MMA, beneficiaries will have additional choices of plan options -- regional PPO plans and specialized MA plans for special needs individuals (Special Needs Plans or SNPs).

MA organizations may, at their discretion and with CMS approval, offer plans that include a Part B premium reduction. This reduction is known as Medicare Advantage Reduction (MARD). The amount of the reduction may vary among plans.

The Centers for Medicare and Medicaid Services (CMS) contracts with private plans to provide the drug benefit. Individuals need to enroll in a stand-alone Prescription Drug Plan (PDP) or a Medicare Advantage Plan that includes a drug benefit (MA-PD) in order to receive this Medicare benefit, which began on January 1, 2006.

As of January 1, 2006, Medicaid no longer covers pharmacy benefits for individuals eligible for both Medicare and Medicaid (also referred to as “dual eligibles” or “duals”). Depending on their income and resources, individuals may qualify for extra help (the “low income subsidy”) with their Medicare prescription drug costs– premiums, deductibles, and copayments.

Benefits are health care services that are intended to maintain or improve the health status of members, for which the MA organization incurs a cost or liability under an MA plan, and that are approved by CMS. An MA plan includes, at a minimum, basic benefits and may also include mandatory supplemental benefits and optional supplemental benefits.

Cost plan means a plan operated by a Health Maintenance Organization (HMO) or Competitive Medical Plan (CMP) in accordance with a cost reimbursement contract under §1876(h) of the Act Some cost plans offer Medicare prescription drug coverage as an optional supplemental benefit.

Election is a request for enrollment in or voluntary disenrollment from an MA plan, a Medicare prescription drug plan or the traditional Medicare fee-for-service program (“Original Medicare”). (Disenrollment from Original Medicare would only occur when an individual enrolls in an MA plan.)

Election period (also called “enrollment period”) is the time during which an eligible beneficiary may elect to enroll in or disenroll from a Medicare Advantage plan, a Medicare prescription drug plan or Original Medicare.

M A Organization is a public or private entity organized and licensed by a State as a risk-bearing entity that is certified by CMS as meeting the MA contract requirements.

An M A Plan is health benefits coverage offered under a policy or contract by an MA organization that includes a specific set of health benefits offered at a uniform premium and uniform level of cost-sharing to all Medicare beneficiaries residing in the service area (or segment of the service area) of the MA plan.

Original Medicare is health insurance available under Medicare Part A and Part B through the traditional fee-for-service (FFS) payment system.

Provider network are providers with which an MA organization contracts or makes arrangements to furnish covered health services to plan enrollees.

A Service area is a geographic area that for local MA plans is a county or multiple counties, and for MA regional plans is a region approved by CMS within which an MA-eligible individual may enroll in a particular MA plan offered by an MA organization. Each MA plan must be available to all MA-eligible individuals within the plan's service area. Counties do not need to be contiguous and under limited circumstances, CMS may approve the inclusion of “partial” counties in a service area.

The MMA permits Medicare beneficiaries who are entitled to Part A and Part B to have their health care provided by an MA organization. An MA organization must enter into a contract with the Secretary of the Department of Health and Human Services (DHHS) to participate under Medicare.

An MA organization must provide members in its plan with coverage of the basic benefits by furnishing the benefits directly or through arrangements, or by paying for the benefits. Each MA organization must provide coverage of, through the provision of or payment for, all services that are covered by Part A and Part B of Medicare and that are available to beneficiaries residing in the plan’s service area.

In addition, the law permits MA organizations to offer plans that do not require members to receive services through a provider network (i.e. private fee-for-service plans, regional or local preferred provider organizations and some Medical Savings Account plans).

MA coordinated care plans include a network of providers that are under contract or arrangement with the organization to deliver the benefit package approved by CMS. The network must be approved by CMS to ensure that all applicable requirements are met including access and availability standards, service area requirements, and quality standards. MA coordinated care plans may include mechanisms to control utilization, such as referrals from a provider (also known as a “gatekeeper”) to receive services within the plan, and financial arrangements that offer incentives to providers to furnish high quality and cost-effective care.

MA coordinated care plans include, but are not limited to, HMO plans with or without point of service options, plans offered by provider sponsored organizations, preferred provider organizations, as well as the Religious Fraternal Benefits Society plan.

Definitions of the various types of MA coordinated care plans are as follows:

• An HMO is a public or private organization which provides (either directly or through arrangements with others) comprehensive health services to enrolled members who live within a specific geographic area. The beneficiaries pay a predetermined premium which covers the medical expenses without regard to the frequency or extent of covered services furnished.

• An HMO with a point-of-service plan is a plan in which a member may be reimbursed by the HMO for services received through non-network providers when network providers could have been used.

• A point of service (POS) plan is a benefit option that an MA plan can offer to its Medicare members as an additional, mandatory supplemental, or optional supplemental benefit. Under the POS benefit option, the MA plan allows members the option of receiving specified services outside of the MA plan’s provider network. In return for this flexibility, members typically have higher cost-sharing requirements for services received and, where offered as a mandatory or optional supplemental benefit, may also be charged a premium for the POS benefit option.

• A provider-sponsored organization is operated by providers, in which the substantial proportion of services are delivered through the sponsoring provider or affiliated providers.

• A preferred-provider organization (PPO) is a plan that has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan; provides for reimbursement for all covered benefits regardless of whether the benefits are provided within the network of providers; and only for purposes of quality improvement requirements in §422.152(e) of the MA regulation is offered by an organization that is not licensed or organized under State law as an HMO.

• Religious and Fraternal (RFB) Society Plans are offered by a religious and fraternal society for members of the society. Only members of the society may enroll. The society must meet Internal Revenue Service and Medicare requirements for this type of organization.

• A Special Needs Plan (SNP) can be any type of coordinated care plan that meets CMS' SNP requirements and either exclusively enrolls special needs individuals or enrolls a greater proportion of special needs individuals. The MMA designated three specific segments of the Medicare population as special needs individuals: institutionalized individuals; those entitled to Medical Assistance under a State Plan under Title XIX (Medicaid) - “dual eligibles;” and other high-risk groups of chronically ill or disabled individuals who would benefit from enrollment in this type of plan.

A Medical Savings Account (MSA) is a type of MA plan that combines a high-deductible health plan and a tax advantaged personal savings account set up to fund medical costs not covered by the plan.

MSA plan members will receive an annual deposit into an interest-bearing account from CMS to help them cover their health care costs. Members will use the money in their MSAs to pay for their health care before the high deductible is reached. Once the deductible is met, the MA organization offering the MSA plan will be responsible for payment of 100 percent of the expenses related to covered services. When the money in the account is used to cover “qualified medical expenses” under IRS rules, it is not taxed. MSA plans are statutorily restricted from covering Part D drugs, but MSA enrollees can join a stand-alone prescription drug plan (PDP).

Depending on the MSA that the beneficiary chooses, the individual may be able to go to any doctor or hospital, or the individual may be limited to a network of providers.

An MA private fee-for-service plan is an MA plan that pays providers of services at a rate determined by the plan on a fee-for-service basis without placing the provider at financial risk. A PFFS plan does not vary the rates for a provider based on the utilization of that provider's services, and does not restrict enrollees' choices among providers that are lawfully authorized to provide services and agree to accept the plan's terms and conditions of payment.

Enrollees in a PFFS plan are not limited to a provider network. Members of a PFFS plan can go to any doctor or hospital in the U.S. that is eligible to be paid by Medicare and is willing to accept the plan’s terms of payment. However, if the PFFS has a network of providers, the enrollee’s cost-sharing may be higher if the enrollee seeks care from non-network providers.

In a cost plan, Medicare enrollees are not restricted to the HMO or CMP for receipt of covered Medicare services, i.e., services may be received through non-HMO/CMP sources and are reimbursed separately by Medicare intermediaries and carriers. Medicare payment to the HMO/CMP is based on the reasonable costs of providing services to the Medicare beneficiaries. Beginning in 2006, Cost Plans were permitted to offer Part D of Medicare as an optional supplemental benefit. In other words, a cost plan that elects to offer qualified prescription drug coverage may offer alternative coverage as an optional supplemental benefit only if the cost plan also offers basic prescription drug coverage. Thus, an enrollee in the cost plan may, at the individual’s option, elect whether to receive qualified prescription drug coverage under the cost plan. If so, the enrollee has the option to elect whether to receive basic prescription drug coverage or if offered by the cost plan, enhanced alternative coverage.

There can be no new cost plans. Cost plans were permitted to expand service areas, as long as requests for such expansions were submitted on or before September 1, 2006, and all other requirements were met. Beginning in 2008, cost plans located in areas where there are two or more MA coordinated care plans meeting minimum enrollment requirements will not by renewed by CMS.

To be eligible for an MA plan the beneficiary must

• be entitled to hospital insurance (Part A) and supplementary medical insurance (Part B) when coverage under the MA plan begins;

• live in the service area of an MA plan.

a. Beneficiaries entitled to Part B only who were enrolled in a Managed Care Plan prior to 01/99 were “grandfathered” into the MA program, that is, they were allowed to continue enrollment in the plan. However, if these individuals elect to disenroll from the MA organization, they are not eligible to enroll in any MA plan until or unless they meet all MA eligibility requirements.

b. Beneficiaries may enroll in Premium-HI during the Transfer Enrollment Period (TEP) for information on the TEP refer to HI 00801.142 - HI 00801.144 .

An eligible individual must complete an enrollment request to enroll in an MA plan, even if that individual is electing an MA plan in the same MA organization in which the individual is enrolled. MA organizations must have, at minimum, a paper enrollment form process. At their discretion, organizations may offer enrollment via telephone and internet, as well. Individuals may call 1-800-MEDICARE to submit enrollment requests to organizations that offer enrollment via the internet. MA elections CANNOT be made at SSA FOs.

There are specific periods referred to as “election periods” during which a beneficiary can elect an MA plan. There are five types of election periods during which individuals may make elections. They are:

• The Initial Coverage Election Period (ICEP);

• The Medicare Advantage Open Enrollment Period (MA OEP);

• The Annual Election Period (AEP);

• All Special Election Periods (SEP); and

• Open Enrollment Period for Institutionalized Individuals (OEPI).

The ICEP is the period during which an individual newly eligible for MA may make an initial election to enroll in an MA plan. This period begins three months immediately before the individual’s first entitlement to both Medicare Part A and Part B and ends on the later of:

• The last day of the month preceding entitlement to both Part A and Part B, or;

• The last day of the individual’s Part B initial enrollment period.

The initial enrollment period for Part B is the seven (7) month period that begins 3 months before the month an individual meets the eligibility requirements for Part B, and ends 3 months after the month of first eligibility.

Once an ICEP election is made and enrollment takes effect, the ICEP election has been used.

In addition to their opportunities during the AEP, SEP, or ICEP, MA eligible individuals may make one MA OEP election from January 1 st through March 31st and for a three-month period upon new entitlement to both Medicare Part A and B.

MA organizations are not required to open their MA plans for enrollment during an OEP . However, MA organizations must accept valid requests for disenrollment from MA-only plans during the OEP since Original Medicare is always open during an OEP. In addition, if an MA organization has more than one MA plan, the MA organization is not required to open each plan for enrollment during the same time frames.

The MA OEP allows disenrollment from an MA plan in order to switch to Original Medicare (with or without prescription drug coverage), or enrollment into a different MA plan (with or without prescription drug coverage).

EXCEPTION: Beneficiaries may not elect an MA MSA plan during the Open Enrollment Period.

The AEP runs from October 15 thru December 7 of each year.

During the AEP, MA eligible individuals may enroll in or disenroll from an MA plan.

The last election made prior to the end of the election period will be the election that takes effect.

There are special election periods during which an individual may enroll in, disenroll from or switch MA plans outside of other election periods. Inquiries regarding SEP eligibility should be referred to 1-800-MEDICARE (TTY 1-877-486-2048).

Examples of SEPs include:

• Individuals who permanently move out of the plan's service area or are affected by plan termination or reduction of the plan's service area are eligible for a SEP.

• Individuals who have employer sponsored coverage, or who are losing such coverage, are eligible for a SEP.

• Individuals who enrolled in an MA plan based on misleading or incorrect information from plan employees, agents or brokers.

• Other SEPs may apply.

Continuous for an MA-eligible institutionalized individual who moves into, resides in, or moves out of an institution. The OEPI ends two months after the month the individual moves out of the institution. Changes permitted: Enrollment into MA plan (MA-only, MA-PD) Disenrollment from MA plan (MA-only, MA-PD) Enrollment into Original Medicare The OEPI does not permit elections into or out of an MA MSA plan, as provided by 42 CFR § 422.62(a)(4) and 422.62(d). An MAO that has chosen to be closed for OEPI enrollment requests must accept requests for disenrollment during the OEPI, as institutionalized individuals that are eligible to make elections under the OEPI may opt to enroll in Original Medicare or elect a different MA plan at any time. Special rules for MA MSA plans Eligible beneficiaries may enroll in an MA MSA plan (should one be offered in their area) only during their initial coverage election period or the annual election period.

An election made during the initial coverage election period is effective the first day of the month following the month in which the enrollment request is received by the MA organization, but never earlier that the date on which the individual is entitled to Part A and enrolled in Part B.

An election made during the MA Open Enrollment Period is effective the first day of the month following the month the election request is received by the MA organization.

An election made during the annual election period is effective January 1st of the following year.

The effective date of elections made during special election periods is dependent upon the specific circumstances.

5. Election made the Open Enrollment Period for Institutionalized Individuals (OEPI)

The effective date of an election made during the OEPI is the first of the month following the plan’s receipt of the enrollment request.

A beneficiary who elects an MA plan does not give up Medicare coverage. The beneficiary's Medicare services are being paid for under a different payment system. The beneficiary will generally use their MA plan card to obtain benefits and services, as the MA plan provides their coverage.

To enroll in a cost plan, the beneficiary must

• be entitled to Part A and enrolled in Part B; or enrolled in Part B

• not have ESRD at time of enrollment (a beneficiary that develops ESRD after enrolling in a cost plan may not be disenrolled).

• reside in service area of a 1876 cost plan

The 1876 cost plans must provide open enrollment for at least 30 consecutive days during each contract year. Information about enrollment periods should be obtained from the cost plan.

The cost plan will notify the individual of the effective date of enrollment, which is generally the first of the first or second month after the individual requests enrollment. However, the beneficiary can choose an effective date of up to three (3) months into the future.

The beneficiary who elects an 1876 cost plan does not give up the beneficiary' Original Medicare coverage.

The beneficiary’s Medicare services are being paid for under a different payment system.

The beneficiary keeps the Medicare card and will continue to have Medicare as long as the requirements for entitlement are met.

The beneficiary may access Medicare fee-for-service coverage while enrolled in the cost plan.

HI 00801.142 - HI 00801.144 for information on the Transfer Enrollment Period

Beneficiaries may disenroll from an MA plan only during the following election periods:

• Open Enrollment Period,

• Annual Election Period, and

• Special Election Periods.

Refer to HI 00208.067B for a description of election periods.

Members of 1876 cost plans may disenroll at any time during the year.

Disenrollment from an MA MSA plan may only occur during the Annual Election Period or during a Special Election Period that may apply.

Individuals enrolled in an MA plan may disenroll by:

• Giving or faxing a signed written notice to the MA organization, or through their employer, where applicable;

• Submitting a request via the Internet to the MA organization (if the MA organization offers such an option); or

• Calling 1-800-MEDICARE (TTY 1-877-486-2048).

A request for disenrollment from an 1876 cost plan must:

• be made in writing,

• be signed by the beneficiary or representative,

• be in the form required by the organization or CMS, and

• be filed with the organization.

NOTE : SSA does not accept disenrollment requests for Medicare Advantage or 1876 cost plans (see HI00208.071B).

A disenrollment request filed during the open enrollment period is effective the first day of the month following the month the election is received by the MA organization. For example, a disenrollment request received on 03/03/07 will be effective 04/01/07. CMS intends “receipt” to mean when the organization comes into the actual possession of the request — NOT the postmark date of the disenrollment request.

A disenrollment request filed during the annual election period is effective January 1st of the following year.

The effective date of disenrollment requests filed during special election periods is dependent upon the specific circumstances.

The effective date of disenrollment is generally the first day of the month following the month in which the disenrollment request is received. The beneficiary can select a prospective disenrollment date up to 3 months into the future.

Beneficiaries who disenroll from an MA plan and do not elect another plan are automatically covered by the Original Medicare plan.

CMS has established an automatic disenrollment process for beneficiaries who change plans. A beneficiary who elects another plan is automatically disenrolled from the previous plan in which the beneficiary was a member. When a beneficiary elects a different MA plan, the beneficiary does not have to submit a request to disenroll from the previous plan.

The MA organization must promptly submit a beneficiary’s disenrollment request to CMS.

Organizations must notify beneficiaries as follows:

• The 1876 cost organization must furnish the beneficiary with a copy of the beneficiary's request for disenrollment.

• MA organizations must send the member a written notice acknowledging the request for disenrollment.

• MA and 1876 cost organizations are strongly encouraged to send written confirmation of the disenrollment to the beneficiary once the individual is disenrolled.

A beneficiary maintains Medicare appeal rights if the beneficiary is dissatisfied with a determination of the MA or 1876 cost plan regarding liability for services furnished or the plan's refusal to provide or arrange for Medicare covered services. The Medicare appeal process of an MA or 1876 cost member may no longer be initiated in the SSA offices, but must be initiated with the MA organization. Refer individuals who contact SSA offices regarding MA or 1876 cost plan appeals procedures to 1-800-MEDICARE (TTY 1-877-486-2048) or to the State Health Insurance Assistance Program.

From 1987 through November 14, 2005, Medicare beneficiaries enrolled in managed care plans were able to disenroll from those plans at Social Security field offices (FOs). The Sixth Omnibus Budget Reconciliation Act passed in 1986 included this provision to allow Medicare beneficiaries the opportunity to go to a “neutral” third party to disenroll from Managed Care Plans. Beneficiaries could also disenroll directly from the plans during that timeframe. (Refer to HI 00208.069B. )

Beginning November 15, 2005, these disenrollments are handled by 1-800-MEDICARE, not SSA. In addition, 1-800-MEDICARE is able to accept enrollment requests for Medicare prescription drug plans and Medicare Advantage plans offering Medicare prescription drug coverage. Individuals may submit enrollment requests through the new CMS Online Enrollment Center as well. In addition, 1-800-MEDICARE (TTY 1-877-486-2048) serves as a centralized resource to provide individuals information on Medicare health plan options, based on the needs of the beneficiary.

Beginning November 15, 2005, SSA representatives cannot input or transmit Medicare managed care disenrollment requests into the SSA system, i.e. via the Post Entitlement System (POS) and TC 24015.040.

Beneficiaries enrolled in Medicare health plans may not disenroll at a Social Security FO.

Beneficiaries seeking disenrollment must contact 1-800-MEDICARE (TTY 1-877-486-2048), or their plans directly, as follows:

• Beneficiaries enrolled in MA plans (HMOs, PPOs, PFFS, PSOs, RFBs) may contact 1-800-MEDICARE or their plan directly

• Beneficiaries enrolled in 1876 Cost Plans or MA MSA plans must disenroll directly with their plan; they may not request disenrollment via 1-800-MEDICARE

FO representatives should direct ALL beneficiaries requesting disenrollment – including telephone, mail and walk-in - to call Medicare directly at 1-800-MEDICARE (1-800-633-4227; TTY users should call 1-877-486-2048) to request disenrollment.

FOs may assist walk-in requests in SSA office by calling 1-800-MEDICARE in office. It is important that the beneficiary understands that a call to the SSA field office is not needed; rather, beneficiaries may call 1-800-MEDICARE on their own.

FOs ceased mailings and distribution of the CMS-566 form effective November 15, 2005).

FOs will forward to the appropriate CMS regional contacts all disenrollment requests received through the mail, including previously distributed CMS-566 forms. See HI 00208.073A for the CMS RO address.

FOs can advise beneficiaries they will need to have the following information on hand to process the disenrollment:

• Full Name

• Medicare # from the red, white and blue card

• Date of Birth

For the protection of their identity, beneficiaries will need to provide one additional piece of information such as:

• Phone# (if beneficiary called 1-800-MEDICARE previously)

• SSN

• Address

• City, State, Zip

• Part A/Part B Coverage (Yes/No)

• Part A/Part B Effective Date

Beneficiaries should:

1. Dial 1-800-MEDICARE; TTY users should call 1-877-486-2048.

2. Select English or Spanish.

3. Wait for the introduction to finish and say (i.e. speak aloud) “Agent.”

4. When an agent answers, state that you wish to Disenroll from a Medicare Health Plan.

5. The agent will transfer you to a disenrollment customer service representative (CSR).

6. The CSR will ask a few questions (e.g. Name, Medicare #, Date of Birth, etc.) as previously described to verify identity. NOTE : If the individual does not have this information at the time of the call, the individual will be asked to call back when this information is available.

7. After this information is provided, the CSR will verify the plan you are currently enrolled in (and would like disenrollment from).

8. The CSR will input the disenrollment.

9. Once the Medicare systems confirm the disenrollment (should take approximately 1 week), a confirmation letter will be mailed to you.

CAUTION: Do not attempt to provide detailed responses to questions about the Medicare Advantage (MA) program or counsel individuals in their choice of a MA plan.

Refer beneficiaries who request the following printed material to CMS at 1-800-MEDICARE (1-800-633-4227); TTY users call 1-877-486-2048; or to the appropriate website:

• Medicare _& You (and Medicare and You, Spanish)

• Information on MA MSA plans

• List of MA plans available in beneficiary’s area: Medicare Plan Finder

Refer beneficiaries who require assistance in selecting an MA plan to:

• CMS at 1-800-MEDICARE (1-800-633-4227); TTY users call 1-877-486-2048 or,

• The State Health Insurance Assistance Program (SHIP). Each State has a SHIP which can answer questions concerning health care options and the MA program. Refer to HI 00208.073B for State SHIP telephone numbers.

Beneficiaries who wish to enroll in a MA plan should contact the plan directly to request enrollment with the plan.

Follow the procedures in HI 00801.142 through HI 00801.144 if the beneficiary requests enrollment in Premium - HI.

In all enrollment/disenrollment cases, take the following actions:

• Advise the beneficiary to contact the MA plan for resolution.

• Beneficiaries may also contact 1-800-MEDICARE (1-800-633-4227); (TTY 1-877-486-2048)

• If the beneficiary is unsuccessful and has come into the SSA FO , take a statement from the beneficiary on a Form SSA-795, Statement of Claimant or Other Person explaining the problem. Forward the SSA-795 along with a.screen of the MEQY to the servicing CMS RO. See Center for Medicare and Medicaid Services website for CMS RO email addresses. FAX all documentation, into NDRed.

• If the beneficiary is unsuccessful and has contacted the TSC , take a statement from the beneficiary on Form SSA-5002 Report of explaining the problem. Email the SSA-5002 along with a screen shot of the MEQY to the servicing CMS RO. See Center for Medicare And Medicaid Services website for CMS RO email addresses. After emailing the material, follow local instructions for dispostion of the SSA-5002.

Any follow-up action needed between CMS and the beneficiary relative to this case is conducted by the CMS RO.

Region I (Boston) Health Plans & Providers Branch John F. Kennedy Federal Building, Room 2375 Boston, MA 02203 Region V (Chicago) CMS Division of Beneficiaries, Health Plans & Providers 233 North Michigan Avenue Suite 600 Chicago, IL 60601 Region VIII (Denver) Division of Beneficiaries, Health Plans & Providers Customer Relations Branch 1961 Stout Street Denver, CO 80241 Region II (New York) Division of Beneficiary Health Plans & Providers, Beneficiary Services & Provider Branch 26 Federal Plaza, Room 3811 New York, NY 10278 Region VI (Dallas) Health Plans and Providers Branch 301 Young StreetRoom 833 Dallas, TX 75202 Region IX (San Francisco) Health Plan & Provider Operations 90 7 th Street, Suite 5-300 (5W) San Francisco, CA 94103 Region III (Philadelphia) Division of Beneficiary Health Plans & Providers Beneficiary Services Branch Enrollment/Disenrollment Unit The Public Ledger Building Suite 216 150 S. Independence Mall West Philadelphia, PA 19106 Region VII (Kansas City) Division of Beneficiary Services Richard Bolling Federal Building 601 East 12th Street, Room 235 Kansas City, MO 64106 Region X (Seattle) Division of Beneficiaries, Health Plans & Providers Managed Care Branch 701 5th Avenue Suite 1600 MS-01 Seattle ,WA 98104 Region IV (Atlanta) Atlanta Federal Center, 4th Floor Division of Beneficiary Services 61 Forsyth St. SW, Suite 4T20 Atlanta, GA 30303-8909

ALABAMA 1-800-243-5463 or 1-334-242-5743 ALASKA 1-800-478-6065 or 1-907-269-3680 AMERICAN SAMOA 1-808-586-7299 ARIZONA 1-800-432-4040 (AZ only) OR 1-602-542-4446 OR ARKANSAS 1-800-224–6330 or 1-501-371-2782 CALIFORNIA 1-800-434-0222 COLORADO 1- CONNECTICUT 1-860–424–5274 DELAWARE 1-800-336-9500 or 1-302-674-7364 DIST. OF COLUMBIA 1-202-994-6272 FLORIDA 1-800-963-5337 GEORGIA 1-866–552–4464 GUAM 1-671–735–4721 or 1–671–735–7415 HAWAII 1-808-586-7299 or 1–888–875–9229 IDAHO 1-800-247-4422 ILLINOIS 1-800-548-9034 or 1-217-785–9021 INDIANA 1-800-452-4800 or 1-765–608–2318 IOWA 1-800-351-4664 or 1-515-242-5190 KANSAS 1-800-860-5260 or 1-785–291–357 KENTUCKY 1-502-564-7372 or 1–503–564–6930 LOUISIANA 1-800-259-5301 or MAINE 1-800-750-5353 MARYLAND 1-800-243-3425 (MD only) 1-410-767-1100 TTY: 1-410-767-1083 MASSACHUSETTS 1-800-882-2003 or 1-617-727-7750 MICHIGAN 1-800-803-7174 MINNESOTA 1-800-333-2433 MISSISSIPPI 1-800-948-3090 or 1-601-359-4366 MISSOURI 1-800-390-3330 or 1-573-893-7900 (Ext. 137) MONTANA 1-800-332-2272 (MT only) 1-406-444-7781 NEBRASKA 1-800-234-7119 NEVADA 1-800-307-4444 or 1-702-486-4602 NEW HAMPSHIRE 1-866-634-9412 NEW JERSEY 1-877-222-3737 or 1-800-792-8820 NEW MEXICO 1-800-432-2080 or 1-505-476-4846 NEW YORK 1-800-701-0501 1-212-602-4180 (NY City only) NORTH CAROLINA 1-855-408-1212 or 1-919-807-6900 NORTH DAKOTA 1-888-575-6611 or 1-701-328-2440 NORTHERN MARIANA ISLANDS 1-800-586-7299 OHIO 1-800-686-1578 OKLAHOMA 1-800-763-2828 1-405-521-6628 OREGON 1-800-722-4134 1-503-947-7979 PENNSYLVANIA 1-800-783-7067 PUERTO RICO 1-877-725-4300 RHODE ISLAND 1-401-462-0510 SOUTH CAROLINA 1-800-868-9095 1-803-734-9900 SOUTH DAKOTA 1-800-536-8197 1-605-224-3212 (Pierre) 1-605-333-3314 (Sioux Falls) 1-605-342-8635 (Rapid City) TENNESSEE 1-877-801-0044 1-615-741-2056 TEXAS 1-800-252-9240 UTAH 1-800-541-7735 1-801-538-3910 VERMONT In State: 800-642-5119 Out of State: 802-748-5182 VIRGINIA 1-800-552-3402 or 1-804-662-9333 VIRGIN ISLANDS 1-340-772-7368 WASHINGTON 1-800-562-6900 WEST VIRGINIA 1-877-987-4463 1-304-558-3317 WISCONSIN 1-800-242-1060 WYOMING 1-800-856-4398 1-307-856-6880

Under an agreement between the Secretary, CMS and each State, a State agency (usually a component of the State Health Department) surveys and recommends to the Secretary whether or not providers and suppliers are eligible to participate in the Medicare program. The State agency’s principal activities in this area are:

1. Identifying an institution or facility that might qualify as a provider or supplier for title XVIII and XIX programs, using guidelines provided by the Secretary;

2. Inspecting and certifying (recommending) to the Secretary whether or not the provider or supplier qualifies as a participating provider or supplier;

3. Giving consultation to providers and suppliers to help them sustain their compliance with quality standards to participate in the program;

4. For title XIX purposes, determining whether or not an institution can be paid for treating Medicaid beneficiaries.

For certification purposes, a State agency must establish and maintain methods and criteria for identifying situations in which a question of fraud in obtaining certification may exist. Any such situations are reported to the CMS Bureau of Quality Control RO having responsibility for investigating Medicare fraud in the area in which the offending facility is located.

State agencies designated to carry out Health Insurance program functions may engage in, and cooperate with, a variety of planning and coordination efforts which have goals similar to those of the Health Insurance Program. These activities include health facility planning, providing for the treatment of mental and chronic diseases, and providing for sufficient community facilities for patient care at appropriate levels of intensity. The Health Insurance Program encourages this coordination and reimburses the State agencies for a fair share of the costs attributable to these activities.

To insure that Medicare beneficiaries receive quality care through sound utilization of institutional facilities and professional services, a utilization review plan based on statutory requirements was included as a condition of participation for hospitals and SNF’s. To assure providers are complying with the requirements of utilization review, State agencies periodically review each provider’s mechanism. However, where a PSRO is operating, the conditions of participation do not require utilization review.

The Part A intermediary also becomes concerned with such utilization review factors as the proper length of stay and the necessity of the services performed in individual cases. State agencies and intermediaries are encouraged to exchange their findings in utilization review so that they can complement each other’s efforts.

The Social Security Act provides for Professional Standards Review Organizations (PSROs) “in order to promote the effective, efficient, and economical delivery of health care services of proper quality.”

PSRO’s are responsible for reviewing services (and items) for which payment may be made under the Act. The purpose of PSRO review is to determine whether or not: (1) the services are or were medically necessary; (2) the services furnished or proposed to be furnished on an inpatient basis could, consistent with the provision of appropriate medical care, be or have been effectively furnished on an outpatient basis or more economically in an inpatient health care facility of a different type (i.e., determining whether services are or were appropriate; and (3) the quality of the services meets or met professionally recognized standards of health care (i.e., determining whether services are or were of acceptable quality).

Thus, where a PSRO has assumed binding review responsibility, it is responsible for both the initial and reconsideration determinations with respect to the medical necessity, appropriateness, and quality of care of services.

PSROs may also be utilized, where appropriate, by the Secretary for purposes of professional consultation in the exclusion or termination of physicians or other suppliers of health care goods or services. If a PSRO determines that a physician or other supplier of health care goods or services is guilty of abuse against the Medicare or Medicaid programs, it is required to report this to the Centers for Medicare & Medicaid Services (CMS) for the imposition of whatever sanctions are appropriate. In addition, PSROs are available to advise CMS or the Medicare contractors as a peer review body with respect to potential overutilization of services, unnecessary services, or services of generally inferior quality.

Where PSROs have implemented binding review authority, the utilization review condition for a facility’s participation in the Medicare or Medicaid program is superceded by the PSRO assumption of review. Consequently, the State agency survey of the utilization review activity, discussed in HI 00208.075 B is eliminated. In addition, once a PSRO has binding authority, it is the only entity able to certify services as medically necessary for purposes of Medicare or Medicaid payment. Any initial appeal of a PSRO denial must be directed to the PSRO.

RRB has responsibility for claims for payment for covered services involving all “qualified railroad retirement beneficiaries” (see HI 00801.011 ), except for those services furnished by Group Practice Prepayment Plans (see HI 00208.095 ) whose membership is not limited to railroad employees or annuitants or their families and for services by plans which deal directly with CMS.

RRB enrolls qualified railroad retirement beneficiaries for medical insurance; makes determinations as to the eligibility of such individuals for enrollment; and makes determinations as to the beginning and ending of any coverage period resulting from such enrollment.

RRB collects medical insurance premiums by deduction from annuities (or by remittance when deductions are not possible). However, RRB does not collect premiums from beneficiaries whose premiums are paid by a State.

RRB issues health insurance cards to qualified railroad retirement beneficiaries for whom it has jurisdiction.

As provided by law, RRB selects and enters into contracts with Part B carrier(s) in the same manner as CMS. RRB has selected Travelers Insurance as its nationwide representative to process medical insurance claims involving enrollees who are railroad retirement beneficiaries.

NOTE: The claim of any qualified RR beneficiary is processed by the Travelers Insurance Company even though the qualified RR beneficiary is also entitled to RSDI benefits.

RRB is required to take action to assure that payments by its carrier conform to the payments made in the same locality for comparable services by the area carrier acting for CMS. This is intended to keep to a minimum disparities in reasonable charge determinations for services by the same physicians and suppliers. Complaints alleging disparity in payments should be called to the attention of the Medicare Bureau RO.

Beneficiary utilization records (of deductibles met and payments made under Part B) are maintained by CMS.

Information is exchanged by CMS and RRB to the full extent necessary for efficient and effective administration.

CMS reimburses the RRB and the carrier for Medicare administrative costs.

The operating agreement between CMS and RRB may be modified or terminated by either upon reasonable notice which takes into consideration the rights and the needs of beneficiaries. Termination is subject to appropriate notice to the carrier(s) involved.

RRB may use CMS facilities and staff when it is more efficient and economical to do so. This is done at the times and under the conditions upon which CMS and RRB agree.

The Part A intermediary is a national, State, or other public or private agency or organization which has entered into an agreement with CMS to process Medicare claims received from providers of services. (Providers may choose to deal directly with CMS rather than an intermediary.)

These agencies or organizations perform such administrative duties as:

1. Determining the reasonable cost for provider services under both Part A and Part B;

2. Making payments directly to providers (in certain instances Part A intermediaries also make payments to beneficiaries);

3. Providing consultative services to assist hospitals, SNFs and HHA’s to maintain necessary fiscal records and otherwise qualify as providers;

4. Serving as a center for, and communicating to providers, any information or instruction furnished by CMS;

5. Making audits of provider records;

6. Helping providers with utilization review procedures;

7. Providing the Bureau of Quality Control and the Office of Investigations (OI) with needed information and assistance in the investigation of claims of fraud or abuse against the Medicare program, and, establish controls developed in conjunction with BQC, to minimize the possibility of incorrect Medicare payments;

8. Making payment directly to nonprovider renal dialysis facilities under Part B.

CMS makes payment for the intermediary’s cost of administration and advances funds such as the Government determines to be necessary and proper for carrying out the functions covered by the contract.

The agreement to serve as an intermediary may be terminated by either the intermediary or CMS under certain conditions specified in the Act and in regulations.

The Part B carrier is an organization which has entered into an agreement with CMS to perform specified administrative functions under the medical insurance program. These functions include:

1. Determining the amount of and making payments to beneficiaries and/or physicians, suppliers and others who furnish covered Part B services and supplies;

2. Maintaining benefit payment and related program records which will permit a determination of the quality of the carriers performance;

3. Relaying information pertinent to the administration of the Health Insurance Program;

4. Otherwise assisting in the administration of the medical insurance plan;

5. Providing the Bureau of Quality Control and OI with needed information and assistance in the investigation of claims or fraud or abuse against the Medicare program, and establish controls, developed in conjunction with BQC, to minimize the possibility of incorrect Medicare payments.

Carrier contracts are for a term of at least one year, and are automatically renewed for successive periods of one year in the absence of a 90 day advance notice by the carrier or the Secretary of intention not to renew. A contract provides for payment of the carrier’s cost of administration (including the advances of funds) as the Government determines to be necessary and proper for carrying out the functions covered by the contract. CMS can terminate a contract if it is found that the carrier has failed substantially to carry out its contract or is carrying it out in a manner inconsistent with the efficient administration of the medical insurance program.

For Medicare purposes, a Group Practice Prepayment Plan (GPPP) is an organization which has a formal arrangement with three or more full time physicians to provide certain health services to the plan’s members who have contributed (or have had contributions made on their behalf) toward the costs of services by the advance payment of premiums or dues. These services may be limited to clinic or doctor’s office visits or may include the full range of hospital and other provider services.

Under Medicare, hospital costs of individuals who are members of GPPP’s are reimbursable in the same manner as other provider services, i.e., the provider bills the Part A intermediary. For Part B nonprovider services, however, special arrangements are necessary inasmuch as charges for physicians’ and other health services associated with GPPP’s are not made on a fee-for-service basis. Plans may elect to be reimbursed directly by CMS on a reasonable cost or reasonable charge related to cost basis; these Plans do not file individual bills for Plan services to Plan members. Plans dealing through area carriers file bills for services to Plan members and are reimbursed by the carrier on a reasonable charge related to cost basis. Whether the Plan deals directly with CMS or through a carrier, services to Plan members furnished outside the Plan are billed in the usual manner through the area carrier.

When an organization having a provider agreement undergoes a change of ownership, the agreement becomes invalid in relation to the new ownership. A participating provider which plans to change ownership gives advance notice of its intention so that necessary action can be taken to enter into an agreement with the newly-owned institution or to give notice to the public in the event the newly-owned institution does not wish to participate in the Medicare program. A participating provider which plans to enter into a lease arrangement (in whole, or in part) should also give advance notice of its intention, because the provider agreement is not transferrable to the lessee.

Refer any contemplated changes of ownership which come to the DO's attention to the HSQRO.

Chapter Table of Contents Subchapter HI 00401.000 Provider and Related Definitions

Subchapter Table of Contents Section Latest Transmittal HI 00401.200 Providers of Services TN 1 10-22 HI 00401.205 Reasonable Cost Reimbursement HI 00401.210 Under Arrangements HI 00401.215 Termination of Provider Participation HI 00401.220 Services After Termination Hospital HI 00401.225 Hospital Defined HI 00401.230 Definition of Emergency Services Hospital HI 00401.240 Psychiatric Hospital HI 00401.245 Certification of Parts of Institutions as Hospitals Rural Health Clinic HI 00401.250 Rural Health Clinic (RHC) Defined HI 00401.255 Rural Health Clinic Services TN 1 10-22 Comprehensive Outpatient Rehabilitation Facility (CORF) HI 00401.257 Comprehensive Outpatient Rehabilitation Facility (CORF) Defined Skilled Nursing Facility HI 00401.260 Skilled Nursing Facility (SNF) Defined HI 00401.265 Distinct Part of an Institution as a Skilled Nursing Facility (SNF) HI 00401.270 Transfer Agreements HI 00401.275 Christian Science Sanatorium Hospice HI 00401.277 Hospice Defined Home Health Agency HI 00401.280 Home Health Agency (HHA) Defined HI 00401.285 Arrangements by HHA's TN 1 10-22 HI 00401.290 Rehabilitation Centers HI 00401.295 Physician Defined TN 1 10-22 HI 00401.300 Physical Therapists in Independent Practice TN 1 10-22 Reasonable Charge HI 00401.305 Reasonable Charge HI 00401.310 Criteria for Determining a Reasonable Charge HI 00401.315 The Customary Charge TN 2 04-25 HI 00401.320 Determining The Prevailing Charge TN 1 10-22 HI 00401.325 Effect of Waiver of Coinsurance or Deductible on Determination of Actual and Customary Charges TN 1 10-22 HI 00401.330 Negotiated Rates for Laboratory Services HI 00401.335 Reasonable Charge Screens for Injections TN 1 10-22 HI 00401.340 Benefit Period TN 1 10-22 HI 00401.345 Examples of Benefit Period TN 1 10-22

A provider of services (or provider) is a hospital, skilled nursing facility (SNF), home health agency (HHA), detoxification facility (effective April 1, 1981), comprehensive outpatient rehabilitation facility (effective July 1, 1981), and, for the limited purpose of furnishing outpatient physical therapy or speech pathology services, a clinic, rehabilitation agency, or public health agency which meets the applicable eligibility requirements of title XVIII of the Social Security Act and regulations issued by the Administration.

To be a participating provider qualified to receive payment under Medicare, a provider must be in compliance with applicable provisions of title VI of the Civil Rights Act of 1964 and must enter into an agreement under section 1866 of the Social Security Act which provides that it (a) will not charge any individual or other person for items and services covered by the health insurance program other than deductibles and coinsurance amounts; and (b) will return any money incorrectly collected from the individual or other person on the individual's behalf or make certain other disposition according to instructions from the Administration.

A provider which has executed an agreement becomes qualified to participate after the agreement is accepted by CMS. When the agreement is made retroactive, the provider must comply with the terms of the agreement as of the retroactive effective date.

Payment will be made to the provider for covered items and services it furnishes on or after the effective date of the agreement.

Participating providers are reimbursed on a reasonable cost basis for services under both HI and SMI. An important role of the fiscal intermediary, in addition to claims processing and payment, and other assigned responsibilities, is to furnish consultative services to providers in the development of accounting and cost-finding procedures which will assure them equitable payment under the program.

In formulating methods for making fair and equitable reimbursement for services rendered beneficiaries of the program, payment is made on the basis of current costs of the individual provider. All necessary and proper expenses of an institution in the production of services, including normal standby costs, are recognized. The share of the total institutional cost that is borne by the program is related to the case furnished beneficiaries so that no part of their costs need to be borne by other patients. Conversely, costs attributable to other patients of the institution are not to be borne by the program. Thus, the application of this approach, with appropriate accounting support, will result in meeting actual costs of services to beneficiaries as such costs vary from institution to institution.

A provider may have others furnish certain covered items and services to its patients through arrangements under which receipt of payment by the provider for the services discharges the liability of the beneficiary or any other person to pay for the services. In permitting providers to furnish services under arrangements, it is not intended that the provider merely serves a billing mechanism for the other party. For services provided under arrangements to be covered, the provider must exercise professional responsibility over the arranged-for services.

The provider's professional supervision over arranged-for services requires application of many of the same quality controls as are applied to services furnished by salaried employees. The provider must accept the patient for treatment in accordance with its admission policies, maintain a complete and timely clinical record on the patient which includes diagnosis, medical history, physician's orders, and progress notes relating to all services received, and maintain liaison with the attending physician with regard to the progress of the patient and the need for revised orders or, in the case of home health services and outpatient physical therapy or speech pathology services, the required plan of treatment.

A provider may voluntarily terminate its participation in the program or have it terminated by the Secretary for cause.

MINOR CHANGEA provider may terminate its agreement by filing a written notice with the Medicare regional office. CMS may accept the termination date stated in the notice (the date must be the first day of a month) or set a different date. However, the termination date set by the Administration shall not be more than 6 months from the date the provider’s notice is filed.

CMS may terminate an agreement with a provider if it determines that the provider:

1. Is not complying substantially with the provisions of the agreement or with the applicable provisions of title XVIII of the Act and regulations; or

2. No longer meets the appropriate conditions of participation; or

3. Has failed to supply information which is necessary to determine whether payments are due or were due and the amounts of such payments; or

4. Refuses to permit examination of fiscal and other records.

Effective with the date a provider agreement is terminated, no payment will be made to the provider under the agreement for:

A. Inpatient hospital services (including inpatient tuberculosis and inpatient psychiatric hospital services) and posthospital extended care services furnished to patients who are admitted on or after the termination date. (Payment can continue to be made for up to 30 days of inpatient hospital or extended care services furnished on or after the termination date for beneficiaries admitted prior to the termination date.)

B. Home health services furnished under a plan which is established on or after the termination date. (However, if the plan was established before the termination date, payment can be made for services furnished through the calendar year in which the termination is effective.)

C. Other items and services, including outpatient physical therapy or speech pathology and diagnostic services, furnished on or after the effective date of termination.

The Medicare regional office ascertains from the provider the names and claim numbers of Medicare beneficiaries entitled to have payment made on their behalf after the effective date of termination of the provider agreement. The regional office periodically checks with the intermediary to assure that an institution whose agreement is terminated continues to bill the program for covered services furnished these beneficiaries. The regional office periodically checks with the intermediary to assure that the terminated institution continues to submit “no payment” death or discharge bills for the period after termination, for at least as long as the institution continues to submit payment bills.

Citations:

Social Security Act—Sec. 1861(e),(f),(g)

Regulations No. 5—Secs. 405.1011-405.1040

A hospital (other than tuberculosis or psychiatric) means an institution which:

A. Is primarily engaged in providing, by or under the supervision of physicians, to inpatients: 1. Diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons; or 2. Rehabilitation services for the rehabilitation of injured, disabled, or sick persons;

B. Maintains clinical records on all patients;

C. Has bylaws in effect with respect to its staff of physicians;

D. Has a requirement that every patient must be under the care of a physician;

E. Provides 24-hour nursing service rendered or supervised by a registered professional nurse, and has a licensed practical nurse or registered professional nurse on duty at all times;

F. Has in effect a hospital utilization review plan;

G. Is licensed or is approved by the State or local licensing agency as meeting the standards established for such licensing;

H. Meets other health and safety requirements found necessary by the Secretary of Health and Human Services. (These additional requirements may not be higher than comparable ones prescribed for accreditation by the Joint Commission on Accreditation of Hospitals (JCAH) with exceptions specified in the law.)

I. Is not primarily for the care and treatment of mental diseases or tuberculosis.

An emergency services hospital is a nonparticipating hospital which meets the requirements of the law’s definition of a “hospital” relating to full-time nursing services and licensure under State or applicable local law. (A Federal hospital need not be licensed under State or local licensing laws to meet the definition of emergency hospital.) In addition, the hospital must be primarily engaged in providing, under the supervision of doctors of medicine or osteopathy, services of the type that HI 00401.225 describes in defining the term hospital, and must be primarily engaged in providing skilled nursing care and related services for patients who require medical or nursing care. (See requirement A. of the definition of an SNF in HI 00401.260 .) Psychiatric and tuberculosis hospitals that meet the above hospital requirements can qualify as emergency hospitals. Inpatient hospital services and related physician and ambulance services furnished outside the United States are covered under certain limited conditions.

The determination of whether an emergency existed is made by the appropriate intermediary. Payment of claims for emergency is also made by intermediaries designated by CMS.

A stay in a hospital meeting these requirements meets the prior stay requirements for coverage of extended care services and, prior to 7 /1/81, for Part A home health services.

A psychiatric hospital is an institution which is primarily engaged in providing by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons. To be eligible for participation in the program as a psychiatric hospital it must be accredited by the JCAH, have in effect a utilization review plan, and comply with additional staffing and medical record requirements necessary to carry out an active program of treatment and intensive care.

Under certain conditions a distinct part of a tuberculosis or psychiatric institution may be certified as a tuberculosis psychiatric, or general hospital.

A distinct part of a psychiatric institution can be certified as a psychiatric hospital if it meets the conditions of participation even though the institution of which it is a part does not. If the distinct part meets requirements equivalent to the accreditation requirements of the JCAH, it can qualify under the program even though the institution itself is not accredited.

A general hospital facility within a psychiatric hospital may be certified as a general hospital independent of the institution as a whole provided the general facility is a self-contained operational entity distinct from the rest of the institution. The general hospital facility would be regarded as a separate institution for this purpose since the law does not provide for certifying a “distinct part” of an institution as a general hospital. Services furnished in a separately certified general hospital facility are not subject to any of the benefit limitations applicable to the other parts of the institution, i.e., the reduction in benefit days in the first spell of illness in the case of psychiatric hospitals and the 190 day lifetime maximum on inpatient services in the case of psychiatric hospitals.

There is no provision for a psychiatric wing of a general hospital to be certified as a psychiatric hospital. The distinct part provisions apply only to psychiatric institutions and not to general hospitals. However, this does not prevent the certification of a psychiatric hospital which is a part of a medical center or other large complex, provided the hospital operates as a separate functioning entity, i.e., it is located in a separate building, wing, or part of a building, has its own administration and maintains separate fiscal records.

Citations:

Social Security Act—Sec. 1861(aa)

Regulations No. 5—Secs. 405.2401-405.2430

A rural health clinic is a facility which:

A. is engaged primarily in furnishing to out-patients, services described in HI 00401.255 ;

B. in the case of a facility which is not a physician-directed clinic, has an arrangement (consistent with the provisions of State and local law relative to the practice, performance and delivery of health services) with one or more physicians (see HI 00401.295 ). Provision must be made for the periodic review by physicians of covered services furnished by physician assistants and nurse practitioners, their supervision and guidance, the preparation by physicians of necessary medical orders for care and treatment of clinic patients, and the availability of physicians for necessary referral of, and consulation for, patients, for advice and assistance in the management of medical emergencies, and, in the case of a physician directed clinic, has one or more of its staff physicians perform the activities accomplished through such an arrangement;

C. maintains clinical records on all patients;

D. has arrangements with one or more hospitals, having agreements in effect under section 1866 of the Act for the referral and administration of patients requiring inpatient services or such diagnostic or other specialized services as are not available at the clinic;

E. has written policies, developed with the advice of (and with provision for review of such policies from time to time by) a group of professional personnel, including one or more physicians and one or more physician assistants or nurse practitioners, to govern the services described in HI 00401.255 ;

F. has a physician, physician assistant, or nurse practitioner responsible for the execution of policies described in E. and relating to the provision of the clinic's services;

G. directly provides routine diagnostic services, including clinical laboratory services, as prescribed in regulations and has prompt access to additional diagnostic services from facilities meeting requirements under title XVIII;

H. in compliance with State and Federal law, has available for administering to clinic patients at least such drugs and biologicals as are determined by the Secretary to be necessary for the treatment of emergency cases and has appropriate procedures or arrangements for storing, administering and dispensing drugs and biologicals;

I. has appropriate procedures for review of utilization of clinic services to the extent that the Secretary determines to be necessary and feasible; and

J. meets such other requirements as the Secretary may find necessary in the interest of health and safety of the individuals who are furnished services by the clinic.

For POMS purposes, the term rural health clinic includes only a facility which is located in an area which is not an urbanized area and that is designated by the Secretary as a shortage area, that is, having a shortage of health manpower or personal health services.

The term rural health clinic services (when furnished to an individual as an outpatient of a RHC) means:

A. physician services and services and supplies furnished incident to a physician's professional service, of kinds which are commonly furnished in physicians' offices and are commonly either rendered without charge or included in the physicians' bills (including drugs and biologicals which cannot be self-administered as determined in accordance with regulations);

B. services furnished by a physician assistant or by a nurse practitioner and services and supplies furnished as an incident to the services that would otherwise be covered if furnished by a physician or as an incident to a Physician's services; and

C. in the case of a RHC located in an area with a shortage of home health agencies, part-time or intermittent nursing care and related medical supplies (other than drugs and biologicals) furnished by a registered professional nurse or licensed practical nurse to a homebound individual under a written plan or treatment (1) established and periodically reviewed by a physician, or (2) established by a nurse practitioner or physician assistant and periodically reviewed and approved by a physician as described in HI 00401.250 B.

A comprehensive outpatient rehabilitation facility (CORF) is a facility which:

A. is primarily engaged in providing (by or under the supervision of physicians) diagnostic, therapeutic, and restorative services to outpatients for the rehabilitation of injured, disabled, or sick persons;

B. provides at least the following comprehensive outpatient rehabilitation services: 1. physicians' services; 2. physical therapy; and 3. social or psychological services;

C. maintains clinical records on all patients;

D. has policies established by a group of professional personnel, including one or more physicians;

E. has a requirement that every patient must be under the care of a physician;

F. is licensed or meets licensing standards if located in a State which licenses facilities of this type;

G. has in effect a utilization review plan in accordance with regulations prescribed by the Secretary;

H. has in effect an overall plan and budget; and

I. meets such other conditions of participation as the Secretary may find necessary.

Citations:

Social Security Act—Sec. 1861(j)

Regulations No. 5—Secs. 405.1101-405.1137

A skilled nursing facility (SNF) is an institution (or a distinct part of an institution, see HI 00401.265 ), such as a skilled nursing home or rehabilitation center, which has a transfer agreement in effect with one or more participating hospitals (see HI 00401.270 for transfer agreements and HI 00401.200 for definition of participating hospital), and which:

A. is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons,

B. has policies (developed with the advice of and periodically reviewed by a professional group including one or more physicians and one or more registered professional nurses) to govern the skilled nursing care and related medical or other services it provides,

C. has a physician, a registered professional nurse, or a medical staff responsible for the execution of such policies.

D. has a requirement that the health care of every patient must be under the supervision of a physician.

E. provides for having a physician available to furnish necessary medical care in cases of an emergency.

F. maintains clinical records on all patients,

G. provides 24-hour nursing service sufficient to meet nursing needs in accordance with the policies developed pursuant to B. above, and has at least one registered professional nurse employed full time,

H. provides appropriate methods and procedures for dispensing and administering drugs and biologicals,

I. has in effect a utilization review plan.

J. is licensed in accordance with State or local law, or is approved by the State or local licensing agency as meeting the licensing standards where State or applicable local law provides for the licensing of institutions of this nature, and

K. is in substantial compliance with health and safety requirements established by regulation.

L. supplies complete information as to the identity of each person who has an ownership interest of at least 10 percent; if it is organized as a corporation, the names of each officer and director; if organized as a partnership, the name of each partner; and agrees to report any such changes,

M. cooperates in an effective program of independent medical evaluation and audit of its patients, including the patient's need for skilled nursing services, and

N. meets the Life Safety Code of the National Fire Protection Association requirements applicable to nursing homes.

A qualified skilled nursing facility is one which meets all the requirements in the above definition.

The term SNF does not include any institution which is primarily for the care and treatment of mental diseases or tuberculosis. NOTE: Effective October 30, 1972, section 265 of the 1972 amendments made optional the rendering of medical social services by SNF's. Even though SNF's can participate in the Medicare program without offering such services. Medicare will continue to allow, as an element of cost, expenditures for medical social services provided by a facility for its inpatients. However, SNF's that continue to render social services must comply with the staffing and other standards for social services specified in the regulations.

In order to qualify for participation in the program as an SNF, a distinct part of an institution must be physically separated from the rest of the institution, i.e., it must represent an entire physically identifiable unit consisting of all the beds within that unit, such as a separate building, floor, wing, or ward. Although it is required that the distinct part be identifiable as a separate unit within the institution, it need not necessarily be confined to a single location within the institution's physical plant. The distinct part may, for example, consist of several floors or wards which are scattered throughout several different buildings within the institutional complex. In each case, however, the patients of the distinct part would have to be located in units which are physically separate from those units housing all other patients of the institution. Various beds scattered throughout the institution do not comprise a distinct part for purposes of being certified as an SNF.

To participate in the program an SNF must have a written transfer agreement with one or more participating hospitals providing for the transfer of patients between the hospital and the facility, and for the interchange of medical and other information. If an otherwise qualified SNF has attempted in good faith, but without sucess, to enter into a transfer agreement, this requirement may be waived by the State agency.

A Christian Science sanatorium operated or listed and certified by the First Church of Christ, Scientist, Boston, Mass., qualifies as both a hospital and SNF. Sanatorium services are considered to be furnished by a sanatorium in its capacity as a hospital unless the individual elects to have them treated as sanatorium extended care services. Inpatient care in such an institution whether as hospital services or extended care services can begin or prolong a “spell of illness” (benefit period, see HI 00401.340 ).

Payment may not be made in the same benefit period for both sanatorium extended care and extended care services in a qualified SNF other than a Christian Science sanatorium. This limitation does not apply to hospital services. Payment for sanatorium extended care services is limited to 30 days in each benefit period.

A hospice is a public agency, private organization, or a subdivision of either that is primarily engaged in providing care to terminally ill individuals and meets the conditions of participation for hospices specified in 42 CFR 418.50 to 418.98 and has a valid provider agreement, i.e., it must be participating in Medicare. If it is a free-standing hospice that provides inpatient care directly, the hospice must also meet the conditions of participation in 42 CFR 418.100.

Citations:

Social Security Act—Sec. 1861(o)

Regulations No. 5—405.1201-405.1230

An HHA is a public agency or private organization, or a subdivision of such an agency or organization, which meets the following requirements:

A. It is primarily engaged in providing skilled nursing services and other therapeutic services, such as physical, speech, or occupational therapy, medical social services, and home health aide services. A public or voluntary nonprofit health agency may qualify by: 1. Furnishing both skilled nursing and at least one other therapeutic service directly to patients, or 2. furnishing directly either skilled nursing services or at least one other therapeutic service and having arrangements with another public or voluntary nonprofit agency to furnish the services which it does not provide directly. A proprietary agency can qualify only by providing directly both skilled nursing services and at least one other therapeutic service.

B. It has policies established by a professional group associated with the agency or organization (including at least one physician and at least one registered professional nurse) to govern the services, and provides for supervision of such services by a physician or a registered professional nurse.

C. It maintains clinical records on all patients

D. It is licensed in accordance with State or local law or is approved by the State or local licensing agency as meeting the licensing standards (where State or local law provides for the licensing of such agencies or organizations).

E. It meets other conditions found by the Secretary to be necessary for health and safety.

A private organization which is not exempt from Federal income taxation under Section 501 of the Internal Revenue Code of 1954 (sometimes referred to as a “proprietary” organization) must be licensed pursuant to State law. If the State has no licensing law for such organizations, a proprietary agency cannot participate in the health insurance program. Effective July 1, 1981, proprietary home health services in States without licensing laws are allowed to participate in the health insurance program.

For services under hospital insurance, the term “home health agency” does not include any agency or organization which is primarily for the care and treatment of mental disease. There is no such restriction under SMI (see HI 00610.390 .

Arrangements may be made by an HHA with others to furnish items or services. Whether the services and items are furnished by the HHA itself or by another agency under arrangements made by the HHA, both must agree not to charge the patient for covered services and items and must also agree to return money incorrectly collected.

There are three situations in which an HHA may have arrangements with another health organization or person to provide home health services to patients:

A. An agency or organization, in order to be approved to participate in the program makes arrangements with another agency or organization to provide the nursing or other therapeutic services which it cannot provide directly.

B. An agency or organization, which is already approved for participation, makes arrangements with others to provide services it does not provide.

C. An agency or organization, which is already approved for participation, makes arrangements with a hospital, SNF, or rehabilitation center for services on an outpatient basis because the services involve the use of equipment which cannot be made available to the patient in the patient's place of residence. If the arrangements are with an agency or organization which is not a qualified provider of services, there must be a written contract. The contracting organization must give assurance that it will comply with title VI of the Civil Rights Act.

When the services are of such a nature that they cannot be administered at the patient's residence and are administered at a rehabilitation center which is not participating in the program as a hospital, SNF, or HHA, the rehabilitation center must meet certain standards. The physical plant and equipment of such a rehabilitation center must meet all applicable State and local legal requirements for construction, safety, health, and design, including safety, sanitation and fire regulations, building codes, and ordinances.

Physician means doctor of medicine, doctor of osteopathy (including osteopathic practitioner), doctor of dental surgery or dental medicine (within the limitations in C.), doctor of podiatric medicine (within the limitations in D.), or doctor of optometry (within the limitations of F.), or a chiropractor (within the limits of G.), legally authorized to practice by a State in which the individual performs this function. The services performed by a physician within these definitions are subject to any limitations imposed by the State on the scope of practice.

In all States, the issuance by the State of a license to practice medicine constitutes legal authorization. Temporary State licenses also constitute legal authorization to practice medicine. If State law authorizes local political subdivisions to establish higher standards for medical practitioners than those set by the State licensing board, such local standards will be issued in determining whether a particular physician has legal authorization. If State licensing law limits the scope of practice of a particular type of medical practitioner, only the services within these limitations will be covered.

NOTE:

The term “physician” does not include such practitioners as a Christian Science practitioner, or naturopath.

The requirement that a doctor of medicine must be legally authorized to practice medicine and surgery by the State in which the individual performs services is met where a physician is licensed by the State to practice medicine and surgery.

A doctor of osteopathy who is legally authorized to practice medicine and surgery by the State in which the individuals performs services qualifies as a physician. In addition, a licensed osteopath or osteopathic practitioner qualifies as a “physician” to the extent that the individual performs services within the scope of the practice as defined by State law. For example, in some States osteopaths and osteopathic practitioners are limited in their practice to the manipulation of bones and muscles; such legally authorized services are covered.

A dentist is a “physician” under the health insurance program if the individual is a doctor of dental surgery or dental medicine legally authorized to practice dentistry by the State in which the individual performs services. However, a dentist is a physician only with respect to surgery related to the jaw or any structure contiguous to the jaw, or the reduction of any fracture of the jaw or any facial bone. In general, “the jaw or any structure contiguous to the jaw” includes structures of the facial area below the eyes; e.g., mandible, teeth, gums, tongue, palate, salivary glands, sinuses, etc.

Because of the general exclusion of payment for dental services, payment for the services of dentists is also limited to those surgical procedures which are not primarily provided for the care, treatment, removal, or replacement of teeth or structures directly supporting teeth. The coverage or exclusion of any given dental service is not affected by the professional designation of the “physician” rendering the service; i.e., an excluded dental service remains excluded and a covered dental service is still covered whether furnished by a dentist or a doctor of medicine.

Effective with admissions on or after 1/1/73, the 1972 Amendments authorize the dentist caring for the patient to certify (without corroborating certification by a physician) that because of the patient's underlying medical condition and clinical status, the patient requires hospitalization for performance of excluded dental procedures.

A podiatrist is included within the definition of “physician” but only with respect to those functions which the podiatrist is legally authorized to perform in the State in which the individualperforms them. This means that the professional services provided by a podiatrist within the scope of applicable State license (except those services which are specifically excluded) are “physician's services” reimbursable on a reasonable charge basis under Part B.

Podiatrists may hold any of the following professional degrees of which the first three are the most common: Pod.D or D.P. (Doctor of Podiatry), D.S.C. (Doctor of Surgical Chiropody), D.P.M. (Doctor of Podiatric Medicine), D.S.P. (Doctor of Surgical Podiatry), Graduate in Podiatry, Master Chiropodist, Graduate Chiropodist, or in a very few instances another podiatry degree. Within a particular State, all individuals holding any of these degrees are licensed to perform the same functions; however, there are variations from State to State as to the authorized scope of podiatric practice.

A podiatrist is considered a “physician” for any of the following purposes:

1. for making the required physician certification and recertifications of the medical necessity for Part A and Part B provider services;

2. for the purpose of establishing and periodically reviewing a home health plan of treatment; and for purposes of constituting a member of a Utilization Review (UR) committee but only if: a. the performance of these functions is consistent with the policy of the institution or agency with respect to which the podiatrist performs them; b. the podiatrist is legally authorized by the State to perform such functions; and c. at least two of the physicians on the UR committee are doctors of medicine or osteopathy.

There are many physicians performing services in hospitals operated by the Federal Government—military hospitals, Veterans Administration hospitals, and Public Health Service hospitals. Normally the services provided by a physician in a Federal hospital are not reimbursable except when the hospital provides services to the public generally as a community institution. Such a physician working in the scope of Federal employment may be considered as coming within the statutory definition of “physician” even though the individual may not have a license to practice in the State in which the individual is employed.

A doctor of optometry, legally authorized to practice optometry by the State in which the individual performs such function, becomes a “physician” as defined in the law but only for the purpose of attesting to the patient's need for prosthetic lenses. Thus, payment may be made for necessary prosthetic lenses whether prescribed by an optometrist or other physician authorized to do so. This change applies to claims for prosthetic lenses furnished on and after October 30, 1972.

A licensed chiropractor who meets uniform minimum standards (see 3. below) is a physician with respect to specified services furnished on and after July 1, 1973. Coverage extends only to treatment by means of manual manipulation of the spine to correct a subluxation demonstrated by x-ray, provided such treatment is legal in the state where performed.

No coverage is included for chiropractic x-rays or other diagnostic or therapeutic services.

A chiropractor must be licensed or legally authorized to furnish chiropractic services by the State or jurisdiction in which the individual provides them. Reimbursement may not be made for chiropractic services rendered in the State of Louisiana where the practice is not legal.

a. Chiropractors licensed or authorized to practice prior to July 1, 1974, and those individuals who commenced their studies in a chiropractic college beforethat date must meet all of the following minimum standards to render reimbursable services under the program: 1. Preliminary education equal to the requirements for graduation from an accredited high school or other secondary school; and 2. Graduation from a college of chiropractic approved by the State's chiropractic examiners which included the completion of a course of study covering a period of not less than 3 school years of 6 months each year. The student must have been in actual continuous attendance taking adequate courses of study in the subjects of anatomy, physiology, symptomatology and diagnosis, hygiene and sanitation, chemistry, histology, pathology, and principles and practice of chiropractic including clinical instruction in vertebral palpation, nerve tracing and adjusting; and 3. Passage of an examination prescribed by the State's chiropractic examiners covering the subjects listed in 2) above.

b. Individuals commencing their studies in a chiropractic college after June 30, 1974, must meet all of the following additional requirements: 1. Satisfactory completion of 2 years of pre-chiropractic study at the college level. 2. Satisfactory completion of a 4 year course of 8 months each year (instead of a 3 year course of 6 months each year) at a college or school of chiropractic which includes not less than 4,000 hours in the scientific and chiropractic courses specified in subparagraph a. 2) above plus courses in the use and effect of x-ray and chiropractic analysis; and 3. The practitioner must be over 21 years of age.

Citations:

Social Security Act—Sec. 1861(p)

A qualified physical therapist for program payment purposes is an individual who is licensed as a physical therapist by the State in which the individual is practicing and meets one of the following requirements:

1. Has graduated from a physical therapy curriculum approved by the American Physical Therapy Association (APTA), or by the Council on Medical Education and Hospitals of the American Medical Association, or jointly by the Council on Medical Education of the American Medical Association and the American Physical Therapy Association; or

2. Prior to January 1, 1966, was admitted to membership by the APTA, or was admitted to registration by the American Registry of Physical Therapists, or has graduated from a physical therapy curriculum in a 4-year college or university approved by a State department of education; or

3. Has 2 years of appropriate experience as a physical therapist and has achieved a satisfactory grade on proficiency examination approved by the Secretary except that such determinations of proficiency will not apply with respect to persons initially licensed by a State as a physical therapist after December 31, 1977, or seeking qualification as a physical therapist after that date; or

4. Was licensed or registered prior to January 1, 1966, and prior to January 1, 1970, had 15 years of full-time experience in the treatment of illness or injury through the practice of physical therapy in which services were rendered under the order and direction of attending and referring physicians; or

5. If trained outside the United States, was graduated since 1928 from a physical therapy curriculum approved in the country in which the curriculum was located and in which there is a member organization of the World Confederation for Physical Therapy, meets the requirements for membership in a member organization of the World Confederation for Physical Therapy, has 1 year of experience under the supervision of an active member of the APTA, and has successfully completed a qualifying examination as prescribed by the American Physical Therapy Association.

The Medicare RO informs the carriers of those physical therapists who are qualified and hold the required Medicare credentials.

A qualified physical therapist is considered to be in independent practice when the individual renders services on the individual's own responsibility and free of the administrative and professional control of an employer such as a physician, institution, agency, etc., the persons the individual treats are the individual's own patients; and has the right to collect fees for the services rendered. While the therapist need not be in full-time private practice, the individual must be engaged in private practice on a regular basis, i.e., the individual is recognized as a private practitioner and for that purpose maintains at the individual's own expense an office or office space and the necessary equipment to provide an adequate program of physical therapy.

An office (or office space) in a hospital, SNF, or on the premises of any clinic or agency participating as a provider of outpatient physical therapy services utilized by a physical therapist in furnishing such services as an employee of or under arrangements with the provider, may not be considered the physical therapist's office for purposes of this section. The expressed purpose of this limited benefit is to make physical therapy more readily available to the beneficiary in cases where the therapist's office might be more accessible than a provider's facility.

A physical therapist will be considered engaged in private practice on a regular basis when the individual maintains office hours of such frequency and duration that the patients undertaken to treat can receive services as medically indicated.

The reasonable charge is the basis of payment under SMI for medical and other health services furnished by physicians, medical groups, independent laboratories, suppliers of ambulance services, and suppliers of durable medical equipment, prostheses, etc.

The carrier has primary responsibility for determining reasonable charges.

The reasonable charge determinations made by carriers are not normally reviewed by CMS on a case-by-case basis. However, the Administration has an overall responsibility for the administration of the SMI program. The basic methods and procedures used by carriers in determining reasonable charges must be consistent with the law, the regulations, and the broad principles and policy guidelines issued by CMS.

The following guidelines are used by carriers to assure overall consistency with respect to the concepts they apply in making reasonable charge determinations.

The two criteria set out in the Medicare law (Section 1842 of title XVIII) which must be considered in determining the reasonable charge for a service are:

A. the customary charges for similar services generally made by the physician or other person furnishing such services (see HI 00401.315 ); and

B. the prevailing charges in the locality for similar services. (See HI 00401.320 .)

Therefore, the reasonable charge for a specific covered service in the absence of unusual medical complications or circumstances may not exceed the lowest of: the physician's or supplier's customary charge for that service; the prevailing charge made for similar services in the locality (however, see HI 00401.320C. ); or the actual charge of the physician or supplier rendering the service).

The law also provides that the reasonable charge for a service may not exceed the charge applicable for a comparable service and under comparable circumstances to the policyholders or subscribers of the carrier.

Other factors that are necessary and appropriate with respect to a specific item or service are taken into account.

The income of the individual patient may not be considered in determining the amount of the reasonable charge.

The customary charge is the amount which best represents the actual charges made for a given medical service by a physician to the physician's patients in general, or by suppliers of other medical and health services to the general public. The carrier obtains information on the customary charges of physicians and suppliers not only from the Medicare program, but from other available sources, e.g., from its own programs, from other insurance programs, from the Federal Employee Health Benefit Program, from TRICARE, from any studies conducted by State or local medical societies, and from public agencies. It also may ask physicians or other persons for their charges for services rendered to the public in general.

In instances where physicians or suppliers feel that the carrier does not have sufficient current information about their charges, they may volunteer this information to the carrier. Further, carriers make known their willingness to receive currently valid information regarding customary charges from the medical community. However, any information on charges obtained from other sources is validated, to the extent possible, against the carrier’s claims experience under Medicare and its own programs.

To the extent possible, when customary charges are calculated for a fiscal year, the actual charges physicians or suppliers have made for services rendered during the calendar year immediately preceding the start of the fiscal year (i.e., derived from either claims processed, or from claims for services rendered during the preceding calendar year) are used.

In calculating the customary charge for a given service, each charge the physician or other person has made for a service is arrayed in ascending order. The lowest actual charge which is high enough to include the median of the arrayed charge data is selected as the physician’s or supplier’s customary charge for the service. However, where the charges generally made by a physician or supplier to other patients are lower than those made to Medicare beneficiaries, the lower charges are used as the basis for establishing the Medicare reasonable charge screen.

When a carrier does not have adequate statistics on charges for all of a calendar year, e.g., for suppliers of medical equipment, prothestics, ambulance services, or for new services, the fees charged and the price lists in effect as of June 30 of that calendar year only may be used. The intent is to use a price list which can reasonably be assumed not to exceed the median of the prices charged by the supplier for items and services during that calendar year.

Where a carrier has permitted an increase in a customary charge under the unusual circumstances provision (see subsection C.), the increased amount is recognized as the customary charge for the next fiscal year if it exceeds the median of the charges made by the physician or supplier for the service during the calendar year immediately preceding the start of that fiscal year.

Once a carrier has established the customary charge screens for a fiscal year, further increases (other than to correct errors) are permitted only in individually identified and highly unusual situations where equity clearly indicates that the increases are warranted. Request for revisions in customary charge profiles are initiated only by physicians or suppliers furnishing covered services. Such requests are neither encouraged nor discouraged by the carrier, and each request is handled on its own merits. The following considerations are taken into account, as applicable, in determining whether unusual circumstances warrant a revision in a customary charge profile in a particular situation:

This involves finding out how long it has been since the last change, and if the physician or supplier has had a change in customary charge for the service in the past two or three years. The more time that has elapsed since the last change, the stronger the case is for recognizing the current change.

Where the physician or supplier states not previously increase fees because of the government’s request for restraint in this regard, and the carrier can verify this through its claims records and/or information furnished by the physician or other person, it may take this factor into account in determining whether unusual circumstances are present in a particular case.

The carrier considers the amount of the requested increase and the relationship of the new and old charges to the customary charges of other physicians in the locality for the service.

Where the physician or supplier specifically makes the point and establishes that increases in operating expenses are substantially above those resulting from general economic factors, and substantiates the uniqueness of the situation, the carrier may consider this factor in determining whether an adjustment in its customary charge profile is warranted.

The fact that a physician has recently been “Board Certified” in a specialty does not by itself justify the recognition of higher “customary” charges. For example, a physician may have been board eligible and made charges in line with the fees of other specialists in the field for some time, and the carrier’s customary charge screen may reflect these charges. In such a situation, an increase in the customary charge screen to further recognize the physician’s specialty practice would not be warranted.

Except in situations in which the regulations or CMS instructions provide specific exceptions, the amount recorded as a customary charge limit for a service in a carrier’s screen must normally be the median of the charges made by the physician or other person for the service during the full one-year period. However, where a carrier makes an equity adjustment in its customary charge screen under this exception, the carrier records a new fee as a customary charge after the charge has been made by the physician or supplier to patients for at least three months.

Each carrier has the responsibility for determining whether an equity adjustment in a physician’s or supplier’s customary charge profile can be made. In each instance in which an adjustment is made, the carrier documents the situation and its determination, and has such documentation readily available for review by CMS. Normally, equity adjustments are made in customary charge profiles only in a relatively small number of situations.

Prevailing charges are those charges which fall within the range of charges that are most frequently and widely used in a locality for a particular procedure or service. The top of this range establishes an overall limitation on the charges which the carrier accepts as reasonable for a given procedure or service, except where unusual circumstances or medical complications warrant an additional charge.

For any fiscal year, the prevailing charge limit in a locality for a service must be calculated as the 75th percentile of the customary charges determined for that service in accordance with HI 00401.315 B. (However, see D. below regarding the economic index limitation.) In this calculation, each customary charge for the service is arrayed in ascending order and weighted by how often the physician or other person rendered the service (as reflected by the charge data the carrier used to calculate the customary charge). The lowest customary charge which is high enough to include the customary charges of the physicians or supplier who rendered 75 percent of the cumulative services is determined to be the prevailing charge for the service (subject to the economic index limitation). The proper procedure for establishing revised prevailing charge screens based on the 75th percentile is illustrated by the following example:

Customary Charge Number of Routine Followup Office Visits Rendered by Physicians with Customary Charges as Indicates Cumulative Services $5 1402 1402 $6 1115 2517 $7 1680 4197 $8 803 5000 Total = 5000

In the above example, 75 percent of the total of 5,000 services equals 3,750 services. The prevailing charge is, therefore, $7. (A total of 2,517 services were rendered by the physicians with $5 and $6 customary charges, and an additional 1,680 services were rendered by the physicians with $7 customary charges. The 3,750th service was thus rendered by a physician with a $7 customary charge.)

Where it is necessary to establish customary charges through the use of price lists (see HI 00401.315 B. ), these customary charges are also used to establish the required prevailing charge limits. In this regard, if a carrier cannot derive precise data on the frequency of services from its records, it may use any information it has about the volume of business done by various suppliers in its area in order to weight the customary charges used to calculate the prevailing charges.

Carrier prevailing charge screens may not be rolled back below the level of the screens in effect on December 31, 1970, where the latter had been found acceptable by the Secretary.

For the purpose of making reasonable charge determinations, a locality is the geographic area for which the carrier is to derive the prevailing charges for services. Usually a locality is a political or economic sub-division of a State, and includes a cross-section of the population with respect to economic and other characterstics. Where people tend to gravitate toward certain population centers to obtain medical care or service, localities may be recognized on a basis constituting medical service areas (interstate or otherwise), comparable in concept to “trade areas.”

Carriers delineate localities on the basis of their knowledge of local conditions. The localities may differ in population density, economic level, and other major factors affecting charges for services. However, distinctions between localities are not made so finely that a locality includes only a very limited geographic area whose population has distinctly similar income characteristics (e.g., a very rich or very poor neighborhood within a city).

Where appropriate, different localities are established with respect to different types and levels of services. For example, a carrier may determine that a State has five localities for general practitioners’ charges, but only one locality (the entire State) for members of a particular specialty group. This might happen where there are not enough members of the specialty group in any one of the five localities to establish a valid basis for deriving the prevailing charges for their services.

The range of prevailing charges in a locality may be different for physicians or suppliers who engage in a particular specialty practice or service than for those who are engaged in another type of specialty practice or in general practice or service. Existing differentials in the level of charges between different kinds of practice or service could, in some localities, lead to the development of more than one prevailing charge for application by the carrier in its determination of reasonable charges. Carrier decisions in this respect are responsive to the existing patterns of charges made by physicians and suppliers who render covered services, and establish differentials in the levels of charges between different kinds of practice or service only where this would be in accord with such patterns.

For example, a cardiologist may charge $25 for a specific examination while a general practitioner’s charge is $15 for a similar examination. Both charges are customary for each physician and fall within their respective ranges of prevailing charges in the locality. Thus, the charges made by each of these physicians may be accepted as reasonable charges.

There may be preeminent specialists whose charges reflect their special positions in the profession. The customary charges of such a physician are included with the customary charges of all specialists in the locality in establishing the prevailing charges for specialists in the same medical field. However, the customary fee for a service may not be determined to be the reasonable charge if it is higher than the prevailing charge for the procedure in the locality. In such a case, to obtain the reasonable charge, the customary charge is reduced to the prevailing charge.

For example, the prevailing charge for a particular service by specialists is $230. Dr. A’s customary charge is $220 and Dr. B’s customary charge is $225. Both of these charges are “reasonable.” But Dr. C who is renowned in the performance of the procedure has a customary fee of $300 for that service (Dr. C’s customary charge was considered in the array of charges to establish the prevailing charge.) The reasonable charge for Dr. C’s services is $230 since that is the prevailing charge for the service in that locality.

Pursuant to section 224(a) of P. L. 92-603, prevailing charge levels used in determining Medicare reasonable charges for physician’s services may be increased above the level for fiscal year 1973 only to the extent determined to be justified by the Secretary on the basis of appropriate economic index data. The economic index figure is furnished by CMS to all carriers. The economic index limitation applies only to increases in prevailing charges and only to physician’s services. It does not affect carrier’s customary charge calculations. The law established the carrier’s prevailing charge screens for fiscal year 1973 (based on physician’s charge levels during calendar year 1971) as the base for measuring all future increases. The economic index calculated for each fiscal year will, therefore, reflect on a cumulative basis the changes that have taken place in physician’s practice expenses and in general earnings levels since calendar year 1971.

The criteria that the carrier considers in determining the reasonable charge ( HI 00401.305 ) for a service or item include (in addition to the prevailing charge HI 00401.320 ) the customary charge ( HI 00401.315 ) of the physician or supplier who furnished it, and the actual charge made. In this regard, a billed amount that is not reasonably related to an expectation of payment is not considered by the carrier to constitute the “actual” charge.

Therefore, when a physician/supplier routinely and consistently waives the collection of coinsurance or deductible amount, from or on behalf of Medicare beneficiaries generally, the carrier reviews the circumstances to determine whether this constitutes a reduction of the physician's or supplier's actual charges and customary charges.

Situations where a physician or supplier does not have a general policy of waiver of coinsurance but accepts a lesser amount than the usual charge in discharge of a patient's liability because of a particular patient's straitened circumstances will not be considered to constitute a reduction of the actual charge made.

If the DO learns of a physician's or supplier's prior advertisement of a general intention to waive collection of Medicare coinsurance or deductible amounts, or other evidence that such waiver is settled business policy; or that the physician/supplier generally fails to make reasonable collection efforts (similar to those customarily made to collect comparable amounts from non-Medicare patients), report this information to the carrier.

The Secretary is authorized to enter into agreements with laboratories under which Medicare payments for diagnostic laboratory tests will be on the basis of negotiated rates which will be the full charges. Since the laboratories will not bill Medicare beneficiaries for deductible and coinsurance amounts, cost savings for both the laboratories and the program will result.

This provision applies only to diagnostic laboratory tests for which payment is to be made to a laboratory on the basis of assignment. Further, the negotiated rates may not exceed the payments that would have been made in the absence of such rates.

Payments made to a laboratory under an agreed-upon rate will have been calculated to assure that program liability will be no more than had payment been based on the reasonable charge subject to the deductible and coinsurance amounts. Under the agreement, when reimbursement is based on a negotiated rate, the laboratory accepts the amount as payment in full.

A laboratory is eligible to receive Medicare payments for covered services in accord with agreed-upon rates only if the laboratory agrees to submit claims to the carrier in a manner which is efficient, economical and under conditions that assure that only covered services are billed for; and it agrees not to bill beneficiaries for any deductible and coinsurance amounts (and to refund any such amount collected in error).

Agreements entered into with laboratories remain in effect for 1 year. Each agreement specifies the kinds of laboratory services it covers and the agreed upon payment for these services. It provides for termination or nonrenewal of the agreement at the end of the year, and for a mutually acceptable method for renewal and/or renegotiation of the reimbursement rate.

The carrier reviews any proposal received, determines the laboratory’s eligibility, and works out with the laboratory any modifications deemed advisable or necessary. It submits the proposal to the Medicare RO with its evaluation, recommendations, and information on the current allowable charges for the laboratory’s services. The Medicare RO reviews all the information, requests additional information as needed, and forwards the proposal to Central Office with its analysis and recommendations. CMS determines whether the proposal is acceptable and/or what changes may be necessary. When a mutually acceptable proposal has been worked out, the laboratory and carrier involved are notified by the Medicare RO of the formal and final procedures necessary to effectuate the agreement.

Where a separate charge for an injection is submitted by a physician, and it is the prevailing practice in the community to make such an additional charge, the maximum allowable charge may not normally exceed the approximate ingredient and supply cost plus a $2 allowance for the injection service. Reasonable charge screens for injections, are therefore based on: a flat $2 amount for the service of the physician (or the office nurse) in providing the injection; plus the current cost of the most frequently administered dosage of the drug, as reflected in sources such as Drug Topics Red Book or the Blue Book, (the latest editions), and the cost of supplies such as syringes and needles. (The price of the smallest unit of packaging offered by the manufacturer that will include the most frequently administered dosage of the drug are used in this regard.) However, in cases involving unusual circumstances, an additional allowance above the $2 amount for the physician services may be considered provided proper documentation is supplied. Also, where the claim is documented to indicate that the dosage administered and cost of the drug used were higher than the drug cost that would be applicable to the most frequently administered dosage, the higher drug cost may be allowed to the extent that it is reasonable.

Where an injection is given the patient during an office visit, and the prevailing practice in the locality is not to make a separate or increased charge for injections in such situations, but to charge only the regular office visit fee, the reasonable charge does not include an additional allowance for the injection. Similarly, where an individual physician has not customarily made separate charges for injections in addition to the office visit fee during the year from which the customary charge screen has been derived, the reasonable charge does not include an additional allowance for an injection. In addition, where the carrier knows that the sole purpose of e.g., an “office visit” was for the patient to receive an injection, payment may be made only for the injection (if it is covered). Allowance of a separate additional charge for an “office visit” is not warranted where the services rendered did not really constitute a regular office visit.

All injection claims submitted to a carrier must include the specific name of the drug used. Identification of the drug enables the carrier to correctly pay for the services rendered and helps establish meaningful injection screens.

Where the total charge made for an injection (i.e., for the service of the physician and/or the office nurse in providing the injection, and for the cost of the drug and supplies used) does not exceed $3, the actual charge made is determined to be a reasonable actual charge made is determined to be a reasonable charge without any further determination of the drug cost through use of e.g., the Drug Topics Red Book or the Blue Book. Thus, where the actual cost of the drug used was less than $1, use of the $3 tolerance allows room for some cushioning to offset losses due to spoilage and spillage. However, in no case may the reasonable charge exceed the actual charge made for an injection.

Injections such as those that require the precise placement of a needle into inflamed, painful, or target areas or the injection of dangerous drugs may require that only a physician provide this service. Consequently, injections of this nature are not considered routine and appropriate allowances are made. In these instances, the carrier may establish customary and prevailing charge screens to reflect the actual practice of physicians in a locality.

Citations:

Social Security Act—Sec. 1861(o)

A benefit period (spell of illness) is the time period used in the hospital insurance program in determining whether covered Part A services can be paid for by the program. The number of days that inpatient hospital and extended care services are provided a beneficiary is related to the benefit period, as is the number of home health visits prior to July 1, 1981. Although the days for which the program will make payment are limited by the benefit period, a beneficiary is not limited in the number of benefit periods the beneficiary may have. Effective July 1, 1981, the spell of illness requirements for home health services are eliminated.

An individual may be discharged from, and readmitted to, a hospital or SNF several times during a benefit period and still be in the same benefit period if 60 days have not elapsed between discharge and readmission. The stay need not be for related physicial or mental conditions.

A benefit period is a period of consecutive days that begins with the first day (not included in a previous spell of illness) on which a beneficiary is furnished inpatient hospital or extended care services by a qualified provider. THUS, GENERALLY, THE BENEFIT PERIOD BEGINS WHEN COVERED INPATIENT SERVICES ARE INITIALLY FURNISHED TO AN ENTITLED INDIVIDUAL.

A spell of illness may also begin with a stay in a qualified “emergency hospital” in Canada or Mexico when it furnishes the patient covered emergency inpatient hospital services or when it is more accessible for a border resident including nonemergency situations.

If a person is in a nonqualified institution and is subsequently transferred to a qualified hospital (general, psychiatric, or tuberculosis), the person's spell of illness begins on admission to the qualified hospital ( HI 00401.225 ).

Admission to a qualified SNF begins a benefit period even though payment for the services cannot be made under Part A because the prior hospitalization or transfer requirement has not been met.

For coverage of home health services only, prior to July 1, 1981, a benefit period begins when a beneficiary is admitted to a nonparticipating hospital that has Joint Commission on Accreditation of Hospital (JCAH) certification, or that of the American Osteopathic Association (AOA). This rule applies whether the hospital is within the United States or in a foreign country or whether the services are emergency or non-emergency.

It is important to note that for purposes of continuing a benefit period the hospital or SNF in which the stay occurs need not meet all of the requirements that are necessary for starting a benefit period.

Inpatient services will prolong the beneficiary's benefit period if the hospital is primarily engaged in providing, by or under the supervision of physician(s), to inpatients:

1. diagnostic and therapeutic services for medical diagnosis, treatment, and care of, or rehabilitation services to injured, disabled, or sick persons; or

2. psychiatric services for the diagnosis and treatment of mentally ill persons; or

3. medical services for the diagnosis and treatment of tuberculosis.

Participating hospitals will always meet this requirement. For nonparticipating hospitals see the Directory of Medical Facilities.

A stay in a hospital outside the United States prolongs a spell of illness. It may be assumed, in the absence of contrary evidence, that a foreign hospital in which a beneficiary spent one or more days meets one of the above requirements and that the beneficiary's statement about length and place of stay is correct.

Similarly, inpatient services in a SNF or nonparticipating nursing facility prolong a beneficiary's benefit period if the facility meets at least the requirement that it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for injured, disabled, or sick persons. Participating SNF's always meet this definition. For nonparticipating facilities see the Directory of Medical Facilities.

The benefit period ends with the close of a period of 60 consecutive days during which the patient was neither an inpatient of a hospital nor of a nursing facility. To determine the 60 consecutive day period, begin counting with the day on which the individual was discharged.

Example 1:

Jones was born on 8/9/09. On 7/28/74, Jones entered a participating hospital. After being in the hospital for 2 weeks, Jones was discharged on 8 /11/74. On doctor's orders, Jones entered a participating SNF on 8/15 /74, and remained there until 10/27/74. Jones had no further inpatient stays in 1974.

Jones' benefit period began on 8/1/74, the first day of the month Jones attained age 65 and was entitled to hospital insurance. The benefit period ended 12/25/74, the end of the 60-day period beginning with the date of the last discharge.

Example 2:

Smith over age 65, entered a participating hospital on 7/28/74, for treatment of a heart condition. Smith was discharged on 8/11/74. On 8/20/74, Smith entered a nonparticipating nursing home, which provided primarily skilled nursing care and related services. Mr. Smith remained in this facility until the discharge on 10/27/74. On 12/25/74, Smith was again admitted to a participating hospital because of injuries suffered in an accident. Smith was discharged on 1/13/75, and had no further inpatient stays in 1975.

Smith's benefit period began on 7/28/74. Smith's stay in the nursing home began less than 60 days after the hospital stay and the benefit period was continued even though the stay was not covered. The subsequent hospital stay began less than 60 days after discharge from the nursing home and continued the benefit period, although the condition treated was unrelated to prior stays. The benefit period ended on 3/13/75, the end of the 60-day period beginning with the day of the last discharge.

Chapter Table of Contents Subchapter HI 00601.000 Hospital Insurance HI 00610.000 Supplementary Medical Insurance HI 00620.000 Exclusions from Coverage HI 00630.000 Medicare Coverage Outside U.S.

Subchapter Table of Contents Section Latest Transmittal HI 00601.001 Scope of Benefits TN 5 10-22 HI 00601.005 Covered Part A Inpatient Hospital Services TN 10 02-23 HI 00601.010 Hospital Inpatient Services - Coverage Guidelines TN 5 10-22 HI 00601.015 Bed and Board TN 10 02-23 HI 00601.020 Nursing and Other Services TN 5 10-22 HI 00601.025 Drugs and Biologicals TN 5 10-22 HI 00601.030 Supplies, Appliances and Equipment TN 5 10-22 HI 00601.035 Other Diagnostic or Therapeutic Items or Services TN 5 10-22 HI 00601.040 Services of Interns or Residents-in-Training HI 00601.045 Inpatient Services in Connection with Dental Services HI 00601.050 Therapy Services TN 5 10-22 HI 00601.055 Inpatient Hospital Services Counting Toward Maximums HI 00601.060 Guarantee of Payment for Inpatient Hospital Service TN 5 10-22 HI 00601.065 Lifetime Reserve Days TN 6 10-22 HI 00601.070 Inpatient Day Defined HI 00601.075 Late Discharge TN 6 10-22 HI 00601.080 Leaves of Absence TN 6 10-22 HI 00601.085 Discharge or Death on First Day of Entitlement or Participation TN 6 10-22 HI 00601.090 Limitation on Inpatient Psychiatric Benefits in Initial Benefit Period TN 10 02-23 HI 00601.095 Patient's Status in Applying Reduction TN 6 10-22 HI 00601.100 Institution's Status in Determining Reduction in Days HI 00601.105 Counting Days of Admission, Discharge, and Leave in Reducing Days HI 00601.110 Inpatient Psychiatric Hospital Services—Lifetime Limitation HI 00601.115 Inpatient Service Days Counting Toward Maximums Extended Care Services—Coverage HI 00601.120 Coverage of Extended Care Services HI 00601.125 SNF Coverage Guidelines TN 6 10-22 HI 00601.130 Prior Hospitalization and Transfer Requirements TN 6 10-22 HI 00601.135 Covered Level of Care TN 6 10-22 HI 00601.140 Daily Skilled Service TN 6 10-22 HI 00601.145 Skilled Nursing Services HI 00601.150 Nonskilled Nursing Services HI 00601.155 Questionable Situations HI 00601.160 Physical Therapy as Basis for Extended Care HI 00601.165 Other Rehabilitation Service as a Basis for Extended Care HI 00601.170 Need Satisfied Only by SNF Inpatient Care HI 00601.175 Covered Extended Care Services TN 7 10-22 HI 00601.180 Nursing Care Provided by or Under the Supervision of a Registered Professional Nurse TN 7 10-22 HI 00601.185 Bed and Board in Semi-Private Accommodations Furnished in Connection With Nursing Care HI 00601.190 Physical, Speech and Occupational Therapy Furnished by the SNF or by Others Under Arrangements with the SNF and Under Its Supervision HI 00601.195 Medical Social Services TN 7 10-22 HI 00601.200 Drugs and Biologicals TN 7 10-22 HI 00601.205 Supplies, Appliances and Equipment TN 7 10-22 HI 00601.210 Medical Services of an Intern or Resident-in-Training HI 00601.220 Other Diagnostic or Therapeutic Services Provided by a Hospital HI 00601.230 Other Services HI 00601.270 Extended Care Benefit Days TN 7 10-22 HI 00601.280 Inpatient Extended Care Services Counting Toward Maximums HI 00601.290 Covered Hospice Services TN 7 10-22 HI 00601.295 Hospice Care - Requirements for Coverage TN 10 02-23 HI 00601.300 Home Health Services TN 7 10-22 HI 00601.310 HHA Coverage—Discussion Guidelines TN 7 10-22 Covered Services HI 00601.320 Nursing Care HI 00601.330 Definition of “Intermittent” HI 00601.340 When Skilled Nursing Care is Reimbursable TN 8 10-22 HI 00601.350 Skilled Nursing Services—Examples TN 10 02-23 HI 00601.360 Student Nurses TN 8 10-22 HI 00601.370 Psychiatric Nursing TN 8 10-22 HI 00601.380 Physical, Speech and Occupational Therapy Furnished by an HHA or by Others Under Arrangements With the HHA and Under its Supervision Other Home Health Services HI 00601.390 Medical Social Services HI 00601.400 Services of a Home Health Aide TN 8 10-22 HI 00601.410 Medical Supplies (Except for Drugs and Biologicals) and the Use of Medical Appliances TN 8 10-22 HI 00601.420 Services of Interns and Residents HI 00601.430 Outpatient Services TN 8 10-22 HI 00601.440 Part Time or Intermittent Services TN 8 10-22 HI 00601.450 Counting Visits Under the Hospital and Medical Plans TN 8 10-22 HHA Exclusions HI 00601.460 Specific Exclusions from Coverage as Home Health Services HI 00601.470 Special Conditions for Coverage of Home Health Services Under Hospital Insurance (Part A) TN 8 10-22 HI 00601.480 Fourteen Day Limit on Plan Establishment TN 9 10-22 HI 00601.490 Related Illness or Impairment TN 9 10-22 HI 00601.500 Transfer of Patient HI 00601.510 Duration of Home Health Services Under Hospital Insurance TN 9 10-22 HI 00601.520 Presumption of Coverage HI 00601.550 Inpatient Hospital Deductible TN 4 01-20 HI 00601.560 Inpatient Hospital Coinsurance TN 9 10-22 HI 00601.570 Extended Care Coinsurance TN 4 01-20 HI 00601.575 Basis for Determining the Coinsurance Amounts HI 00601.580 Part A Blood Deductible TN 10 02-23 Provider Cost Limits HI 00601.590 Background HI 00601.600 Provider Charges to Beneficiaries for Excess Costs TN 9 10-22 HI 00601.610 Determining Emergency Services TN 9 10-22 HI 00601.620 District Office Role TN 9 10-22

Beneficiaries covered under Part A of Medicare are entitled to the following services, when such services are medically necessary.

In each benefit period (spell of illness) payment may be made for up to 90 days of patient care in any participating general care, or psychiatric hospital. Payment may not be made for more than a total of 190 days of psychiatric hospital services during the patient's lifetime. In each benefit period, hospital insurance pays for all covered services for the first 60 days, except for an inpatient hospital deductible which is determined annually by the Secretary. (See HI 00601.550 ).

For the 61st through the 90th day hospital insurance pays for all covered services, except for a daily coinsurance amount which is one quarter of the inpatient hospital deductible. (See HI 00601.560 .A).

Each beneficiary also has a “lifetime reserve” of 60 additional hospital days. They can elect to use these days after their 90th inpatient day stay. The beneficiary's “lifetime” reserve pays for all covered services, except for a daily coinsurance amount which is one-half of the initial deductible. (See HI 00601.560 .B).

In addition to the inpatient hospital deductible there is also a blood deductible of the first three pints of blood in each benefit period.

Payment may be made for emergency inpatient hospital services furnished by nonparticipating hospitals when such services are necessary to prevent the death or serious impairment of the health of the individual and because the threat to the life or health of the individual necessitates the use of the most accessible hospital. (See HI 01201.201.) (Emergency outpatient services are covered under Medicare Part B.)

A patient no longer in need of intensive hospital care may still require daily skilled nursing or rehabilitation services which, as a practical matter, can only be provided in an SNF. The Hospital Insurance program will pay for these services if they are provided in Medicare participating SNFs. Generally, the patient must be admitted within 30 days after discharge from a qualifying 3-day hospital stay (see HI 00601.130 ).

In each benefit period the hospital insurance plan pays for all covered services provided in a participating SNF during the first 20 days and all but daily coinsurance amount which consists of one-eighth of the inpatient hospital deductibles for up to 80 additional days. (See HI 00601.480 ).

Following a qualifying hospital stay of at least 3 days, the doctor may decide that further care can best be given in a homebound patient's home through a participating home health agency (HHA). If the patient requires intermittent skilled nursing care or physical or speech therapy, and otherwise qualifies for home health benefits, they are also eligible to receive certain other home health services. These services include occupational therapy, medical social services, the use of medical supplies and medical appliances, and the part-time services of home health aides.

Hospital insurance can pay for home health visits if a patient's doctor establishes a home health plan within 14 days after discharge from a hospital or participating SNF and the care is for further treatment of a condition which was treated in a hospital or participating SNF.

Under these conditions, Hospital Insurance can pay the full cost of up to 100 home health visits after the start of the benefit period and before the start of another. Payment for these visits can be made for up to 12 months after the most recent discharge from a hospital or participating SNF.

Effective 7/1/81, the prior inpatient stay requirements, the 100 visit limitation, and the spell of illness requirements are eliminated. Also, a patient can qualify for home health benefits if they requires occupational therapy.

Effective December 1, 1981, occupational therapy is eliminated as a basis for entitlement to home health services. However, if a person has otherwise qualified for home health services because of the need for skilled nursing care, physical therapy or speech therapy, the patient's eligibility for home health services may be extended solely on the basis of the continuing need for occupational therapy.

In lieu of certain other benefits, payment may be made for hospice care during up to two periods of 90 days each and one subsequent period of 30 days if an individual elects to receive hospice care. (See HI 00601.295 .)

Citations:

Act—Sec. 1861(b)

20 CFR Sections 405.103, 405.161

Patients covered under hospital insurance are entitled to have payment made on their behalf on a reasonable cost basis for inpatient hospital services. An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a person is considered an inpatient if formally admitted as an inpatient with the expectation that they will remain at least overnight and occupy a bed even though it later develops that they can be discharged or transferred to another hospital and does not actually use a hospital bed overnight. However, there are exceptions to the general rule:

When a patient with a known diagnosis enters a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for only a few hours (less than 24), and this expectation is realized, they are considered an outpatient regardless of: the hour of admission; whether or not they used a bed; and whether or not they remained in the hospital past midnight.

Renal dialysis treatments are usually outpatient services but may be inpatient services. A patient who is staying at their home, who is ambulatory, whose condition is stable and who comes to the hospital for routine, chronic dialysis treatments, and not for a diagnostic workup or a changed in therapy, is considered an outpatient. On the other hand, a patient undergoing short-term dialysis until their kidneys recover from an acute illness (acute dialysis), or a person with borderline renal failure who develops acute renal failure every time they have an illness and requires dialysis (episodic dialysis), is always an inpatient. A patient may begin dialysis as an inpatient and then progress to an outpatient status.

If doubt exists as to a particular patient's status after these criteria are applied, a medical opinion is obtained by the intermediary.

NOTE: When patients requiring extended care services occupy beds in a hospital, they are considered inpatients of the hospital. In such cases, the services furnished in the hospital are not considered extended care services, and payment may not be made under the program for such services. However, if a bed in a participating SNF is not available, the beneficiary's continued stay in the hospital would be medically necessary and program payment could be made.

The 1972 Amendments extended coverage to disabled beneficiaries. As a result, beneficiaries in the child-bearing years are included for the first time. Reasonable and necessary services associated with pregnancy are covered and reimbursable under Medicare. The increased possibility of illness or injury which accompanies this condition is well recognized, and medical supervision is required throughout pregnancy and for a brief period beyond. Skilled medical management is appropriate throughout the events of pregnancy, beginning with diagnosis of the condition, continuing through delivery, and ending after the necessary postnatal care. Similarly, in the event of termination of pregnancy, regardless of whether terminated spontaneously or whether abortion is induced for therapeutic or elective reasons, the need for skilled medical management and/or medical services is equally as important as in those cases carried to full term.

After the infant is delivered and is a separate individual, items and services furnished to the infant cannot be covered and reimbursed under the program on the basis of the parent's eligibility.

An individual who meets the requirements for entitlement contained in HI 00801.001 and receives inpatient hospital services in a participating hospital shall be entitled to coverage if (1) the services are not excluded from coverage for any of the circumstances listed in HI 00620.000 and (2) the individual meets the hospital level of care requirements.

Emergency services in a nonparticipating hospital may be covered.

Hospital inpatient services covered by the Medicare program represent a discrete level of care. Two criteria must be satisfied in order for the hospital level of care requirement to be met: the services the patient receives in the hospital must be medically indicated; and it must be reasonable to provide the needed care in a hospital rather than in a less costly facility or on an outpatient basis. In determining whether these criteria are met, consideration is given to factors such as the patient's condition and their need for the kinds of physician supervision, around-the-clock nursing or the facilities available only in hospitals.

If an inquirer asks when an inpatient hospital stay will be covered by Medicare, supply the information as in A. above. In addition, explain that Medicare coverage determinations are made by the intermediary, and that the intermediary cannot make the determination until after the patient is admitted to the hospital and the hospital has submitted a claim for the services furnished by the hospital.

Provide the beneficiary with the basic information as to what constitutes covered services. When emergency services in a nonparticipating hospital are involved, explain the medical necessity and accessibility requirements. If, after the explanation, the beneficiary indicates that they are dissatisfied, assist them in filing a reconsideration request.

(If a patient receives items or services in excess of, or more expensive than, those for which payment can be made, payment is made only for the reasonable cost of the covered items or services.)

Under the Utilization Review (UR) requirement, certain limitations on payment for inpatient hospital services and posthospital extended care services have been established. (For purposes of this section “inpatient hospital services” include inpatient hospital services and inpatient psychiatric and tuberculosis hospital services.)

If, in the review of a continued stay case, the physician members of the UR committee decide, after an opportunity for consultation is given the attending physician, that further inpatient stay is not medically necessary, notice in writing must be given to the attending physician, the institution, and the patient (or where appropriate, their next of kin) no later than 2 days after the final decision is made. In a hospital, written notice of the finding must in no event be given later than 2 working days after the continued stay review date. In an SNF, written notices of the finding must in no event be given later than 3 working days after the continued stay review date.

While the attending physician may, if they wish, advise the patient personally of the UR committee's decision, it is still necessary for the committee to give timely written notice of its decision to the patient or where appropriate, their next of kin.

Failure or omission by the UR committee to timely notify the physician, the patient, or the patient's next of kin does not create a right to payment where, as a matter of law, none exists. Such failure does not justify payment to the institution for an expense item (e.g., custodial care) which is specifically excluded by statute. However, where the institution is notified of an adverse finding by the UR committee, the institution can be found liable under the waiver of liability provision for noncovered services it provides to the beneficiary after the expiration of the grace period (see 3. below) up to the date the beneficiary receives written notice of the noncoverage of the services. For example, the institution receives notice from the UR committee on March 1 that services were not reasonable and necessary beginning February 27, but does not advise the beneficiary until March 5 and the patient is discharged on March 6. Where both the beneficiary and the institution meet the requirements for waiver of liability program payment can be made for the noncovered service on February 27 and 28 and March 1, and also for 3 more days (March 2, 3, and 4) after the date the provider is notified of the UR finding. However, program payment for March 5 would not be made nor would the beneficiary be responsible for the charges since they did not receive notice until that date.

Program payment can be made for up to 3 days of inpatient hospital or extended care services rendered following the date the institution receives notice of a finding by a UR committee that further inpatient services are not medically necessary. Effective with services rendered after December 31, 1972, this payment limit also extends to a finding by a UR committee, made during the course of a sample or other review of admissions, that admission to the hospital or SNF was not medically necessary. This provision is affected by the waiver of liability provision. Where it is determined that noncovered care was rendered prior to the UR committee's finding, the intermediary determines whether the waiver of liability provision applies before any payment can be made under 1. above.

Certain diagnostic tests needed in connection with a hospital admission that can be done either on an inpatient or outpatient basis may be paid for, under certain conditions, at 100 percent rather than the usual 80 percent if the tests are administered in the outpatient department of a hospital seven days before the patient's admission as a hospital inpatient. This provision may be extended to preadmission diagnostic tests done in a physician's office or on an outpatient basis in a hospital other than the hospital to which the patient is admitted, if found to be administratively practical.

These instructions clarify the application of the reasonable and necessary payment exclusion to diagnostic procedures, such as chest X-rays, urinalysis, etc., provided to patients upon admission to a hospital or skilled nursing facility.

The major factors which support a determination that a diagnostic procedure performed as part of the admitting procedure to a hospital or skilled nursing facility is reasonable and necessary are:

1. The test is specifically ordered by the admitting physician (or a hospital or skilled nursing facility staff physician having responsibility for the patient where there is no admitting physician); i.e., it is not furnished under the standing orders of a physician for their patients;

2. The test is medically necessary for the diagnosis or treatment of the individual patient's condition; and

3. The test does not unnecessarily duplicate a test performed on an outpatient basis prior to admission or performed in connection with a recent admission.

Intermediaries consult with PSRO's to obtain information they gathered on a sample basis as to whether X-rays and diagnostic tests are specifically ordered as described in 1. above.

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:

1. The private room is not medically necessary; and

2. The patient (or relative or other person acting on their behalf) has requested the private room and the provider informs them at the time of the request of the amount of the charge.

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 their representative) protests a charge for the private room on the grounds that the privacy was medically necessary, or that the provider did not inform them of the charge, assist them 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.

A private room is medically necessary when isolation of a beneficiary is required to avoid jeopardizing their health or recovery, or that of other patients who are likely to be alarmed or disturbed by the beneficiary’s communicable disease. For example, communicable disease, heart attacks, cerebrovascular accidents, and psychotic episodes may require isolation of the patient for certain periods.

In establishing the medical necessity for isolation, the date of the physician’s written statement is not controlling, nor is the presence of a written statement. The crucial question is whether a private room was ordered by the physician because it was necessary for the health of the patient themself or that of other patients.

A private room is considered to be medically necessary even though the beneficiary’s condition does not require isolation if they need immediate hospitalization (i.e., their medical condition is such that hospitalization cannot be deferred) and the hospital has no semiprivate or ward accommodations available at the time of admission. Such beneficiary may not be charged for the private room while the other accommodations remain unavailable.

If the patient is admitted to a provider which has only private accommodations, and no semiprivate or ward accommodations, medical necessity will be deemed to exist for the accommodations furnished. Beneficiaries are not to be subject to an extra charge for a private room in an all-private room provider.

A beneficiary who needs a private room may be assigned to any of the provider’s private rooms.

Although they do not have the right to insist on the private room of their choice, their preferences are given the same consideration as if they were paying all provider charges themselves. The program does not, under any circumstances, pay for personal comfort items. Thus, the program does not pay for deluxe accommodations and/or services; these include a suite, or a room substantially more spacious than is required for treatment, or specially equipped or decorated, or serviced for the comfort and convenience of persons willing to pay a differential for such amenities. If they (or their representative) requests such deluxe accommodations, the provider advises them that there will be a charge, not covered by Medicare, of a specified amount per day and may charge them that amount for each day they occupy the deluxe accommodations.

The beneficiary may not be charged such a differential in private room rates if that differential is based on factors other than personal comfort items. Such factors might include differences between older and newer wings, proximity to lounge, elevators or nursing stations, desirable view, etc. Such rooms are standard one-bed units and not deluxe room for purposes for these instructions, even though the provider may call them deluxe and have a higher customary charge for them. No additional charge may be imposed upon the beneficiary who is assigned to a room which may be somewhat more desirable because of these factors.

The law contemplates that Medicare patients should not be assigned to ward accommodations except at the patient’s request or for a reason consistent with the purposes of the health insurance program.

When ward accommodations are furnished at the patient’s request or for a reason determined to be consistent with the program’s purposes, payment is based on the average per diem cost of routine services (see A. above). Where ward accommodations are assigned for other reasons, the law provides what may be a substantial penalty. (See 2. below.)

It is consistent with program purposes to assign the patient to ward accommodations if all semiprivate accommodations are occupied, or the facility has no semiprivate accommodations. However, the patient must be moved to semiprivate accommodations if they become available during their stay.

Some providers have a policy of placing in wards all patients who do not have private physicians. Such a practice may be consistent with the purposes of the program if the intermediary determines that the ward assignment insures to the benefit of the patient. In making this determination, the intermediary’s principal consideration is whether the assignment is likely to result in better medical treatment of the patient (e.g., it facilitates necessary medical and nursing supervision and treatment).

It is not consistent with the purposes of the law to assign a patient ward accommodations on the basis of their social or economic status, their national origin, race, or religion, or their entitlement to benefits as a Medicare patient, or any other such discriminatory reason. It is also inconsistent with the purposes of the law to assign patients to ward accommodations merely for the convenience or financial advantage of the institution.

If a ward assignment is made neither at the patient’s request nor for a reason consistent with the purpose of the program, the reimbursement to the provider for the routine services is decreased. The reduction in payment, when applicable, is made by the intermediary at the end-of-year settlement.

One of the requirements for recognition of a hospital special accommodation care unit is that it must be physically identifiable as separate from general accommodation care areas and it must normally render only special care. When a hospital places general care patients temporarily in special care units because all of the beds available for general care patients are occupied, Medicare still considers such special care units as meeting the program requirements of being physically separate. However, the hospital must be able to furnish sufficient documentation to satisfy the intermediary that only overflow general care patients are being placed in the special care units. The provider may not charge beneficiaries who are overflow from general care accommodations for care in special care units.

Nursing and other related services, use of hospital facilities, and medical social services ordinarily furnished by the hospital for the care and treatment of inpatients are covered under hospital insurance.

The services of a private-duty nurse or other private-duty attendant are not covered. Private-duty nurses or private-duty attendants are registered professional nurses, licensed practical nurses, or any other trained attendant whose services ordinarily are rendered to, and restricted to, a particular patient by arrangement between the patient and the private-duty nurse or attendant. Such persons are engaged or paid by an individual patient or by someone acting on their behalf, including a hospital that initially incurs the costs and looks to the patient for reimbursement for such noncovered services.

When the hospital acts on behalf of a patient, the services of the private-duty nurse or other attendant under such an arrangement are not inpatient hospital services regardless of the control which the hospital may exercise with respect to the services rendered by such private-duty nurse or attendant.

If the hospital engages the services of a nurse anesthetist or other nonphysician anesthetist (either on a salary or fee-for-service basis) under arrangements which provide for billing to be made by the hospital, the cost of the service when provided to an inpatient would be covered under Part A.

Medical social services are those social services which contribute meaningfully to the treatment of a patient's condition. Such services include, but are not limited to; (1) assessment of the social and emotional factors related to the patient's illness, their need for care, their response to treatment, and their adjustment to care in the facility; (2) appropriate action to obtain case work services to assist in resolving problems in these areas; (3) assessment of the relationship of the patient medical and nursing requirements to their home situation, their financial resources, and the community resources available to them in making the decision regarding their discharge.

Drugs and biologicals for use in the hospital, which are ordinarily furnished by the hospital for the care and treatment of inpatients are covered. Three basic requirements must be met for a drug or biological furnished by a hospital to be included as a covered hospital service. (1) The drug or biological must represent a cost to the institution in rendering services to the beneficiary. (2) It must either be included, or approved for inclusion, in the U.S. Pharmacopoeia, the National Formulary, or the U.S. Homeopathic Pharmacopoeia; or, except for those unfavorably evaluated, in AMA Drug Evaluations (the successor publication to New Drugs) or Accepted Dental Therapeutics (the successor publication to Accepted Dental Remedies); or be approved by the pharmacy and drug therapeutics or equivalent committee of the medical staff of the hospital for use in the hospital. (3) The drug or biological must be reasonable and necessary as specified in HI 00620.010 .

An investigational drug ordinarily is not considered as reasonable and necessary since its efficacy has not been established. Therefore, even if a drug or biological is approved by an appropriate hospital committee, the reasonable cost of an investigational or other non-approved drug or biological (e.g., Laetrile) cannot be reimbursed. This exclusion applies whether or not the drug or biological is administered during an otherwise covered hospital stay. (An exception has been made, however, for certain cancer drugs known as group C drugs, approved and distributed by the National Cancer Institute, in cooperation with the Food and Drug Administration for treatment by physicians who agree to participate in approved studies.)

Drugs and biologicals furnished by a hospital to an inpatient for use outside the hospital are, in general, not covered as inpatient hospital services. However, if the drug or biological is deemed necessary to permit or facilitate the patient's departure from the hospital, and a limited supply is required until they can obtain a continuing supply, the drug or biological is covered as an inpatient hospital service.

Supplies, appliances, and equipment, which are ordinarily furnished by the hospital for the care and treatment of the beneficiary solely during their inpatient stay in the hospital are covered inpatient hospital services.

Under certain circumstances, supplies, appliances, and equipment used during the beneficiary's inpatient stay are covered even though they leave the hospital with the patient when they are discharged. Examples of items covered under this rule are cardiac valves, cardiac pacemakers, and artificial limbs, which are permanently installed in or attached to the patient's body while they are an inpatient of the hospital; and items, such as tracheostomy of drainage tubes, which are temporarily installed in or attached to the patient's body while they are receiving treatment as an inpatient and which are also necessary to permit or facilitate the patient's release from the hospital.

Supplies, appliances, and equipment furnished to an inpatient for use only outside the hospital are not, in general, covered as inpatient hospital services (for coverage of such items under Part B, see HI 00610.100 ). However, a temporary or disposable item which is medically necessary to permit or facilitate the patient's departure from the hospital, and is required until the patient can obtain a continuing supply is covered as an inpatient hospital service.

The reasonable cost of oxygen furnished to hospital inpatient is covered under Part A as an inpatient supply.

Other diagnostic or therapeutic items or services ordinarily furnished inpatients by the hospital or by others under arrangements made by the hospital are covered. Such services to hospital inpatients may be covered under Part A even when furnished off the hospital premises. For example, diagnostic or therapeutic services of an audiologist off the hospital premises are covered if billed by the hospital under arrangements, if the services are furnished at a speech and hearing center, and if the audiologist meets certain qualifications. With respect to items that leave the hospital with the patient when they are discharged, such as splints or casts, the rules for determining whether the item is covered are the same as in HI 00601.030 .

When a psychologist or physical therapist is a salaried member of the staff of a hospital, their diagnostic or therapeutic services to inpatients of that hospital are covered on a reasonable cost basis in the same manner as the services of other nonphysician hospital employees. The services of a psychologist or physical therapist who is not a salaried staff member are covered if furnished by the hospital as part of the services it ordinarily furnishes under arrangements which provide for billing to be handled by the hospital.

Diagnostic services furnished to an inpatient by an independent clinical laboratory under arrangements with the hospital are reimbursable under hospital insurance.

An independent laboratory is one which is independent both of the attending or consulting physician's office and of a hospital which is participating in the program as a provider of services.

A clinical laboratory is a laboratory where micro-biological, serological, chemical, hematological, bio-physical, cytological, immunohematological or pathological examinations are performed on materials derived from the human body to provide information for diagnosis, prevention, or treatment of a disease or assessment of a medical condition.

Diagnostic services furnished a hospital inpatient under arrangements with a laboratory of another participating hospital are reimbursable on a cost basis under Part A to the hospital obtaining the services.

Hospital insurance covers the reasonable cost of the services of interns or residents-in-training under a teaching program approved by the Council or Medical Education of the American Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association.

In the case of services of interns or residents-in-training in the field of dentistry in a hospital or osteopathic hospital, the teaching program must have the approval of the Council in Dental Education of the American Dental Association.

Effective for accounting periods beginning after 12/31/72 the services of interns and residents-in-training in the field of podiatry under a teaching program approved by the Council on Podiatry Education of the American Podiatry Association are covered under Part A. See HI 00610.050 for coverage of services of hospital interns and residents under medical insurance.

When hospitalization is medically necessary for a dental procedure and the dentist's service is covered under Part B, the inpatient hospital services furnished during the stay are covered under Part A. For example, both the professional services of the dentist and the inpatient hospital expenses are covered when the dentist reduces a jaw fracture of an individual who is an inpatient of a participating hospital.

Before 7/1/81 where a patient is hospitalized solely for noncovered dental treatment ( HI 00620.160 ) the inpatient hospital services are not covered unless necessary to assure proper medical management, control, or treatment of a nondental impairment.

For hospital admissions after June 30, 1981, hospital inpatient services which are necessary because of the severity of a noncovered dental procedure are covered. The dental procedure itself is excluded from coverage if it is a service described in HI 00620.160 . Hospital inpatient services which are necessary for the performance of a dental procedure because of the patient's underlying medical condition and clinical status continue to be covered.

When the hospital services are covered, all ancillary services furnished by the hospital, such as X-rays, administration of anesthesia, use of the operating room, etc., are covered.

Regardless of whether the inpatient hospital services are covered, the medical services of physicians furnished in connection with noncovered dental services, are not covered. Thus, the services of an anesthesiologist, radiologist, or pathologist whose services are performed in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth are not covered.

Physical, speech, occupational, and respiratory therapy services furnished by a participating hospital or by others under arrangements with and under the supervision of the hospital are reimburseable under the Medicare program. (Physical, speech, and occupational therapy services are also covered SNF and HHA benefits. Respiratory therapy services furnished to inpatients of an SNF would be covered under the extended care benefit when provided by a hospital with which the facility has a transfer agreement (see HI 00601.230 .)

To be covered as physical therapy all of the following conditions must be met;

a. The services are directly and specifically related to an active written treatment regimen designed by the physician after any needed consultation with the qualified physical therapist;

b. The services are of such a level of complexity and sophistication or the condition of the patient is such that the judgment, knowledge and skills of a qualified physical therapist are required;

c. The services are, in fact, performed by or under the supervision of a qualified physical therapist, i.e., the qualified physical therapist provides authoritative procedural guidance for the rendering of the services with initial direction and periodic inspection of the actual act and is on the premises if the person performing the services does not meet the assistant-level qualifications;

d. The services are provided with the expectation, based on the assessment made by the physician of the patient's restoration potential after any needed consultation with the qualified physical therapist, that the patient will improve significantly in a reasonable and generally predictable, period of time (see 2. below) or must be necessary to the establishment of a safe and effective maintenance program required in connection with a specific disease state (see 3. below);

e. The services are considered under accepted standards of medical practice to be a specific and effective treatment for the patient's condition; and

f. The services are reasonable and necessary to the treatment of the patient's condition.

Many inpatients who do not require physical therapy services as defined above do require services involving procedures which are routine in nature in the sense that they can be rendered by supportive personnel, e.g., aides or nursing personnel, without the supervision of a qualified physical therapist. Such services as well as services involving activities for the general good and welfare of patients, e.g., general exercises to promote overall fitness and flexibility and activities to provide diversion or general motivation, do not constitute physical therapy services for Medicare purposes. However, since they constitute an essential and integral part of good inpatient care, such services can be billed through the physical therapy cost center even though they do not constitute physical therapy for Medicare purposes, if the following conditions are met: the services are medically necessary; the treatment furnished is prescribed by a physician; all services are provided by salaried employees of the physical therapy department of the provider; the cost incurred is reasonable in amount; and charges are equally imposed on all patients.

As indicated in 1. above, to constitute physical therapy, a service furnished an individual must, among other things be reasonable and necessary to the treatment of their illness. If an individual's expected restoration potential would be insignificant in relation to the extent and duration of physical therapy services required to achieve such potential the physical therapy would not be considered reasonable and necessary to the treatment of the individual's illness or injury. Accordingly, there must be a medically appropriate expectation that the patient's condition will improve significantly in a reasonable (and generally predictable) period of time based on the assessment made by the physician of the patient's restoration potential after any needed consultation with the qualified physical therapist. Such expectations may not always prove to be valid, and the realization that restoration will not occur can and should also be reached in a reasonable and generally predictable period of time.

Generally, the repetitive services required to maintain function do not involve the use of complex and sophisticated physical therapy procedures, and consequently the judgement and skill of a qualified physical therapist are not required for the safe and effective rendition of such services. However, the specialized knowledge and judgment of a qualified physical therapist may be required to establish a maintenance program if the program is to be safely carried out and the treatment aims of the physician achieved. In such situations, the initial evaluation of the patient's needs, the designing by the qualified physical therapist of a maintenance program which is appropriate to the capacity and tolerance of the patient and the treatment objectives of the physician, the instruction of the patient or supportive personnel, e.g., aides or nursing personnel (or family members where physical therapy is being furnished on an outpatient basis) in the carrying out of such program and such infrequent reevaluations as may be required would constitute physical therapy under the program.

In particular cases, the skills, knowledge and judgment of a qualified physical therapist might be required in the giving of such treatments or baths, e.g., where the patient's condition is complicated by circulatory deficiency, areas of desensitization, open wounds, or other complications. Also, if such treatments are given as a prerequisite to a skilled physical therapy procedure, they are considered part of the physical therapy service.

Gait evaluation and training furnished a patient whose ability to walk has been impaired by neurological, muscular or skeletal abnormality requires the skills of a qualified physical therapist and constitutes reimbursable physical therapy provided that it can reasonably be expected to significantly improve the patient's ability to walk.

Repetitious exercises to improve gait, maintain strength, endurance and assistive walking, such as provided insupport for feeble or unstable patients, do not require the skills of a qualified physical therapist.

Program payment will be made for these services. They must always be performed by or under the supervision of a qualified physical therapist.

Therapeutic exercises which must be performed by or under the supervision of the qualified physical therapist due either to the type of exercise employed or to the condition of the patient constitute covered physical therapy. Range of motion exercises require the skills of a qualified physical therapist only when they are part of the active treatment of a specific disease which has resulted in a loss or restriction of mobility and such exercises, either because of their nature or the condition of the patient, may only be performed safely and effectively by or under the supervision of a qualified physical therapist.

Only the qualified physical therapist may perform range of motion tests and, therefore, such tests constitute reimbursable physical therapy.

Generally, range of motion exercises which are not related to the restoration of a specific loss of function but rather are related to the maintenance of function do not require the skills of a qualified physical therapist and are, therefore, not covered.

For outpatient physical therapy see HI 00610.370 .

Speech pathology services are those services necessary for the diagnosis and treatment of speech and language disorders which result in communication disabilities. They must relate directly and specifically to a written treatment regimen established by the physician after any needed consultation with the qualified speech pathologist.

Speech pathology services must be reasonable and necessary to the treatment of the individual's illness or injury. To be considered reasonable and necessary, the following conditions must be met:

a. The services must be considered under accepted standards of practice to be a specific and effective treatment for the patient's condition;

b. The services must be of such a level of complexity and sophistication, or the patient's condition must be such that the services required can be safely and effectively performed only by or under the supervision of a qualified speech pathologist. (See 42 CFR 405.1202(u)(1)(2).)

c. There must be an expectation that the patient's condition will improve significantly in a reasonable (and generally predictable) period of time based on the assessment by the physician of the patient's restoration potential after any needed consultation with the qualified speech pathologist, or the services must be necessary to the establishment of a safe and effective maintenance program required in connection with a specific disease state; and

d. The amount, frequency, and duration of the services must be reasonable under accepted standards of practice.

If an individual's expected restoration potential would be insignificant in relation to the extent and duration of speech pathology services required to achieve such potential, the services would not be considered reasonable and necessary. In addition, there must be an expectation that the patient's condition will improve significantly in a reasonable (and generally predictable) period of time. If at any point in the treatment of an illness or injury it is determined that the expectations will not materialize, the services will no longer constitute covered speech pathology services, as they would no longer be reasonable and necessary for the treatment of the patient's condition and would be excluded from coverage under section 1862(a)(1).

After the initial evaluation of the extent of the disorder or illness, if the restoration potential is judged insignificant or, after a reasonable period of trial, the patient's response to treatment is judged insignificant or at a plateau, an appropriate functional maintenance program may be established. The specialized knowledge and judgment of a qualified speech pathologist may be required if the treatment aim of the physician is to be achieved; e.g., a multiple sclerosis patient may require the services of a speech pathologist to establish a maintenance program designed to fit the patient's level of function. In such a situation, the initial evaluation of the patient's needs, the designing by the qualified speech pathologist of a maintenance program which is appropriate to the capacity and tolerance of the patient and the treatment objectives of the physician, the instruction of the patient and supportive personnel (e.g., aides or nursing personnel, or family members where speech pathology is being furnished on an outpatient basis) in carrying out the program, and such infrequent reevaluations as may be required, would constitute covered speech therapy. After the maintenance program has been established and instructions have been given for carrying out the program, the services of the speech pathologist would no longer be covered, as they would no longer be considered reasonable and necessary for the treatment of the patient's condition and would be excluded from coverage under section 1862(a)(1).

Speech pathology services can be grouped into two main categories: services concerned with diagnosis or evaluation and therapeutic services.

Unless excluded by section 1862(a)(7) of the law, these services are covered if they are reasonable and necessary. The speech pathologist employs a variety of formal and informal language assessment tests to ascertain the type, casual factor(s), and severity of the speech and language disorders. Reevaluation would be covered only if the patient exhibited a change in functional speech or motivation, clearing of confusion, or the remission of some other medical condition which previously contra-indicated speech pathology. However, monthly reevaluations, e.g., a Porch Index of Communicative Ability (PICA) for a patient undergoing a restorative speech pathology program, are to be considered a part of the treatment session and could not be covered as a separate evaluation for billing purposes.

The following are examples of common medical disorders and resulting communication deficits which may necessitate active restorative therapy:

1. Cerebrovascular disease such as cerebral vascular accidents presenting with dysphagia, aphasia/dysphasia, apraxia, and dysarthria;

2. Neurological disease such as Parkinsonism or Multiple Sclerosis may exhibit dysarthria, dysphagia, or inadequate respiratory volume/control;

3. Mental retardation with disorders such as aphasia or dysarthria; and

4. Laryngeal carcinoma requiring laryngectomy resulting in aphonia may warrant therapy of the laryngectomized patient so they can develop new communication skills through esophageal speech and/or use of the electrolarynx.

NOTE: Many patients who do not require speech pathology services as defined above do require services involving nondiagnostic, nontherapeutic, routine, repetitive, and reinforced procedures or services for their general good and welfare; e.g., the practicing of word drills. Such services do not constitute speech pathology services for Medicare purposes and would not be covered since they do not require performance by or the supervision of a qualified speech pathologist.

Occupational therapy is medically prescribed treatment concerned with improving or restoring functions which have been impaired by illness or injury or, where function has been permanently lost or reduced by illness or injury, to improve the individual's ability to perform those tasks required for independent functioning. Such therapy may involve:

a. the evaluation, and reevaluation as required, of a patient's level of function by administering diagnostic and prognostic tests;

b. the selection and teaching of task oriented therapeutic activities designed to restore physical function;

c. the planning, implementing, and supervising of individualized therapeutic activity programs as part of an overall “active treatment” program for a patient with a diagnosed psychiatric illness;

d. the planning and implementing of therapeutic tasks and activities to restore sensory-integrative function;

e. the teaching of compensatory technique to improve the level of independence in the activities of daily living;

f. the designing, fabricating, and fitting of orthotic and self-help devices; and

g. vocational and prevocational assessment and training.

Occupational therapy furnished by a participating hospital or by others under arrangements with the hospital and under its supervision is reimbursable when all the following conditions are met:

a. The services are prescribed by a physician;

b. The services are performed by a qualified occupational therapist or a qualified occupational therapy assistant under the general supervision of a qualified occupational therapist. (“General supervision” requires initial direction and periodic inspection of the actual activity; however, the supervisor need not always be physically present or on the premises when the assistant is performing services.);

c. The services are reasonable and necessary for the treatment of the individual's illness or injury. The guidelines in A.2. on an individual's restoration potential also apply to occupational therapy. Generally speaking, occupational therapy is not reasonable or necessary when a patient suffers a temporary loss or reduction of function which could be expected to spontaneously improve as the patient gradually resumes normal activities. Occupational therapy is also not usually considered reasonable and necessary in meeting motivational needs which are not related to a specific diagnosed psychiatric illness. As indicated in C.1, item g, occupational therapy includes vocational and prevocational assessment and training. When services provided by an occupational therapist and/or assistant are related solely to specific employment opportunities, work skills or work settings, they are not reasonable or necessary for the diagnosis or treatment of an illness or injury and are excluded from coverage.

Occupational therapy frequently necessitates the use of various supplies, e.g., looms, ceramic tiles, leather, etc. The cost of such supplies may be included in the occupational therapy cost center.

For outpatient occupational therapy see HI 00610.380 .

Respiratory therapy (respiratory care) services are prescribed by a physician for the assessment, diagnostic evaluation, treatment, management, and monitoring of patients with deficiencies and abnormalities of cardiopulmonary function.

Respiratory therapy services include but are not limited to:

a. The application of techniques for support of oxygenation and ventilation in the acutely ill patient. These techniques include, but are not limited to: 1. establishment and maintenance of artificial airways: 2. ventilator therapy and other means of airway pressure manipulation; 3. precise delivery of oxygen concentration; and 4. techniques to aid removal of secretions from the pulmonary tree.

b. The therapeutic use and monitoring of medical gases (especially oxygen), bland and pharmacologically active mists and aerosols and such equipment as resuscitators and ventilators;

c. Bronchial hygiene therapy, including deep breathing and coughing exercises, IPPB, postural drainage, chest percussion and vibration, and nasotracheal suctioning;

d. Diagnostic tests for evaluation by a physician, e.g., pulmonary function tests, spirometry, and blood gas analyses;

e. Pulmonary rehabilitation techniques which include: 1. exercise conditioning; 2. breathing retraining; and 3. patient education regarding the management of the patient's respiratory problems; and

f. Periodic assessment and monitoring of the acute and chronically ill patients for indications for, and the effectiveness of, respiratory therapy services.

Such services are performed by respiratory therapists or technicians, physical therapists, nurses and other qualified personnel.

To qualify for reimbursement under Medicare, such therapy must qualify as a covered service and must be reasonable and necessary for the diagnosis or treatment of an illness or injury. To be considered reasonable and necessary, respiratory therapy services furnished to a beneficiary must be:

a Consistent with the nature and severity of the individual's symptoms and diagnosis.

b Reasonable in terms of modality, amount, frequency and duration of the treatment.

c Generally accepted by the professional community as being safe and effective treatment for the purpose used.

Inpatient hospital services count toward the maximum number of benefit days payable per benefit period only if:

A. Payment for the services was made, or

B. Payment for the service would be made if a request for payment were properly filed and if the physician certified that the services were medically necessary. When payment cannot be made because of the inpatient hospital deductible or coinsurance requirements, the day(s) nevertheless count toward the beneficiary's maximum days of inpatient hospital care.

Under the guarantee of payment provision, a participating hospital may be paid for inpatient hospital services furnished on behalf of a beneficiary whose benefit days have been exhausted (including the 190-day lifetime limit on inpatient psychiatric hospital services). The guarantee of payment provision does not apply until the individual has exhausted their 60 lifetime reserve days except where the average daily charge is equal to, or less than the lifetime reserve day coinsurance amount, since in such cases the reserve days cannot be used by the beneficiary. (See HI 00601.065 ).

The guarantee applies only to inpatient hospital services furnished by a participating hospital, whether general, psychiatric, or tuberculosis. The provision assures that payment will be made to a hospital for services furnished during the time it takes to ascertain the patient’s eligibility from the utilization record.

Benefits are payable under the guarantee if the patient’s benefit days were exhausted before the intermediary’s reply to the notice of admission reached the hospital. This includes those situations in which benefit days were exhausted prior to admission and where a beneficiary had some benefit days remaining at the time of their admission, e.g., two or three days of eligibility, but these were exhausted before the intermediary’s reply to the notice of admission reached the hospital. Payment under the guarantee is made at the full rate; that is, the hospital receives payment without any reduction for coinsurance. A hospital is not required to claim payment under the guarantee provision; it may look to the patient for payment.

The intermediary may pay for covered inpatient hospital services for up to 6 days after the day of admission. Saturdays, Sundays, Federal legal holidays, and the days of admission are omitted in computing the six elapsed days.

Payment may not be made for any day after the day the hospital receives notice from any source of the exhaustion of the beneficiary’s benefits.

Benefits paid to a hospital under the guarantee provision are subject to recovery from the beneficiary and/or third party payers, by the intermediary, and by CMS, in the same way as other overpayments for which beneficiaries are liable.

Under the lifetime reserve provision each beneficiary has available a total of 60 additional days of inpatient services. Payments for these additional days of care can be made under this provision after the beneficiary has used 90 days of inpatient hospital services in a benefit period (see HI 00401.340 ). However, if a beneficiary does not want to use their reserve days, they may elect not to have payment made under the reserve provision (and save their reserve for a later time).

The reserve days are available for care in participating hospitals and for emergency services in nonparticipating hospitals.

A beneficiary's reserve days are not available to the extent that they are subject to the 150 day psychiatric hospital reduction, i.e., when they have been in a psychiatric hospital during the 150 day period immediately preceding their first day of entitlement to Part A benefits and is still in a psychiatric hospital on the first day of entitlement (see HI 00601.090 ).

The reserve days are also available to a beneficiary who uses up 190 days of inpatient psychiatric hospital care (see HI 00601.110 ) and remains in or reenters a psychiatric hospital.

A beneficiary will be deemed to have elected not to use their lifetime reserve to cover inpatient days for which the hospital's daily charge is equal to or less than the lifetime reserve days coinsurance amount (see HI 00601.560 ). Such days are treated as noncovered days.

An election not to use lifetime reserve days may be made by the beneficiary (or by someone acting on their behalf) at the time of admission or at any time thereafter, subject to the limitations on retroactive elections in (2) below.

Hospitals notify patients who have already used, or will use, 90 days of benefits in a benefit period that they can elect not to use their reserve days for all or part of a stay. The notice is given when the beneficiary has five regular coinsurance days left and is expected to be hospitalized beyond that period. When the hospital discovers that the patient has fewer than five regular coinsurance days left, it immediately notifies the patient of this option. The hospital makes available an appropriate election statement or form to be included in the patient's hospital record if they elect not to use reserve days.

(A Medicare beneficiary who is eligible for medical assistance under a State plan is advised that such assistance will not be available if they elect not to use their lifetime reserve days. However, this restriction does not apply when the beneficiary is deemed to have elected not to use lifetime reserve days because the hospital charges do not exceed the lifetime reserve days coinsurance amount (see a.above).

Ordinarily, an election not to use reserve days will apply prospectively. If the election is filed at the time of admission, it may be effective with the first day of hospitalization or with any day thereafter. If the election is filed later, it may be effective beginning with any day after the day it is filed.

A beneficiary may, while in the hospital or within 90 days following their discharge, retroactively elect not to use reserve days provided: (A) the beneficiary (or some other source) offers to pay the hospital for any of the services not payable under Part B; or (B) the hospital agrees to accept the retroactive election.

An individual may elect not to use reserve days for only one period of consecutive days in each hospital stay. If an election not to use reserve days is made effective with the first day for which they are available, it may be terminated at any time. After termination of the election, all hospital days would be covered to the extent that reserve days are available. (Thus, an individual who has private insurance which covers hospitalization beginning with the first day after 90 days of benefits have been exhausted may terminate their election as of the first day not covered by the insurance plan.) If an election not to use reserve days is made effective beginning with any day after the first day for which reserve days are available, it must remain in effect until the end of that stay unless the entire election is revoked in accordance with E. below.

If the charges will be paid by other hospital insurance or if some other person agrees to pay the hospital, an election not to use reserve days may be filed by any of the individuals who may sign a Request for Payment on behalf of the beneficiary (e.g., relative, legal guardian, etc.). If an incapacitated beneficiary does not have other hospital insurance, and no other person agrees to pay the hospital, only the beneficiary's legal representative may file an election on their behalf.

An election not to use reserve days may be revoked in whole or in part (subject to the restrictions in C. above) while the patient is still in the hospital or within 90 days following discharge provided a claim has not been filed for Part B ancillary services furnished on the hospital days in question. The revocation must be submitted to the hospital in writing and made part of the patient's hospital record. If a beneficiary is incapacitated, any of the individuals who are permitted to sign the Request for Payment may file the revocation on the beneficiary's behalf within the 90 day period. However, an election not to use reserve days may not be revoked after the beneficiary dies.

The number of days of care charged to a beneficiary for inpatient hospital services is always in units of full days. A day begins at midnight and ends 24 hours later. The midnight-to-midnight method is used in reporting days of care for beneficiaries, even if the hospital uses a different definition of day for statistical or other purposes.

A part of a day, including the day of discharge or death, or a day on which a patient begins a leave of absence, is not counted as a day. (Charges for ancillary services on the day of discharge are covered under the reimbursement formula.) if admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one inpatient day.

When a patient chooses to continue to occupy their hospital accommodations beyond the check-out time for personal reasons, the hospital may charge the beneficiary for their continued stay. Such a stay beyond the checkout time, for the comfort or convenience of the patient, is not covered under the program and the hospital's agreement to participate in the program does not preclude it from charging the patient. However, it is expected that hospitals will not impose late charges on a beneficiary unless they have been given reasonable notice (for example, 24 hours) of their impending discharge.

Where the patient's medical condition is the cause of the stay past the check-out time (e.g., the patient needs further services, is bedridden and awaiting transportation to their home or to an SNF, or dies in the hospital), the stay beyond the discharge hour is covered under the program and the hospital may not charge the patient.

The day on which the patient began a leave of absence is treated as a day of discharge and is not counted as an inpatient day unless they return to the hospital by midnight of the same day. The day the patient returns to the hospital from a leave of absence is treated as a day of admission and is counted as an inpatient day if they are present at midnight of that day.

In the following special situations program payment is not made for accommodations on the day of discharge or death, but may be made under Part A for ancillary services provided on that day; (a) where a patient is admitted prior to the first day of their entitlement and is discharged from, or dies in, a participating hospital on the first day of their entitlement; and (b) where a patient in a noncovered stay in a nonparticipating hospital is discharged or dies on the first day the hospital becomes a participating hospital. For a late discharge on such a day, follow the rules in HI 00601.075 Although in these situations a day of utilization is not counted, a benefit period begins and any charges for covered services are applied against the deductible.

If an individual is in a participating psychiatric hospital on the first day of their entitlement to hospital insurance, the number of inpatient benefit days in the first benefit period may be reduced. The days (not necessarily consecutive) on which they were an inpatient of a psychiatric hospital in the 150 day period immediately before the first day of entitlement, must be subtracted from the 150 days of inpatient hospital services for which they would otherwise be eligible in their first benefit period. Days spent in a general hospital for diagnosis or treatment of a psychiatric condition prior to entitlement will not reduce the patient's inpatient benefit days in their initial benefit period.

The reduction applies only to inpatient hospital services received in a psychiatric hospital, or in a general hospital if the individual is an inpatient of the general hospital primarily for the diagnosis or treatment of mental illness. Thus, for example, if a patient in a psychiatric hospital has no benefit days remaining because of the reduction, they may nevertheless be entitled to have payment made for up to 150 days of inpatient hospital services for a non-mental illness during their first benefit period.

The patient will be eligible to have payment made for inpatient psychiatric hospital services and inpatient hospital services primarily for the diagnosis or treatment of mental illness in the first benefit period only for the number of days remaining after the reduction is applied. To determine the number of days available in the first benefit period to pay for inpatient psychiatric hospital services and inpatient hospital services for the treatment of mental illness, take the following steps:

1. determine how many days in the 150 day preentitlement period the patient spent in a psychiatric hospital

2. subtract these from 150. Payment is made for the remaining days in the following order of priority: a. the 60 full benefit days, b. the 30 coinsurance days at one quarter the inpatient hospital deductible, c. the 60 lifetime reserve days at one half the inpatient hospital deductible.

Benefit days, including lifetime days, not available to the patient because of the psychiatric limitation nevertheless remain available for use in hospitalization not subject to the reduction: a general hospital stay for a nonpsychiatric condition or a tuberculosis hospital stay. The lifetime days not previously used also remain available for any inpatient stays (including psychiatric hospital stays) in subsequent benefit periods.

Example 1:

James Powers was an inpatient of a participating psychiatric hospital on their first day of entitlement on February 1, 1981. James had been in such a hospital in the preentitlement period for 20 days. Therefore, 130 days are payable. Payment would be made in the following order: 60 full benefit days; 30 $51 coinsurance days; 40 $102 coinsurance (lifetime) days.

Example 2:

The same facts as example 1, except that Mr. Powers had been in a psychiatric hospital in the preentitlement period for 70 days. Therefore, 80 days are payable. Payment would be made in the following order: 60 full benefit days; 20 $51 coinsurance days.

Example 3:

The same facts as in example 1, except that Mr. Powers had been in a psychiatric hospital in the preentitlement period for 110 days. Therefore, 40 days are payable. Payment would be made for these 40 days at full benefit.

A patient who is in a participating psychiatric hospital on the first day of their entitlement is subject to the inpatient psychiatric reduction. The reduction applies to patients admitted to or discharged from such a hospital on their first day of entitlement, or who begin or end a leave of absence on that day. Where only a distinct part of an institution is participating as a psychiatric hospital, the provision applies only to patients who, on their day of entitlement, are inpatients of that part.

The provision does not apply to persons who are receiving inpatient diagnostic or therapeutic services for a psychiatric condition in a general hospital on their first day of entitlement. It also does not apply to patients who, on that day, are inpatients of a psychiatric institution's medical-surgical facility, if that facility is participating as a general hospital.

The status of a psychiatric hospital (or a distinct part of such a hospital) as of the individual's first day of entitlement is controlling in determining whether days spent there during the preceding 150 days are to be deducted. Thus, deductions would be made for days spent in a hospital (or distinct part) which was participating as of the individual's first day of entitlement even though it was not participating during all or part of the preceding 150 days. However, where an institution is not participating as of the individual's first day of entitlement, deductions would not be made for days spent in that institution during the preceding 150 days, even though the institution is later certified for participation as a psychiatric hospital.

Where a participating psychiatric hospital is a distinct part of an institution, deductions are made only for days spent in the wards, floors, wings, etc., included in the participating distinct part as of the individual's first day of entitlement, even though it was not participating during all or part of the preceding days. Deductions are not made for days spent in a part of the institution not included in the participating distinct part as of the individual's first day of entitlement; e.g., days spent in a custodial section of the institution or days spent in a general medical-surgical facility participating as a general hospital.

In determining the number of days to be deducted, days of admission and days on which the patient returned from leave of absence are included. Days of discharge, days on which the patient began a leave of absence, or days of leave during all of which the individual is absent from the hospital are not counted.

Payment may not be made for more than a total of 190 days of inpatient psychiatric hospital services during the patient's lifetime. The limitation applies only to services furnished in a psychiatric hospital. The period spent in a psychiatric hospital prior to entitlement does not count against the patient's lifetime limitation, even though preentitlement days may have been counted against the 150 days of eligibility in the first benefit period.

Inpatient hospital (including psychiatric and tuberculosis hospitals) services count toward the maximum number of benefit days payable per benefit period only if:

A. payment for the services is made, or

B. payment for the services would be made if a request for payment were properly filed.

However, where payment cannot be made because of the inpatient deductible or coinsurance requirement, the inpatient day(s) used in satisfying these requirements nevertheless counts toward the beneficiary's maximum inpatient days.

Similarly, inpatient psychiatric hospital services count toward the 190-day lifetime limitation on inpatient psychiatric hospital services only if these conditions are met.

Citations:

Act—Sec. 1861(h), (i)

Regulations No. 5—Sec. 405.120

Post-hospital extended care services furnished to inpatients of an SNF were covered under the hospital insurance program, effective January 1, 1967. Patients having hospital insurance coverage are entitled, if the required conditions are met, to have payment made on their behalf for the reasonable cost of covered extended care services furnished by the facility, or by the others under arrangements with the facility. Coverage is subject to prior hospitalization and transfer requirements; and to a determination that the patient's condition requires a covered level of care. (See HI 00601.135 .)

The term “extended” refers not to care over an extended period, but to active treatment as an extension of inpatient hospital care. The overall goal is to provide an alternative to hospital care for patients who still require general medical management and skilled nursing care or other skilled rehabilitation services on a daily basis, but who do not require the constant availability of physician services ordinarily found only in the hospital setting.

It is important that the limitations on extended care coverage be discussed in beneficiary and public contacts, because of widespread misunderstanding. See HI 00601.125 - HI 00601.230 following.

In any discussion about SNF services, it is most important not to create the impression that a beneficiary is entitled to 100 benefit days “automatically.”

Explain the requirements for coverage of an SNF stay. In addition, make it clear that the DO can supply only general information, and that whether an SNF stay is covered is a decision which the intermediary makes based on the facts which are furnished by the physician, the hospital and the SNF.

If a beneficiary asks whether a contemplated SNF stay will be covered, supply the information in A. above. In addition, explain that Medicare coverage is determined by the intermediary and depends upon the level of care needed and received by the beneficiary. The coverage determination can be made only after the beneficiary has been admitted to the SNF and the intermediary has received a claim for services and medical data furnished by the SNF concerning the care required by the beneficiary.

The beneficiary may be informed by the SNF that their stay is noncovered and they may desire to file an appeal before they receive the disallowance notice. In this case, see GN 03101.070 . The beneficiary may also be informed that part of their stay was covered but that as of a certain date, the coverage was terminated.

Provide the inquirer with the basic information as to what constitutes covered services. It should be remembered that a physician may appropriately recommend a patient's stay in an SNF without knowing whether Medicare will pay for the care provided. A physician's decision may be influenced by social and other factors including the unavailability of friends or relatives to care for the patient at home. While such considerations are appropriate for the physician, they do not affect the intermediary's coverage determination.

If the entire SNF stay has been denied after a considerable period of time has elapsed since the date of admission, explain to the beneficiary that generally, the intermediary can make a determination on the claim only after it has been received and evaluated. Do not give the impression that either the provider or the intermediary is at fault when a retroactive denial is made.

If the beneficiary indicates that they are dissatisfied with the explanation, assist them in filing a request for reconsideration.

The waiver of liability provision applies to SNF admissions when the beneficiary (or the provider) did not know, and had no reason to know that the care was not medically necessary or reasonable or constituted custodial care.

Posthospital extended care services furnished to inpatients of a skilled nursing facility (SNF) are covered under the hospital insurance program. Patients having hospital insurance coverage are entitled to have payment made on their behalf for the reasonable cost of covered extended care services furnished by an SNF or by others under arrangements with the SNF.

In order to qualify for posthospital extended care services, the individual must have been an inpatient of a hospital for a medically necessary stay of at least 3 consecutive calendar days. In addition, effective 12/5/80, the individual must have been transferred to a participating SNF within 30 days after discharge from the hospital, unless the exception in subsection C.2. applies.

The hospital discharge must have occurred on or after the first day of the month in which the individual attained age 65 or became entitled to health insurance benefits under the disability or chronic renal disease provisions of the law. The 3 consecutive calendar days requirement can be met by stays totaling 3 consecutive days in one or more hospitals. In determining whether the requirement has been met, the day of admission, but not the day of discharge, is counted as a hospital inpatient day.

To be covered, the extended care services must have been for the treatment of a condition for which the beneficiary was receiving inpatient hospital services, or a condition which arose while in the SNF for treatment of a condition for which they were previously hospitalized. In addition, the qualifying hospital stay must have been medically necessary.

The 3-day hospital stay need not be in a hospital with which the SNF has a transfer agreement. However, the hospital must be: (a) a participating general, psychiatric, or tuberculosis hospital; or (b) an institution which meets at least the requirements of an emergency services hospital.

Stays in Christian Science Sanatoriums are excluded for the purpose of satisfying the 3 day period of hospitalization. Additionally, there is a prohibition of use of waiver of liability days in meeting the 3 day requirement.

NOTE: While a 3 day stay in a psychiatric hospital satisfies the prior hospital stay requirement, institutions which primarily provide psychiatric treatment cannot participate in the program as SNFs. Therefore, a patient with only a psychiatric condition who is transferred from a psychiatric hospital to a participating SNF is likely to receive only noncovered care. In the SNF, the term “noncovered care” refers to any level of care which is less intensive and skilled than the SNF level of care which is covered under the program. (See HI 00601.135 .)

A stay of 3 or more days in a hospital outside the United States may satisfy the prior inpatient stay requirement for post-hospital extended care services within the United States if the foreign hospital is qualified as an “emergency hospital.”

Posthospital extended care services represent an extension of care for a condition for which the individual received inpatient hospital services. Extended care services are “posthospital” if initiated within 30 days after discharge from a hospital stay which included at least 3 consecutive days of medically necessary inpatient hospital services. (In certain circumstances the 30 day period may be extended, as described in 2. below.) For SNF admissions occurring after October 29, 1972, but before December 5, 1980, see subsection 4. below.

In determining the 30 day transfer period, the day of discharge from the hospital is not counted in the 30 days. For example, a patient discharged from a hospital on August 1 and admitted to an SNF on August 31 was admitted within 30 days. The 30 day period begins on the day following actual discharge from the hospital and continues until the individual is admitted to a participating SNF, and requires and receives a covered level of care. Thus, an individual who is admitted to an SNF within 30 days after discharge from a hospital, but does not require a covered level of care until more than 30 days after such discharge, does not meet the 30 day requirement. (See 2. below for an exception under which such services may be covered.)

If an individual whose SNF stay was covered upon admission is thereafter determined not to require a covered level of care for a period of more than 30 days, payment could not be resumed for any extended care services they may subsequently require even though they have remained in the facility. Such services could not be deemed to be “posthospital” extended care services. (For exception, see 2. below.)

An elapsed period of more than 30 days is permitted for SNF admissions where the patient's condition makes it medically inappropriate to begin an active course of treatment in an SNF within 30 days after hospital discharge, and it is medically predictable at the time of the hospital discharge that they will require covered care within a predeterminable time period. The fact that a patient enters an SNF within 30 days of discharge from a hospital, for either covered or noncovered care, does not necessarily negate coverage at a later date, assuming the subsequent covered care was medically predictable.

In determining the type of case which this exception is designed to handle, it is necessary to recognize the intent of the extended care benefit itself. The extended care benefit covers relatively short-term care when a patient requires skilled nursing or skilled rehabilitation services as a continuation of treatment begun in the hospital. The requirement that covered extended care services be provided in an SNF within 30 days after hospital discharge is one means of assuring that the SNF care is related to the prior hospital care.

This exception to the 30 day requirement recognizes that for certain conditions SNF care can serve as a necessary and proper continuation of treatment initiated during the hospital stay, although it would be inappropriate from a medical standpoint to begin such treatment within 30 days after hospital discharge. Since the exception is intended to apply only where the SNF care constitutes a continuation of care provided in the hospital, it will be applicable only where, under accepted medical practice, the established pattern of treatment for a particular condition indicates that a covered level of SNF care will be required within a predeterminable time frame. Accordingly, to qualify for this exception it must be medically predictable at the time of hospital discharge that a covered level of SNF care will be required within a predictable period of time for the treatment of a condition for which hospital care was received and the patient must begin receiving such care within that time frame.

An example of the type of care for which this provision was designed is a hip fracture case. Under the established pattern of treatment of hip fractures it is known that skilled therapy services will be required subsequent to hospital care, and that they can normally begin within 4-6 weeks after hospital discharge, when weight bearing can be tolerated. Under the exception to the 30 day rule, the admission of a hip fracture patient to an SNF within 4-6 weeks after their hospital discharge for skilled care, which as a practical matter can only be provided on an inpatient basis by an SNF, would be considered a timely admission.

When a patient's medical needs and the course of treatment are not predictable at the time of hospital discharge because the exact pattern of care which they will require and the time frame in which it will be required is dependent on the developing nature of their condition, their admission to an SNF more than 30 days after discharge from the hospital could not be justified under this exception to the 30-day rule. For example, in some situations the prognosis for a patient diagnosed as having cancer is such that it can reasonably be expected that they will require additional care at some time in the future. However, at the time of their discharge from the hospital it is difficult to predict the actual services which will be required or the time frame in which the care will be needed. Similarly it is not known in what setting any future necessary services will be required; i.e., whether they will require the life-supporting services found only in the hospital setting, the type of care covered in an SNF, the intermittent type of care which can be provided by a home health agency, or custodial care which may be provided either in a nursing home or their place of residence. In some instances such patients may require care immediately and continuously; others may not require any skilled care for much longer periods, perhaps measured in years. Since in such cases it is not medically predictable at the time of the hospital discharge that the individual will require covered SNF care within a predeterminable time frame, such cases do not fall within the 30-day exception.

In some cases where it is medically predictable that a patient will require a covered level of SNF care within a predeterminable time frame, the individual will also have a need for a covered level of SNF care within 30 days of hospital discharge. In such situations, this need for covered SNF care does not negate further coverage at a future date even if there is a noncovered interval of more than 30 days between the two stays, provided all other requirements are met. (See example no. 1 below.) However, this rule applies only where part of the care required involves deferred care which was medically predictable at the time of hospital discharge. If the deferred care is not medically predictable at the time of hospital discharge, then coverage may not be extended to include SNF care following an interval of more than 30 days of noncovered care (see example no. 2). Where it is medically predictable that a patient will require a covered level of SNF care within a specific time frame, the fact that an individual enters an SNF immediately upon discharge from the hospital for noncovered care does not negate coverage at a later date, assuming the requirements of the law are met (see example no. 3).

Example 1:

A patient who has had an open reduction of a fracture of the neck of the femur and has a history of diabetes mellitus and angina pectoris is discharged from the hospital on January 30, 1981, and admitted immediately to an SNF. They require among other services careful skin care, appropriate oral medications, a diabetic diet, a therapeutic exercise program to preserve muscle tone and body condition, and observation to detect signs of deterioration in their condition or complications resulting from their restricted mobility, which necessitates skilled management of their care to ensure their safety and recovery. It is also medically predictable that when they reach weight bearing, skilled rehabilitative services will be required. After they are in the SNF for 2 days, they become unhappy and at their request is released to their home in the care of a full-time private duty nurse. Five weeks later when they reach weight bearing they are readmitted to the SNF for the needed rehabilitative care. The patient would be eligible for coverage under the program for the care furnished them during both of these stays.

Example 2:

An individual is admitted to an SNF for daily skilled rehabilitative care which as a practical matter can only be provided on an inpatient basis in an SNF. After 3 weeks the therapy is discontinued because the patient's condition has stabilized and daily skilled services are no longer required. Six weeks later, however, as a result of an unexpected change in the patient's condition, daily skilled services are again required. Since the second period of treatment did not constitute care which was predictable at the time of hospital discharge and could not thus be considered as care which was deferred until medically appropriate, it would not represent an exception to the 30-day rule. Therefore, since more than 30 days of noncovered care had elapsed between the last period of covered care and the reinstitution of skilled services, reimbursement could not be made under the extended care benefit for the latter services.

Example 3:

A patient whose right leg was amputated was discharged from the hospital and admitted directly to an SNF on January 30, 1981. Although upon admission to the SNF the patient required help with meeting their activities of daily living, they did not require daily skilled care. Subsequently, however, after the stump had healed, daily skilled rehabilitative services designed to enable them to use a prosthesis were required. Since at the time of the patient's discharge from the hospital it was medically predictable that at a predeterminable time interval covered SNF care would be required, and since such care was initiated when appropriate, the patient would be entitled to extended care benefits for the period during which such care was provided.

As indicated, where the required care commences within the anticipated time frame the transfer requirement would be considered met even though more than 30 days have elapsed. However, situations may occur where complications necessitate delayed initiation of the required care and treatment beyond the usual anticipated time frame (e.g., skilled rehabilitative services which will enable an amputee patient to use a prosthetic device must be deferred due to an infection in the stump). In such situations, the 30-day transfer requirement may still be met even though care is not started within the usual anticipated time frame, if the care is begun as soon as medically possible and the care at that time is still reasonable and necessary for the treatment of a condition for which the patient received inpatient hospital care.

In the infrequent situation where the patient has been discharged from the hospital to their home more than 60 days before they are ready to begin a course of deferred care in an SNF, a new spell of illness begins with the day the beneficiary enters the SNF thereby regenerating another 100 days of extended care benefits. Another qualifying hospital stay would not be required, providing the care furnished is clearly related to the hospital stay in the previous spell of illness and represents care for which the need was predicted at the time of discharge from such hospital stay.

If an individual who is receiving covered posthospital extended care leaves an SNF and is readmitted to the same or any other participating SNF for further covered care within 30 days, the 30 day transfer requirement is considered to be met. Thus, the period of extended care services may be interrupted briefly and then resumed, if necessary, without hospitalization preceding the readmission to an SNF. (See C.2.a. above for situations where a period of more than 30 days between SNF discharge and readmission, or more than 30 days of noncovered care in an SNF, is followed by later covered care.)

Transfer rules for SNF admissions subsequent to October 29, 1972, and prior to December 5, 1980

Under the transfer rules in effect during this time frame an individual must have been admitted to a participating SNF, and have required and received a covered level of care within 14 days after discharge from a qualifying hospital stay, unless one of the exceptions in subsection b., item 1) or 2) below applies.

Intervals of up to 28 days were permitted where transfer to a participating SNF (for this purpose a “participating SNF” includes only those facilities participating under title XVIII) was deferred under the following conditions:

1. The individual required within the 14-day period after the hospital discharge, and continued to require through admission to the SNF, a covered level of SNF care for a condition for which they received inpatient hospital care, and they met all other extended care requirements and either 2) or 3) below.

2. There was no bed available in the facilities ordinarily utilized in the geographic area in which the beneficiary resided. (A private room is considered an “available bed” for this purpose.) The geographic area in which a beneficiary resides should be defined in such a way that a patient would not be taken away from their family and transported over great distances;

3. There was an available bed in an SNF but it did not constitute appropriate bed space for the patient. In determining whether appropriate bed space was available, consideration should be given only to whether the facility in which a vacant bed was available had the capacity to meet the individual's medical needs, i.e., was capable of providing the required skilled services. Such nonmedical considerations as the individual's or their physician's preference for a particular SNF should not be considered.

An elapsed period of more than 14 days was permitted for SNF admissions where the patient's condition made it medically inappropriate to begin an active course of treatment in an SNF within 14 days after hospital discharge, and it was medically predictable at the time of the hospital discharge that they would require covered care within a predeterminable time period. The fact that a patient entered an SNF immediately upon discharge from a hospital, for either covered or noncovered care, does not necessarily negate coverage at a later date, assuming the subsequent covered care was medically predictable.

If an individual who was receiving covered posthospital extended care left an SNF and was readmitted to the same or any other participating SNF for further covered care within 14 days, the 14 day transfer requirement was considered to be met. Thus, the period of extended care services could be interrupted briefly and then resumed, if necessary, without hospitalization preceding the readmission to an SNF. (See c. above for situations where a period of more than 14 days between SNF discharge and readmission, or more than 14 days of noncovered care in an SNF, was followed by later covered care.)

The following criteria apply to SNF admissions on or after January 1, 1973:

An individual is deemed to be receiving a covered level of posthospital extended care if A. on a daily basis, B. they need skilled nursing care or other skilled rehabilitation services for any of the conditions for which they received medically necessary inpatient hospital care, or for a condition which arose while they were in an SNF receiving care for such a condition, and C. as a practical matter, such services can be provided only in an SNF on an inpatient basis. A determination that a patient requires a covered level of care must be based on a decision that all these factors are met.

If the primary purpose of the total care provided an individual is to assist them in meeting the activities of daily living, the custodial care exclusion applies and no payment can be made under the program for any of the care furnished them.

See HI 00601.010 D. for related instructions.

Skilled nursing services or skilled rehabilitation services must be required and provided on a “daily basis”—i.e., on essentially a 7-day-a-week basis. However, if skilled rehabilitation services are not available on a 7-day-a-week basis, a patient whose inpatient stay is based solely on the need for skilled rehabilitation services would meet the “daily basis” requirement where they need and receive such services on at least 5 days a week. Accordingly, where a facility provides physical therapy on only 5 days a week and the patient in such a facility requires and receives physical therapy on each of the days on which such is available, the requirement that skilled rehabilitation services be provided on a daily basis would be met. A break of a day or two during which no skilled rehabilitation services are furnished and discharge from the facility would not be practical would not violate the requirement. For example, a patient who normally requires skilled rehabilitation services on a daily basis exhibits extreme fatigue which causes their physician to suspend therapy sessions for a day or two. Payment would be made for these days since discharge in such a case would not be practical.

For Medicare purposes, a skilled service is one which must be furnished by or under the general supervision of skilled personnel to assure the safety of the patient and achieve the medically desired result.

In determining whether skilled care was needed and provided, the intermediary's medical staff keeps in mind that the patient's eligibility for benefits depends on their need for skilled care and not on their potential for recovery. If a beneficiary requires daily skilled services to prevent deterioration of their condition or to sustain their current capabilities and such services as a practical matter can only be provided by an SNF on an inpatient basis, the beneficiary would be eligible for extended care benefits even though they may have very little or no rehabilitation potential. For example, a terminal cancer patient requiring daily skilled services on an inpatient basis may be eligible for extended care benefits even though their life expectancy may be no more than a few months. Such a patient, who may require palliative treatment, periodic “tapping” to relieve fluid accumulation, and careful skin care and hygiene to minimize discomfort, is receiving a covered level of care. Thus, the controlling factor in determining whether a person is receiving covered care is the level of care and medical supervision that the patient requires, rather than considerations such as diagnosis, type of conditions, or degree of functional limitation.

A skilled nursing service is one which must be furnished by or under the general supervision of licensed nursing personnel and under the general direction of a physician in order to assure the safety of the patient and achieve the medically desired result.

Where a beneficiary's claim for extended care benefits is based on a need for skilled nursing care the guidelines set forth below are used to determine whether the care constitutes skilled services.

Ordinarily, the planning and management of a treatment plan which does not involve the furnishing of skilled services requires the skills of a nurse only where the facts of the case establish that the aggregate of such unskilled services, when considered in light of the patient's condition, necessitates the regular daily involvement of a licensed nurse to ensure the patient's recovery and/or medical safety.

For example, an aged patient with a history of diabetes mellitus and angina pectoris is recovering from an open reduction of a fracture of the neck of the femur. They require, among other services, careful skin care, appropriate oral medication, a diabetic diet, a therapeutic exercise program to preserve muscle tone and body condition, and observation to notice signs of deterioration in their condition or complications resulting from their restricted mobility. Although any one of the required services could be performed by a properly instructed unskilled person, such a person would not have the capability of understanding the relationship among the services and their effect on each other. Since the nature of the patient's condition, their age, and their immobility create a high potential for serious complications, such an understanding is essential to assure the patient's recovery and safety.

Under these circumstances, the management of such a plan requires the skills of a nurse, even though each individual service it involves is normally unskilled.

Observation is a skilled nursing service when the unstabilized condition of the patient requires the skills of a licensed nurse to detect and evaluate the patient's need for possible modification of treatment or institution of medical procedures. For example, pending stabilization of the condition, a patient suffering from arteriosclerotic heart disease may require close observation by skilled nurses for signs of decompensation and loss of fluid balance in order to determine whether the digitalis dosage should be changed or other therapeutic measures should be taken.

Similarly, in some cases, surgical patients (including postoperative cataract patients) are transferred from a hospital to an SNF while still in the immediate unstabilized postoperative period during which the possibility of adverse reaction to anesthesia and other aspects of the operative procedure necessitates close skilled monitoring.

The classification of a particular service as skilled is based on the technical or professional health training required to effectively perform or supervise the service. In many instances a service may be classified as a skilled service on the basis of the complexity alone, e.g., intravenous and intramuscular injections or insertion of catheters. On the other hand, a patient following instructions can normally take a daily vitamin pill. Consequently, the act of giving the vitamin pill to a patient who is too senile to take it himself is not a skilled service. Similarly, State law may require that all institutional patients receive medication only from a licensed nurse. This fact does not make administration of a medication a skilled nursing service if such medication can be prescribed for administration at home without the presence of a licensed nurse.

Any generally nonskilled service could, because of special medical complications, require skilled performance, supervision, or observation. In such cases, the complications and special services involved must be documented by physician orders and/or nursing notes. For example, the existence of a plaster cast on an extremity would not generally indicate a need for skilled care. However, a preexisting acute skin problem and a need for special traction of the injured extremity might require the presence of professional health personnel in order to properly observe for complications and adjust traction accordingly. Such procedures should be undertaken only on specific physician orders and should be documented in the patient's clinical record. The possibility of adverse effects from the improper performance of an otherwise unskilled service does not make it a skilled service unless there is documentation.

Skilled nursing services include but are not limited to the following:

A. Intravenous or intramuscular injections and intravenous feeding. (Injections which can usually be self-administered, for example, the well-regulated diabetic who receives a daily insulin injection, do not require skilled services.)

B. Levine tube and gastrostomy feedings.

C. Naso-pharyngeal and tracheotomy aspiration.

D. Insertion, replacement or sterile irrigation of catheters (see HI 00601.150 .)

E. Application of dressings involving prescription medications and aseptic techniques (see HI 00601.150 for exception).

F. Care of extensive decubitus ulcers or other widespread skin disorders (see HI 00601.150 for exception).

G. Heat treatments specifically ordered by a physician as part of active treatment and which require observation by skilled nursing personnel to adequately evaluate the patient's progress (see HI 00601.150 for exception).

H. Initial phases of a regimen involving administration of medical gases.

I. Restorative nursing procedures, including the related teaching and adaptive aspects of skilled nursing, which are part of active treatment and require the presence of licensed nurses at the time of performance, e.g., teaching the skills and facts necessary for understanding adherence to a regimen such as bowel and bladder training.

The importance of a particular service to an individual patient does not necessarily make it a skilled service. For example, a primary need of a nonambulatory patient may be frequent changes of position in order to avoid development of decubitus ulcers. Since changing of position can ordinarily be accomplished by unlicensed personnel, it would not be a skilled service.

Supportive services which can be learned and performed by the average nonmedical person (and which cannot be considered skilled services under the principles outlined in HI 00601.140 ) include but are not limited to the following:

1. Administration of routine oral medications, eye drops, and ointments.

2. General maintenance care of colostomy or ileostomy.

3. Routine services in connection with indwelling bladder catheters. (This includes emptying and cleaning containers, clamping tubing, and refilling irrigation containers with solution.)

4. Changes of dressings in noninfected postoperative or chronic conditions.

5. Prophylactic and palliative skin care, including bathing and application of creams, or treatment of minor skin problems.

6. General methods of treating incontinence, including use of diapers and rubber sheets.

7. General maintenance care in connection with a plaster cast.

8. Routine care in connection with braces and similar devices.

9. Use of heat for palliative and comfort purposes.

10. Administration of medical gases after initial phases of teaching the patient to institute therapy.

11. General supervision of exercises which have been taught to the patient.

12. Assistance in dressing, eating, and going to the toilet. (See HI 00620.130 for further discussion of custodial care.)

The situation is usually questionable where the primary diagnosis or the primary needs of the patient are psychiatric rather than medical. An institution primarily engaged in treating psychiatric disorders cannot participate as an SNF. This type of active psychiatric treatment requires considerably more sophisticated nursing techniques and physician attention than are available in the usual SNF; therefore, the type of mental condition which could be adequately handled in most SNF's would be one which requires only a supportive environment without daily skilled services. However, in some cases a patient suffering from mental illness may need the type of services which constitute extended care because the mental condition was secondary to another more acute medical disorder.

Uncomplicated post-cataract surgery convalescence, after the immediate postoperative period, usually does not require skilled nursing services since application of eye drops and ointments can generally be performed by any person with brief instructions. Other services usually furnished to such persons are protective in nature and primarily concerned with meeting the activities of daily living since the patient's mobility is restricted.

However, where a patient is transferred from a hospital to an SNF within one or two days following surgery, the patient is still in the immediate unstabilized postoperative period during which the possibility of adverse reaction to anesthesia and other aspects of the operative procedures necessiates close skilled monitoring. During this immediate postsurgical period, the services provided may be skilled nursing services.

When any of the following circumstances exist, there must be evidence that skilled nursing service is also concurrently required and received:

1. The primary service is one or more of the following: a. Oral medication b. Skin care to prevent decubiti c. Restraints d. Frequent laboratory tests

2. The patient is capable of independent ambulation, dressing, feeding, and hygiene;

3. The patient has outside privileges;

4. The diagnosis shown is not of a type which is sufficiently specific to indicate skilled treatment regimen; i.e., the diagnosis is chronic brain syndrome, senility, arteriosclerosis, “old” CVA, etc.

5. Return to a hospital preceding the SNF stay occurred shortly after the expiration of 60 days from the last discharge from hospital or SNF;

6. Long-term hospitalization (60 days or longer) occurred prior to the SNF admission;

7. Discharge from the SNF occurred after about 100 days of care (or there have been many discharges from the SNF after nearly 100 days);

8. Transfer occurred from an SNF to a hospital for three, four, or five days followed by an immediate admission to an SNF.

Where a beneficiary's claim for extended care benefits is based on a need for physical therapy services, the guidelines in HI 00601.190 are used to determine whether the care constitutes skilled services. (The outpatient physical therapy and speech pathology services benefits covered under Part B must meet the requirements in this section and also in HI 00610.380 .

Where an individual's claim is predicated on a need for a type of rehabilitation service other than physical therapy, e.g., occupational therapy ( HI 00601.190 ) or speech therapy ( HI 00601.190 ), the intermediary relies on its medical staff to determine whether the care required by the patient and whether the required care could have been safely and effectively provided only by or under the direct supervision of skilled personnel.

In determining whether the care needed by a beneficiary can as a practical matter only be provided in an SNF on an inpatient basis, consideration is given to the patient's condition and to the availability and feasibility of using more economical alternative facilities and services. In determining the availability of alternative facilities and services, availability of funds to pay for the services furnished by such alternative facilities is not a factor to be considered. For instance, an individual in need of daily physical therapy might be able to receive the needed services from the outpatient department of a nonparticipating hospital. The fact that Medicare reimbursement could not be made for such services is not a basis for determining that the needed care could be provided only in an SNF.

However, if the needed therapy is not available in the area in which the patient resides and the transporting of the individual to the closest facility furnishing such services would be an excessive physicial hardship it would be appropriate to conclude that the needed care can as a practical matter only be provided in an SNF. This conclusion would also follow even though the patient's condition might not be adversely affected, if it would be more economical or efficient to provide the covered services in the SNF. For example, if the patient's condition was such that the daily transportation required the use of an ambulance, it might be more economical to provide the needed care in an SNF.

Patients covered under hospital insurance are entitled to have payment made on their behalf on a reasonable cost basis for covered extended care services. If a patient receives items or services in excess of, or more expensive than, those for which payment can be made, payment will be made only for the reasonable cost of the covered items or services. If the items or services are requested by the patient, the facility may charge them the difference between the amount customarily charged for the services requested and the amount customarily charged for covered services.

An inpatient is a person who has been admitted to an SNF for bed occupancy for purposes of receiving inpatient services. A person is considered an inpatient if formally admitted as an inpatient with the expectation that they will remain at least over night and occupy a bed even though it later develops that they can be discharged and do not actually use a bed over night.

NOTE: 1. Custodial care (see HI 00620.130 ) is not a covered extended care service.

NOTE: 2. When patients requiring inpatient hospital services occupy beds in an SNF, they are considered inpatients of the SNF. In such cases, the services furnished in the SNF may not be considered inpatient hospital services, and payment may not be made under the program. Such a situation may arise when the SNF is a distinct part of an institution, the remainder of which is a hospital, and either there is no bed available or for any other reason the institution fails to place the patient in the appropriate bed. The same rule applies where the skilled nursing facility is a separate institution. For the same reason, where patients who require extended care services occupy beds in a hospital, payment cannot be made for the services furnished to them in the hospital.

NOTE: 3. When patients who require SNF services are placed in a noncertified part of an institution which contains a participating “distinct part” SNF, the services may be paid under certain conditions, based on the waiver of liability provisions.

NOTE: 4. The application of the responsible and necessary payment exclusion to diagnostic procedures such as chest X-rays, urinalysis, etc provided to patients upon admission to a hospital also applies when such services are provided to patients upon admission to a skilled nursing facility. (See HI 00601.010 E. )

The services of a private-duty nurse or other private-duty attendant are not covered. Private-duty nurses or private-duty attendants are registered professional nurses, licensed practical nurses, or any other trained attendants whose services ordinarily are rendered to, and restricted to, a particular patient by arrangement between the patient and the private-duty nurse or attendant. Such persons are engaged or paid by an individual patient or by someone acting on their behalf, including an SNF that initially incurs the cost and looks to the patient for reimbursement for such noncovered services.

Where the SNF acts on behalf of a patient, the services of the private-duty nurse or other attendant under such an arrangement are not extended care services regardless of the control which the SNF may exercise with respect to the services rendered by such private-duty nurse or attendant.

(SEE HI 00601.015 for provisions relating to inpatient accommodations.)

See HI 00601.050 for a full explanation of when these services are covered.

Medical social services are those social services which contribute meaningfully to the treatment of a patient's condition. Such services include, but are not limited to A. assessment of the social and emotional factors related to the patient's illness, their need for care, their response to treatment, and their adjustment to care in the facility; B. appropriate action to obtain case work services to assist in resolving problems in these areas; C. assessment of the relationship of the patient's medical and nursing requirements to their home situation, their financial resources, and the community resources available to them in making the decision regarding their discharge. (The 1972 Amendments made the furnishing of medical social services optional for SNF's.)

Drugs and biologicals for use in the facility which are ordinarily furnished by the facility for the care and treatment of inpatients are covered. Such drugs and biologicals are not limited to those routinely stocked by the SNF but include those obtained for the patient from an outside source, such as a pharmacy in the community. When a facility secures drugs and biologicals from an outside source, the facility must assume financial responsibility for the necessary drugs and biologicals, i.e., the supplier looks to the facility, not the patient, for payment.

The drug or biological must be either included, or approved for inclusion, in the U.S. Pharmacopoeia, the National Formulary, or the U.S. Homeopathic Pharmacopoeia; or, except for those unfavorably evaluated, in AMA Drug Evaluations (the successor publication to New Drugs) or Accepted Dental Therapeutics (the successor publication to Accepted Dental Remedies).

Drugs not included, or approved for inclusion, in the drug compendia are nevertheless covered if such drug (1) was furnished the patient during hisprior hospitalization; (2) was approved for use in the hospital by the hospital's pharmacy and drug therapeutics (or equivalent) committee; and (3) is required for the continuing treatment of the patient in the SNF.

Combination drugs are covered if the combination itself or all the therapeutic ingredients of the combination are included, or approved for inclusion, in any of the designated drug compendia. Under the limited circumstances mentioned in B. above, a combination drug approved by a hospital pharmacy and drug therapeutics committee may also be covered as an extended care service.

Drugs and biologicals furnished by a facility to an inpatient for use outside the facility are, in general, not covered as extended care services. However, if the drug or biological is deemed medically necessary to permit or facilitate the patient's departure from the facility, and a supply is required until they can obtain a continuing supply, the drugs or biologicals would be covered as an extended care service. Drugs and biologicals furnished to outpatients of SNF's are not covered.

Supplies, appliances, and equipment furnished for use in the facility, which are ordinarily furnished by the facility for the care and treatment of inpatients are covered extended care services. However, under certain circumstances, supplies, appliances, and equipment used during the beneficiary's stay are covered even though they leave the facility with the patient when they are discharged. These are circumstances in which it would be unreasonable or impossible from a medical standpoint to limit the patient's use of the item to the periods during which the individual is an inpatient. An example of items covered under this rule is a brace temporarily attached to the patient's body while they are receiving treatment as an inpatient and which is also necessary to permit or facilitate the patient's release from the facility.

Supplies, appliances, and equipment furnished to a patient for use only outside the facility would not, in general, be covered as extended care services. However, a temporary or disposable item provided to a patient which is medically necessary to permit or facilitate their departure from the facility and is required until such time as they can obtain a continuing supply would be covered as an extended care service.

The medical services of an intern or resident-in-training under an approved teaching program of a hospital with which the facility has in effect the required transfer agreement are covered under hospital insurance.

An “approved teaching program” means a program approved by the Council on Medical Education of the American Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association. In the case of services of an intern or resident-in-training in the field of dentistry in a hospital or osteopathic hospital, the teaching program must have the approval of the Council on Dental Education of the American Dental Association. Similarly, effective with accounting periods beginning after 12/31/72, the services of interns and residents-in-training in the field of podiatry under a teaching program approved by the Council on Podiatry Education of the American Podiatry Association are covered.

The medical and surgical services furnished to the facility's patients by interns and residents-in-training of a hospital with which the facility has a transfer agreement are covered under medical insurance if the services are not covered under hospital insurance.

Extended care services also include other diagnostic or therapeutic services provided by a hospital with which the facility has a transfer agreement.

Other services which are necessary to the health of the patients are covered if the services are generally provided by Skilled Nursing Facilities (SNFs).

Items or services that would not be included as inpatient hospital services if furnished to an inpatient of a hospital are also excluded from coverage as extended care services.

The use of an operating room and any special equipment, supplies, or services would not constitute covered extended care services except when furnished to the facility by a hospital with which the facility has a transfer agreement, since operating rooms are not generally maintained by SNF's. However, supplies and nursing services connected with minor surgery performed in an SNF that does not require the use of an operating room or any special equipment or supplies associated with such a room would be covered extended care services and reimbursed as part of the cost of routine services.

Since the provision of respiratory therapy by a respiratory therapist does not represent a service generally provided by SNF's, respiratory therapy furnished by a respiratory therapist is a covered extended care service only when furnished to the facility by a hospital with which the facility has a transfer agreement. (See HI 00601.050 for the definition and coverage criteria pertaining to respiratory therapy services.)

Although the services of a respiratory therapist are not covered extended care services, except as indicated above, respiratory therapy services performed by a nurse would constitute nursing services and would be covered as such under the extended care benefit. Moreover, oxygen which might be required in this service and the cost of nonroutine medications used are considered ancillary services and may be billed for separately. However, the use of any necessary equipment involved is considered part of the routine services furnished by the facility.

NOTE: See HI 00601.520 for information on Presumption of Coverage.

A patient having hospital insurance coverage is entitled subject to the coinsurance requirement ( HI 00601.570 ) to have payment made on their behalf for up to 100 days of covered inpatient extended care services in each benefit period. (See HI 00401.340 .)

The number of days of care charged to a beneficiary for inpatient extended care services is always in units of full days. A day begins at midnight and ends 24 hours later. The midnight-to-midnight method is to be used in reporting days of care for beneficiaries, even if the facility uses a different definition of day for statistical or other purposes.

A part of a day, including the day of admission, counts as a full day. However, the day of discharge, death, or a day on which a patient begins a leave of absence is not counted as a day. (Charges for ancillary services on the day of discharge, death, or the day on which a patient begins a leave of absence are covered.) If admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one inpatient day.

When a patient chooses to occupy their accommodations in an SNF beyond the normal check-out time for personal reasons, the SNF may charge the beneficiary for their continued stay. Such a stay beyond the check-out time, for the comfort or convenience of the patient, is not covered under the program and the SNF's agreement to participate in the program does not preclude the facility from charging the patient. However, it is expected that facilities will not impose late charges on a beneficiary unless they have been given reasonable notice (for example, 24 hours) of their impending discharge.

Where the patient's medical condition is the cause of the stay past the discharge hour (e.g., the patient needs further services, is bedridden and is awaiting transportation to their home, or dies in the facility), the stay beyond the discharge hour is covered under the program and the SNF may not charge the patient.

Extended care services count toward the maximum number of benefit days payable per benefit period only if:

A. Payment for the services is made, or

B. Payment for the service would be made if a request for payment were properly filed and if the physician certified that the services were medically necessary. When payment cannot be made because of the extended care coinsurance requirement, the day(s) used in satisfying this requirement nevertheless count toward the beneficiary's maximum days of extended care.

The following services are covered hospice services:

A. Nursing care provided by or under the supervision of a registered nurse.

B. Medical social services provided by a social worker who is working under the direction of a physician.

C. Physicians' services performed by a physician (as defined in 42 CFR 405.232a) except that the services of the hospice medical director or the physician member of the hospice's interdisciplinary group that provides or supervises the hospice's services must be performed by a doctor of medicine or osteopathy.

D. Counseling services provided to the terminally ill individual and the family members or other persons caring for the individual at home. Counseling, including dietary counseling, may be provided both for the purpose of training the individual's family or other care-giver to provide care, and for the purpose of helping the individual and those caring for the individual to adjust to the individual's approaching death.

E. Short-term inpatient care provided in a participating hospice inpatient unit, or in a participating hospital, SNF, or intermediate care facility (ICF) that additionally meets the special hospice standards regarding staffing and patient areas. Services provided in an inpatient setting must conform to the written plan of care. General inpatient care may be required for procedures necessary for pain control or acute or chronic symptom management which cannot be provided in other settings. Inpatient care may also be furnished to provide respite for the individual's family or other persons caring for the individual at home. Respite care is the only type of inpatient care that may be provided in an ICF. NOTE: Hospice inpatient care, other than respite care in an ICF, will interrupt the generation of a new benefit period for general Medicare hospital and SNF benefits. This would have potential effect on patients who revoke or exhaust the hospice benefit. (See HI 00601.295 .)

F. Medical appliances and supplies, including drugs and biologicals. Only drugs as defined in 1861(t) of the Act and which are used primarily for the relief of pain and symptom control related to the individual's terminal illness are covered. Appliances may include covered durable medical equipment as described in 42 CFR 405.231(g) as well as other self-help and personal comfort items related to the palliation or management of the patient's terminal illness. Equipment is provided by the hospice for use in the patient's home while they are under hospice care. Medical supplies include those that are part of the written plan of care.

G. Home health aide services furnished by qualified aides and homemaker services. Home health aides may provide personal care services. Aides may also perform household services to maintain a safe and sanitary environment in areas of the home used by the patient, such as changing the bed or light cleaning and laundering essential to the comfort and cleanliness of the patient. Aide services must be provided under the general supervision of a registered nurse. Homemaker services may include assistance in personal care, maintenance of a safe and healthy environment, and services to enable the individual to carry out the plan of care.

H. Physical therapy, occupational therapy and speech-language pathology services provided for purposes of symptom control or to enable the individual to maintain activities of daily living and basic functional skills. Nursing care, physicians' services, medical social services and counseling are core hospice services and must routinely be provided directly by hospice employees. Supplemental services may be contracted for during periods of peak patient loads and to obtain physician specialty services.

In order to be entitled to hospice benefits under Medicare, an individual must be entitled to Part A, be certified as terminally ill, and elect to receive hospice benefits.

An individual is considered terminally ill if the medical prognosis is a life expectancy of six months or less. To be covered, a certification that the individual is terminally ill must have been completed and hospice services must be reasonable and necessary for the palliation or management of the terminal illness and related conditions. A plan of care must be established before services are provided, and services must be consistent with the plan. The Medicare hospice benefit is provided in periods of care. The periods consist of two 90-day periods and an unlimited number of 60-day periods.

The hospice must obtain the certification that an individual is terminally ill in accordance with the following procedures:

1. For the first 90-day period of hospice coverage, the hospice must obtain, no later than two calendar days after hospice care is initiated, written certification statements signed by the medical director of the hospice or the physician member of the hospice interdisciplinary group and the individual's attending physician (if the individual has an attending physician). The attending physician is a physician who is a doctor of medicine or osteopathy and is identified by the individual, at the time they elect to receive hospice care, as having the most significant role in the determination and delivery of the individual's medical care.

2. For the subsequent periods, the hospice must obtain, no later than two calendar days after the beginning of that period, a written certification statement prepared by the medical director of the hospice or the physician member of the hospice's interdisciplinary group. The certification must include the statement that the individual's medical prognosis is that their life expectancy is six months or less and the signature(s) of the physician(s).

If an individual elects to receive hospice care, they must file an election statement with a particular hospice. An election may also be filed by a representative acting pursuant to State law. With respect to an individual granted the power of attorney for the patient, State law determines the extent to which the individual may act on the patient's behalf.

The two 90-day election periods must be used before the 60-day periods. An election to receive hospice care will be considered to continue through the initial election period and through the subsequent election periods without a break in care as long as the individual remains in the care of the hospice and does not revoke the election. An individual may designate an effective date for the election period that begins with the first day of hospice care or any subsequent day of hospice care, but not earlier than the date the election is made.

An individual must waive all rights to Medicare payments for the duration of the election of hospice care for the following services:

1. Hospice care provided by a hospice other than the hospice designated by the individual (unless provided under arrangements made by the designated hospice).

2. Any Medicare services that are related to the treatment of the terminal condition for which hospice care was elected or a related condition or that are equivalent to hospice care except for services— a. provided (either directly or under arrangement) by the designated hospice; b. provided by another hospice under arrangements made by the designated hospice; and c. provided by the individual's attending physician if that physician is not an employee of the designated hospice or receiving compensation from the hospice for those services. An individual or representative may revoke the election of hospice care at any time. To revoke the election of hospice care, the individual must file a signed statement with the hospice that revokes the election for Medicare coverage of hospice care for the remainder of that election period and the date that the revocation is to be effective. The effective date cannot be earlier than the date that the revocation is made. The individual forfeits coverage for any remaining days in that election period. Upon revoking the election of Medicare coverage of hospice care for a particular election period, an individual resumes Medicare coverage of the benefits waived when hospice care was elected. An individual may at any time elect to receive hospice coverage for any other hospice election periods for which they are eligible. An individual may change, once in each election period, the designation of the particular hospice from which they elect to receive hospice care. The change of the designated hospice is not considered a revocation of the election. To change the designation of hospice programs, the individual must file, with the hospice from which they have received care and with the newly designated hospice, a signed statement that includes the following information: the name of the hospice from which the individual has received care, the name of the hospice from which they plan to receive care and the date the change is to be effective. A change of ownership of a hospice is not considered a change in the patient's designation of a hospice and requires no action on the patient's part.

Continuous home care is covered only during a period of medical crisis to maintain an individual at home. A period of crisis is when a patient requires continuous, primarily nursing care to achieve palliation or management of acute medical symptoms. Nursing care must be provided by either a registered nurse or a licensed practical nurse. A nurse must be providing care for more than half of the period of care. A minimum of 8 hours of care must be provided during a 24-hour day which begins and ends at midnight. There can be intervening periods between periods when services are provided, e.g., 4 hours could be provided in the morning and another 4 hours in the evening. Homemaker and aide services may also be provided to supplement the nursing care. If less skilled care is needed on a continuous basis to enable the person to remain at home, this is covered as routine home care.

Respite care is short-term inpatient care provided to the individual only when necessary to relieve the family members or other persons caring for the individual at home. Respite care may be provided only on an occasional basis and may not be reimbursed for more than five consecutive days at a time.

Bereavement counseling consists of counseling services provided to the individual's family after the individual's death. Bereavement counseling is a required hospice service, but it is not reimbursable.

Citations:

Act—Sec. 1861(m), (n)

Regulation No. 5—Sec. 405.170

A patient may be eligible for home health services under both hospital insurance and SMI. ( HI 00610.390 for home health services under Part B.) All services furnished by an HHA, whether provided directly by the HHA or under arrangements (see HI 00401.285 ) with others, must be furnished by or under the supervision of qualified personnel.

Items and services must be furnished to an individual who is under the care of a physician. This physician may be the patient's private physician, or physician on the staff of the HHA, or a physician working under an arrangement with the institution which is the patient's residence, or if the agency is hospital-based, a physician on the hospital or agency staff. The attending physician establishes the plan of treatment and also certifies to the necessity for home health services.

Effective July 1, 1981, a physician is prohibited from establishing a plan of treatment, certifying or recertifying for home health services if the physician has a significant ownership interest in, or a significant financial or contractual relationship with such home health agency other than government owned.

Items and services must be furnished under a plan established and periodically reviewed by a physician and which relates the items and services to the patient's condition. The plan must either be put into writing by the physician and made available to the HHA which has accepted the patient as a client or the HHA itself may make a written record of the physician's oral orders.

An individual does not have to be bedridden to be considered as confined to their home. The patient's condition must be such that there exists a normal inability to leave home and, consequently, leaving their home would require a considerable and taxing effort.Generally, a beneficiary is considered to be homebound if they have a condition, due to an illness or injury which restricts their ability to leave their place of residence except with the aid of supportive devices such as crutches, canes, wheelchairs, and walkers, the use of special transportation, or the assistance of another person or if they have a condition so that leaving their home is medically contraindicated.

A patient's residence is wherever they make their home. This may be their own dwelling, an apartment, a relative's home, a home for the aged, or some other type of institution. However, an institution may not be considered a patient's residence if it:

a. Meets at least the basic requirement in the definition of a hospital; i.e., it is primarily engaged in providing by or under the supervision of physicians, to inpatients, diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, and sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons or

b. Meets at least the basic requirement in the definition of a skilled nursing facility; i.e., it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons. Thus, if an individual is a patient in an institution or distinct part of an institution which provides the services described in items a. or b. above, they are not entitled to have payment made for home health services under either Part A or Part B since such an institution may not be considered their residence. When a patient remains in a participating SNF following their discharge from active care, the facility may not be considered their residence for purposes of home health coverage.

In any discussion about home health services it is important not to create the impression that a beneficiary's entitlement to have payment made for visits made to their home by HHA personnel depends solely on whether they are eligible for Medicare benefits.

On the contrary, in discussing home health services with a beneficiary, stress that the law does not cover all types and levels of care provided in the home. Point out that the home health benefit is limited by statute to individuals who are under a physician's care, confined to their homes, and in need of skilled nursing care on an intermittent basis,or physical or speech therapy, or effective July 1, through November 30, 1981, occupational therapy, which is reasonable and necessary to the treatment of their illness. Effective December 1, 1981, occupational therapy is eliminated as a basis for entitlement to home health services. However, if a person has otherwise qualified for home health services because of the need for skilled nursing care, physical therapy or speech therapy, the patient's eligibility for homehealth services may be extended solely on the basis of the continuing need for occupational therapy. If these conditions are, met, Medicare will pay for any of the covered home health services required by the individual providing they are furnished directly or under arrangement by a participating HHA. As a further emphasis of the limitations applicable to the home health benefit, point out that when an individual's only need is for assistance in meeting their activities of daily living, e.g., assistance in bathing, toileting, etc. and performing simple household tasks, the care required would not be reimbursable under Medicare since it would constitute custodial care which is specifically excluded from coverage.

Skilled nursing care under Medicare has been defined as those services which must be performed by, or under the direct supervision of, a licensed nurse if the safety of the patient is to be assured and the medically desired result achieved. Stress that a service is not considered a skilled nursing service merely because it is performed by or under the supervision of a licensed nurse. That is, when the nature of the service is such that it can be safely and effectively performed (or self-administered) by the average nonmedical person without the direct supervision of a licensed nurse, the service cannot be regarded as a skilled nursing service even if a nurse renders the service (see HI 00601.340 ).

Physical therapy has been defined for Medicare purposes as those services prescribed by a physician which because of their complexity or the condition of the patient, require the judgment, knowledge, and skills of a qualified physical therapist and, are in fact, performed by such a therapist or under their direct supervision.

In addition, make it clear that the DO can furnish general information only and that whether home health visits furnished an individual are reimbursable is a decision which must be made by the intermediary with advice from its medical staff based on the facts in the particular case.

If the beneficiary is dissatisfied with the explanation of the denial of home health services, provide any necessary assistance in completing a request for reconsideration.

Program payment will be made for the skilled nursing care the beneficiary receives, provided all of the following conditions are met:

A. The services are ordered by, and included in, the plan of treatment established by the physician for the patient (see HI 00601.300 ), and

B. The services are required on an intermittent basis (see HI 00601.330 ), and

C. The services are performed by, or under the direct supervision of, a licensed nurse to assure the safety of the patient and to achieve the medically desired result (see HI 00601.380 ), and

D. The services are reasonable and necessary to the treatment of an illness or injury (see HI 00601.340 ).

To be considered in need to “intermittent” skilled nursing care, an individual must require a skilled nursing service at least once every 60 days. Cases in which a skilled nursing service is required only once every 60 days are the exception rather than the rule. Since the need for an intermittent skilled nursing service makes the individual eligible for other covered home health services, home health claims based on such a service are carefully reviewed by the intermediary. Intermittent skilled nursing care could include infrequent, yet intermittent, observation and evaluation visits for the blind diabetic at least every 90 days, or the changing of an indwelling silicone catheter at 90-day intervals. A one-time nursing service is not considered a need for intermittent skilled nursing care. However, when the need for a skilled nursing visit at least once every 60 days is medically predictable, but a situation arises after the first visit making additional visits unnecessary, e.g., the patient dies or is hospitalized, the one visit made is reimbursable.

Although most patients require services no more frequently than several times a week, medicare will pay for part-time medically reasonable and necessary skilled nursing care 7 days a week for a short period of time (2-3 weeks).

A person expected to need more or less full-time skilled nursing care over an extended period of time; i.e., a patient who requires institutionalization, would usually not qualify for home health benefits.

Reimbursable skilled nursing care consists of those services reasonable and necessary to the treatment of an illness or injury (see F. below) which must be performed by, or under the direct supervision of, a licensed nurse (R.N., L.P.N. or L.V.N.) if the safety of the patient is to be assured and the medically desired result achieved.

In many instances a service is classified as a skilled nursing service on the basis of its complexity alone, e.g., intravenous and intramuscular injections or insertion of catheters. In others, the classification requires a consideration of both the nature of the services and the condition of the patient, i.e., in a given case the patient's condition may be such that a service which would normally be classified as unskilled can only be provided safely and effectively by a skilled individual. For example, in some situations a patient who has had rectal surgery may be given an enema safely and effectively only by a nurse.

When services can be safely and effectively performed (or self-administered) by the average, non-medical person without the direct supervision of a licensed nurse, the services cannot be regarded as a skilled nursing service. For example, the giving of a bath does not generally require the skills of a nurse. Consequently, it does not constitute a skilled nursing service even though it is performed by a nurse.

It is customary to teach the patient and/or a family member the skills required to administer insulin injections safely and effectively. Once the patient or other nonmedical person has mastered these skills, they are to all intents and purposes functioning as a skilled person when administering or self-administering the injection. If a patient is unable to learn these skills or is physically or mentally incapable of performing the service for themselves, e.g., they are blind, senile, or spastic, and there is no one else willing and able to learn and perform the service for them, the administration of the injection by a nurse constitutes a skilled nursing service.

For example, an individual who suffers from constipation requires an enema from time to time. There is no doubt that the enema is of great importance to them. However, since it can be performed by the average nonmedical person, the fact that no one is available in the home to provide this service does not change it to a skilled nursing service.

Program payment may be made for skilled nursing services required by an individual only if they are found to be reasonable and necessary for the treatment of the individual's illness of injury. To be considered reasonable and necessary for the treatment of an illness or injury, the services furnished must be consistent with the nature and severity of the individual's illness or injury, their particular medical needs and accepted standards of medical practice.

Services directed to the prevention of illness or injury are not covered under the program.

Effective with services furnished on or after 5-17-78, observation and evaluation of a patient's condition is a skilled nursing service. The observation and evaluation services, including the frequency of the visits and any subsequent changes in the frequency, must be ordered by a physician. These services are considered reasonable and necessary when the possibility exists that significant changes (which may require institutionalization or changes in the treatment plan) may occur in the patient's condition.

Teaching and training activities which require the skills or knowledge of a nurse constitute skilled nursing services. These include but are not limited to teaching or training the patient, a family member or others to:

1. Give an injection;

2. Irrigate a catheter;

3. Care for a colostomy or ileostomy;

4. Administer medical gases;

5. Prepare and follow a therapeutic diet;

6. Apply dressings to wounds involving prescription medications and aseptic techniques;

7. Carry out bladder training;

8. Carry out bowel training (only when bowel incontinency exists);

9. Perform activities of daily living (dressing, eating, personal hygiene, etc.) for themselves through use of special techniques and adaptive devices where they have suffered a loss of function;

10. Align and position a bed-bound patient;

11. Perform transfer activities, e.g., bed to chair or wheelchair, wheelchair to bathtub or toilet; and

12. Ambulate by means of crutches, walker, cane, etc.

In determining the reasonable and necessary number of teaching visits consideration is given to whether the home teaching constitutes a reinforcement of that provided in an institution or is the initial instruction received by the patient.

A nurse performs various types of supervisory services. Those which require a nurse's particular skill, knowledge, and judgment constitute skilled nursing service.

The direct supervision provided by a licensed nurse of the performance of a skilled nursing service by other than a nurse constitutes a skilled nursing service, e.g., supervising a student nurse in giving an intravenous or intramuscular injection.

The fact that the conditions of participation require a R.N. to visit the patient's home at least every 2 weeks in order to provide general supervision to the aide and to evaluate the patient's continuing personal care needs does not affect the unskilled nature of the service rendered by the home health aide. Nor do such activities of the supervising nurse represent skill nursing care. Such supervisory visits are not reimbursable as skilled nursing visits.

The insertion of a catheter is a skilled nursing service and is considered reasonable and necessary when the individual has suffered a permanent or temporary loss of bladder control.

When the loss of control necessitating the use of the catheter is temporary, visits made by the nurse to change the catheter must also include instruction of the patient and/or family in bladder training methods. (The actual carrying out of the bladder training, e.g., forcing fluids, or other measures does not require the skills of a nurse.) After the catheter has been removed a reasonable number of visits by the nurse may be necessary to observe and evaluate the effectiveness with which the bladder training has been carried out.

It is established practice to have urinary catheters inserted in male patients by male orderlies. In recognition of this practice, this service by the male orderly may be considered a skilled nursing service even though not performed under the direct supervision of a licensed nurse. This constitutes an exception to the definition of skilled nursing care.

Intramuscular and intravenous injections of medications constitute skilled nursing services. However, if the drug injected is not considered an effective treatment for the condition given, or a medical reason does not exist for providing it by injection rather than by mouth, the injection is not considered reasonable and necessary to the treatment of the individual's illness. Also, if the patient or a member of their family has been taught to administer an intramuscular injection it would not be deemed reasonable and necessary to have a nurse administer the injection. Intravenous injections may only be given by a professional medical person.

The drugs and biologicals injected are specifically excluded from coverage under the home health benefit.

Vitamin B-12 injections are considered specific therapy only for the following conditions:

1. CERTAIN ANEMIAS Pernicious anemia: megaloblastic anemias, macrocytic anemias; fish tapeworm anemia;

2. CERTAIN GASTROINTESTINAL DISORDERS Gastrectomy; malabsorption syndromes such as sprue and idiopathic steatorrhea; surgical and mechanical disorders such as resection of the small intestine, strictures, anastomoses and blind loop syndromes;

3. CERTAIN NEUROPATHIES Posterolaterial sclerosis; other neuropathies associated with pernicious anemia; during the acute phase or acute exacerbation of a neuropathy due to malnutrition and alcoholism.

Insulin injections are specific therapy for diabetes. However, if the individual or a family member has been taught to give the injection it is not considered reasonable and necessary to the treatment of the individual's illness to have a nurse administer such injections. If the patient is mentally and physically able to be taught to give themselves the injection but refuses to learn to do so, visits by a nurse to administer the injections are not considered reasonable and necessary and would not be reimbursable under the program. If a patient has a psychological block to giving themselves an insulin injection, they would be considered mentally unable to be taught to render the self-injection.

Usually, the administration of oral medications does not require the skills of a licensed nurse in the home setting. However, this would not preclude payment in the unusual situation in which the complexity of the patient's condition and the number of drugs prescribed require the skills of a nurse to detect and evaluate side effects or reactions.

These feedings require the skills of a nurse. However, due to the time required for feedings and the fact that an individual requiring such feedings generally requires a higher level of care than can be provided in the home setting, it is expected that they will be furnished in the home only when the individual is waiting to be institutionalized or is in the terminal stages of an illness.

The existence of extensive decubitus ulcers or other widespread skin disorder may necessitate skilled care. The principal indication of whether skilled care is required is the physician's orders for treating the skin, rather than the patient's diagnosis.

Activities such as bathing the skin, applying creams, etc., do not constitute skilled services. Nor does the presence of a small decubitus ulcer, rash, or other relatively minor skin irritation generally indicate a need for skilled care.

Some HHA's participate in training programs in which they utilize student nurses enrolled in a school of nursing to perform skilled nursing services in the home setting. If an HHA participating in such a training program assigns a student nurse to provide skilled nursing services in the patient's home, the costs of their services are reimbursable as skilled nursing care. The services must be performed under the general supervision of a registered professional nurse who is either an employee of the HHA or the school of nursing in which the student is enrolled. However, the supervising nurse need not accompany the student on each visit. This represents a special exception to the requirement that skilled nursing services must be rendered by or under the direct supervision of a licensed nurse. (See HI 00601.400 for counting of visits when the supervisor accompanies the student on a visit.)

Whether a particular service constitues a skilled nursing service is ordinarily determined on a case-to-case basis. As a general rule, however, the counselling and evaluation services required by an elderly patient suffering from a diagnosed psychiatric disorder that required active treatment in a psychiatric institution requires the skills of a psychiatrically trained nurse. (A psychiatrically trained nurse is a nurse who has special training and/or experience beyond the standard curriculum required for the R.N.) The special training of such nurses enables them to interpret the underlying meaning in the patient"s actions and to evaluate the need for the psychiatrist to change the plan of treatment or to reschedule visits to the psychiatrist"s office. Conversely, if the visiting nurse has not been trained in psychiatric care, that nurse's visits would not be reimbursable since they are not deemed “reasonable” to the treatment of the patient"s illness, unless the entire plan of treatment consists solely of injections of fluphenazine, a behavior modifier, which can be furnished by a nurse, that has not been “psychiatrically” trained. It is expected that an individual whose psychiatric disorder is severe enough to require the special skills of a psychiatric nurse will be under the care of a psychiatrist and that the plan of treatment calling for the services of a psychiatric nurse will be established and reviewed by the psychiatrist.

In effect the law precludes an HHA which is primarily for the care and treatment of mental diseases from participating in the program. However, this exclusion does not preclude payment where psychiatric nursing is furnished by an agency which is not primarily for the care and treatment of mental diseases. Should the intermediary find that the number of bills submitted for individuals with mental disorders is significant enough to raise the possibility that an HHA is primarily for the care and treatment of mental diseases, it notifies the CMS RO.

See HI 00601.050 for a full explanation of when these services are covered.

These services must be under the direction of a physician and must be given by or under the supervision of a qualified medical or psychiatric social worker.

The primary function of a home health aide is the personal care of a patient under the supervision of a registered professional nurse and, if appropriate, a physical, speech, or occupational therapist. The assignment of a home health aide to a particular case must be made in accordance with a written plan of treatment established by a physician which indicates the patient's need for personal care services. The specific personal care services to be provided by the home health aide must be determined by a registered professional nurse and not by the home health aide.

Personal care duties which may be performed by a home health aide include assistance in the activities of daily living, e.g., helping the patient to bathe, to get in and out of bed, to care for their hair and teeth, to exercise, and to take medications specifically ordered by a physician which are ordinarily self-administered, and retraining the patient in necessary self-help skills. Covered home health aide services usually last 1-3 hours per visit and generally are provided 2 or 3 times a week.

While the primary need of the patient for home health aide services furnished in the course of a particular visit may be for personal care services furnished by the aide, the home health aide may also perform certain household services which are designated to the home health aide in order to prevent or postpone the patient's institutionalization.

These services may include keeping a safe environment in areas of the home used by the patient, e.g., changing the bed, light cleaning, rearrangements to assure that the beneficiary can safely reach necessary supplies of medication, laundering essential to the comfort and cleanliness of the patient, etc., seeing to it that the nutritional needs (which may include the purchase of food and assistance in the preparation of meals) of the patient are met, and washing utensils used in the course of the visit. If these household services are incidental and do not substantially increase the time spent by the home health aide, the cost of the entire visit would be reimbursable. Housekeeping services would materially increase the amount of time required to be spent by the home health aide to make the visit above the amount of time necessitatedby care for the patient are not reimbursable. Where another member of the household is an equally aged and feeble or ill person, e.g., an aged spouse or parent of the beneficiary, certain services performed by the home health aide may be advantageous to both members of the household but would nevertheless be reimbursable if the amount of time spent by the aide is not materially increased in order to serve the nonbeneficiary member.

The discussion of part-time or intermittent services in HI 00601.440 is applicable to home health aides.

Medical supplies are items which, due to their therapeutic or diagnostic characteristics, are essential in enabling HHA personnel to carry out effectively the care which the physician has ordered for the treatment or diagnosis of the patient's illness or injury. Certain items designed only to serve a medical purpose are considered to be medical supplies, e.g., catheters, needles, syringes, surgical dressings and material used for dressings such as cotton gauze and adhesive bandages, and materials used in aseptic techniques. Other medical supplies include, but are not limited to, irrigating solutions, intravenous fluids, and oxygen.

Other items, often used by persons who are not ill or injured, may be considered medical supplies but only when (1) the item is recognized as having the capacity to serve a therapeutic or diagnostic purpose in a specific situation, and (2) the item is required as part of the actual physician-prescribed treatment of a patient's existing illness or injury.

For example, items which generally serve a routine hygienic purpose, such as soaps and shampoos, and items which generally serve as skin conditioners, such as baby lotion, baby oil, skin softeners, powders, lotions, etc., are not considered medical supplies unless the particular item is recognized as serving a specific therapeutic purpose in the physician's prescribed treatment of the patient's existing skin (scalp) disease or injury.

Medical appliances are items of medical equipment owned or rented by the HHA placed in the home of the patient to facilitate their treatment and rehabilitation. Medical appliances are generally defined as items which can withstand repeated use, are primarily and customarily used to serve a medical purpose, and are generally not useful to a person in the absence of illness or injury. This definition includes (but is not limited to), bedpans, hospital beds, wheelchairs, crutches, trapeze bars, oxygen tents, and intermittent positive pressure breathing machines.

Appliances which customarily serve a medical purpose but are also considerably useful to persons who are not ill or injured, appliances which customarily serve a nonmedical purpose but which may serve a medical purpose in a specific case, and appliances which are primarily designed to prevent illness or injury may be considered as medical appliances only when (1) the physician's plan of treatment specifically includes the use of such appliances in connection with the patient's treatment regimen and specifies any limitations which should be placed on the use of the appliance due to the patient's condition, and (2) the appliance may be expected to contribute meaningfully to the treatment of the illness or injury or to improve the functioning of a malformed body member. Examples of the type of appliances which may fall into this category include heat lamps, exercycles, flotation mattresses, bed baths, etc.

Drugs and biologicals are excluded from coverage as items or services administered by HHA's. They may, in certain cases, be covered under medical insurance, when administered by a physician as part of the physician's professional service, and cannot be self-administered.

Home health services include the medical services of interns and residents-in-training under an approved hospital teaching program (if the agency has an affiliation with or is under common control of a hospital providing such medical services). “Approved” means approved by the Council on Medical Education of the American Medical Association, or in the case of an osteopathic hospital, the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association, and in the case of an intern or resident-in-training in the field of dentistry, approved by the Council on Dental Education of the American Dental Association.

(Reimbursement is provided under Part B for other services hospital interns and residents furnish to beneficiaries receiving home health services.)

Outpatient services include any of the items or services described above which are provided under arrangements (see HI 00401.280 ) on an outpatient basis at a hospital, SNF, rehabilitation center, or outpatient department affiliated with a medical school, and (1) which require equipment which cannot readily be made available at the patient's place of residence, or (2) which are furnished while they are at the facility to receive the services described in (1). The hospital, SNF, or outpatient department affiliated with a medical school must all be qualified providers of services. The cost of transporting an individual to a family cannot be reimbursed as home health services.

Part-time or intermittent services of professional personnel and home health aides is usually service for a few hours a day several times a week. Occasionally, more service; i.e., eight hours, may be provided for a limited period when the physician recommends and, when because of unusual circumstances, neither the alternative of part-time care nor institutionalization is feasible.

Services of professional staff usually are provided less frequently and for shorter periods of time than are the services of home health aides. For physical, speech, and occupational therapists and medical social workers, visit ordinarily should not exceed one hour.

Home health aide visits usually last 1-3 hours a day and generally are provided 2 or 3 times a week.

For the very few ill patients who need extensive personal care services in addition to skilled services, Medicare will pay for part-time medically reasonable and necessary aide services 7 days a week for a short period of time (2-3 weeks). There may also be a few cases involving unusual circumstances where a patient's personal care needs extend beyond 3 weeks. For example, the patient's condition is terminal; they have suffered a relapse which, while requiring more intensive care, either does not necessitate institutionalization or institutionalization cannot immediately be arranged.

The number of visits are counted in the same manner under both the hospital and medical insurance plans.

A visit is a personal contact in the place of residence of a patient made for the purpose of providing a covered service by a health worker on the staff of the HHA, by others under contract or arrangement with the HHA, or a visit by a patient on an outpatient basis to a hospital, SNF, or rehabilitation center, or outpatient department affiliated with a medical school when arrangements have been made by the HHA for one or more covered services.

HHA's are required to have written policies concerning the acceptance of patients which include, consideration of the physical facilities available in the patient's home, attitudes of family members, and availability of family members to help in the care of the patient.

When personnel of the agency make such an initial evaluation visit, the cost is not chargeable as a visit since at this point the patient has not been accepted for home care. If, however, during the course of the initial visit, the patient is determined to be suitable for home health care by the agency, and is also furnished a skilled service as ordered under the physician's plan of treatment, this visit would become the first billable visit.

Evaluation visits may be made by a nurse to determine the specific personal care needs of the patient which will be assigned to a home health aide or to review the manner in which the personal care needs of the patient are being met by the aide. Such visits are also considered an administrative function and are not chargeable to the patient as skilled nursing visits.

If in the course of carrying out a home health plan of treatment for a patient, a nurse visits the patient for the purpose of evaluating the continuing skilled nursing needs of the patient or to teach and counsel the patient and family members regarding the nursing care needs and related problems of the patient at home, the visit would be chargeable as a skilled nursing visit.

If a visit is made simultaneously by two or more persons from the HHA to provide a single service, for which one person supervises or instructs the other, it is counted as one visit. If one person visits the patient's home more than once during a day to provide services, each visit is recorded as a separate visit. If a visit is made by two or more persons from the HHA for the purpose of providing separate and distinct types of services, each is recorded—i.e., two or more visits. If the patient is taken elsewhere for the service because the service would not be furnished in the patient's residence, one visit is counted for each service the patient receives.

In addition to the general exclusions from coverage under health insurance listed in HI 00620.000 ff., the following are also specifically excluded from coverage as home health services:

A. Services or items which would not be paid for if provided to an inpatient of a hospital, such as private duty nursing service, or items of comfort which are necessary for treatment, e.g., television.

B. Meals-on-Wheels or similar food arrangements.

C. Domestic or housekeeping services which are unrelated to patient care.

D. Transportation services, e.g., from place of residence to a facility to receive home health services on an outpatient basis.

In addition to the conditions listed in HI 00601.300 B , the following conditions must be met for coverage under HI for services furnished prior to July 1, 1981.

Coverage of home health visits under HI is subject to a spell of illness provision and a prior inpatient stay requirement.

HI coverage extends only to home health visits (100 or less) furnished after the beginning of one benefit period (see HI 00401.340 ) and before the beginning of the next.

The controlling event is the beginning of the benefit period and it is immaterial whether the patient is either in a benefit period, or has ended a benefit period and not begun a new one. A series of visits ends with the beginning of a new benefit period.

For purposes of qualifying for posthospital home health benefits, a benefit period begins with a stay in a hospital accredited by the Joint Commission on Accreditation of Hospitals (JCAH), or the American Osteopathic Association (AOA), even though the hospital does not participate in the Medicare program. This rule applies regardless of whether the hospital is within the United States or in a foreign country or whether the services are emergency or nonemergency.

In addition to the benefit period requirement, the law specifies that the home health visits must take place in the year following the most recent discharge from a covered SNF stay of any duration or from a medically necessary stay of at least three consecutive days in:

a. A participating general, psychiatric or tuberculosis hospital; or

b. a participating distinct part of a psychiatric or tuberculosis hospital, or

c. a nonparticipating general, psychiatric, or tuberculosis hospital which meets at least the conditions of participation for a hospital, i.e., an emergency services hospital.

A nonparticipating psychiatric or tuberculosis hospital need not meet the special requirements applicable to psychiatric and tuberculosis hospitals. Federal hospitals need not be licensed under State or local laws to meet the prior stay hospital definition. Stays in Christian Science Sanatoriums are excluded for the purpose of satisfying the prior inpatient stay requirement.

The three consecutive calendar days requirement can be met by stays totalling three consecutive days in one or more hospitals. In determining whether the requirement has been met, the day of admission, but not the day of discharge is counted as a hospital inpatient day. There must be an actual discharge of the patient from the hospital or SNF to the patient's residence. See HI 00601.300 for conditions under which an institution may not be considered the patient's residence.

The discharge from the hospital which is required to qualify home health services for payment under HI must have occurred on or after the first day of the month in which the patient attained age 65.

A stay of three or more days in a hospital outside the United States may satisfy the prior inpatient stay requirement for posthospital home health services within the United States if the foreign hospital is qualified as an “emergency hospital.”

NOTE: Effective July 1, 1981, the visit limitation, the prior inpatient stay, and the spell of illness requirements are eliminated.

For services prior to July 1, 1981, the plan for home health services must be established within 14 days after the patient's discharge from the qualifying prior inpatient stay. In determining the 14-day period, the day of discharge is not counted in the 14 days. For example, a patient's plan is established within 14 days if the patient was discharged from a hospital on August 1 and their plan was established on August 15.

There is no limitation on when a plan may be established before the patient's release from the institution. However, it is unlikely that such a plan would be established before the physician has determined the patient's approximate release date from the hospital or SNF since it would be difficult to determine prior to that time just what services will be required in the treatment of the individual's illness or injury upon their discharge to the home setting.

In some cases, services are furnished after discharge from the hospital or SNF and before the plan has been reduced to writing. Payment under Part A may be made for such services if authorized by a physician, provided the plan is reduced to writing within 14 days of the patient's discharge. Effective July 1, 1981, a plan does not have to be established within 14 days of discharge since the prior inpatient stay requirement for home health services is eliminated.

Prior to July 1, 1981, in order for home health services to be covered under HI, a doctor must certify that the patient needs intermittent nursing care of physical or speech therapy for any condition for which the patient was receiving inpatient hospital or extended care services.

Effective July 1, 1981, no such related condition shall be required for home health services under hospital insurance.

If it becomes necessary for the patient to transfer to a different physician or HHA (in a different locality) after the timely establishment of the required physician's plan, the original plan may be continued in the new locality if:

A. There is a referral by the patient's physician in the old locality of both the patient and the plan to a physician in the new locality.

B. The patient's physician in the new locality accepts the original plan of treatment and assumes the responsibility of conducting the required periodic reviews of the plan. The plan could be modified from time-to-time as determined necessary by the patient's physician in the new locality.

Prior to July 1, 1981, under hospital insurance the patient is entitled to up to 100 visits in the one-year period after the most recent discharge from a qualifying inpatient stay and before a new benefit period begins. If before a series of home health visits is completed, a patient receives inpatient services which start a new benefit period, the series of visits is terminated. Both of “inpatient stay” and “timely establishment of plan” requirements must be met in the new benefit period to provide coverage for a new series of home health visits.

If, during the same benefit period, the home health patient returns to a hospital or SNF for a stay which meets the prior-stay requirement, a new one-year period for the patient's Part A visits is established dating from the patient's latest discharge. The one-year period during which an individual may have up to 100 home health visits may thus in fact exceed a year overall. The total number of visits available before the next benefit period begins remains unchanged.

The end of the year for hospital insurance purposes is determined as follows:

Count 365 days (366 when February 29 is included) beginning with the latter of the following:

A. The date of discharge from a 3-day stay in any hospital, or

B. The date of discharge from an SNF stay for which posthospital extended care benefits were payable on the patient's behalf.

Effective July 1, 1981, the 100 visit limitation, the prior inpatient stay, and the spell of illness requirements under Part A are eliminated.

Effective January 1, 1981, the presumed coverage provisions for extended care services and Part A home health services were rescinded pursuant to the Omnibus Reconciliation Act of 1980.

The beneficiary is responsible for an inpatient hospital deductible amount before the program begins paying for inpatient hospital services in each benefit period. The Secretary has in the past been required to determine each year the amount of the deductible for the following year. For 1987, however, the amount of the deductible has been set by law at $520. For each year after 1987, the Secretary is required to promulgate the deductible and related coinsurance amounts between September 1 and September 15 of the preceding year.

For inpatient hospital services rendered in years prior to 1982 and after 1986, the applicable inpatient deductible is the one in effect during the calendar year in which the beneficiary's benefit period begins (i.e., in most cases, the year in which the first inpatient hospital services are furnished in the benefit period). For services rendered in 1982 through 1986, the applicable deductible is the one in effect during the year in which the services were furnished. The following chart shows the applicable deductible amounts for benefit periods beginning in each year since 1974:

Year in Which Benefit Period Began Deductible Amount 2020 1408.00 2019 $1364.00 2018 $1340.00 2017 $1316.00 2016 $1288 2015 $1260 2014 $1216 2013 $1,184 2012 $1,156 2011 $1,132 2010 $1,100 2009 $1,068 2008 $1,024 2007 $992 2006 $952 2005 $912 2004 $876 2003 $840 2002 $812 2001 $792 2000 $776 1999 $768 1998 $764 1997 $760 1996 $736 1995 $716 1994 $696 1993 $676 1992 $652 1991 $628 1990 $592 1989 $560 1988 $540 1987 $520 1986 $492 1985 $400 1984 $356 1983 $304 1982 $260 1981 $204 1980 $180 1979 $160 1978 $144 1977 $124 1976 $104 1975 $ 92 1974 $ 84

Expenses incurred in one benefit period cannot be applied toward the deductible in a later benefit period. Expenses incurred in meeting the blood deductible do not count toward the inpatient hospital deductible.

The beneficiary is responsible for a daily coinsurance amount of one-fourth of the inpatient hospital deductible for the 61st through the 90th days of inpatient hospital services used during each benefit period.

Where the actual charge to the patient for the 61st through the 90th day of inpatient hospital services is less than the applicable coinsurance amount, the coinsurance is the actual charge. (Where the actual charge to the patient for lifetime reserve days is less than the coinsurance amount for those days, the beneficiary is deemed to have elected not to use the days because they would not benefit from their utilization.) (See HI 00601.065B. )

The following chart shows the inpatient hospital coinsurance amounts for benefit periods beginning in each year since 1974:

Year in Which Benefit Period Began Coinsurance Amount 2020 352.00 2019 $341.00 2018 $355.00 2017 $329.00 2016 $322 2015 $315 2014 $304 2013 $296 2012 $289 2011 $283 2010 $275 2009 $267 2008 $256 2007 $248 2006 $238 2005 $228 2004 $219 2003 $210 2002 $203 2001 $198 2000 $194 1999 $192 1998 $191 1997 $190 1996 $184 1995 $179 1994 $174 1993 $169 1992 $163 1991 $157 1990 $148 1989 $0 * 1988 $135 1987 $130 1986 $123 1985 $100 1984 $89 1983 $76 1982 $65 1981 $51 1980 $45 1979 $40 1978 $36 1977 $31 1976 $26 1975 $23 1974 $21

*Coinsurance was not charged for inpatient hospital care in calendar year 1989 due to Catastrophic Coverage; the deductible was applied.

The beneficiary is responsible for a daily coinsurance amount of one-half of the inpatient hospital deductible for each of the lifetime reserve days (the 91st through the l50th day) used in a benefit period.

The following chart shows the lifetime reserve day coinsurance amounts for benefit periods beginning in each year since 1974:

Year in Which Benefit Period Began Coinsurance Amount 2020 704.00 2019 $682 2018 $670 2017 $658 2016 $644 2015 $630 2014 $608 2013 $592 2012 $578 2011 $566 2010 $550 2009 $534 2008 $512 2007 $496 2006 $476 2005 $456 2004 $438 2003 $420 2002 $406 2001 $398 2000 $388 1999 $384 1998 $382 1997 $380 1996 $368 1995 $358 1994 $348 1993 $338 1992 $326 1991 $314 1990 $296 1989 $0 * 1988 $270 1987 $260 1986 $246 1985 $200 1984 $178 1983 $152 1982 $130 1981 $102 1980 $ 90 1979 $ 80 1978 $ 72 1977 $ 62 1976 $ 52 1975 $ 46 1974 $ 42

* Coinsurance was not charged for inpatient hospital care in calendar year 1989 due to Catastrophic Coverage; the deductible was applied.

The beneficiary is responsible for a daily coinsurance amount of one-eighth of the inpatient hospital deductible for the 21st through the 100th day of extended care services used during each benefit period.

Where the actual charge to the patient for the 2lst through the l00th day is less than the applicable coinsurance amount, the coinsurance is the actual charge.

The following chart shows the extended care coinsurance amounts for benefit periods beginning in each year since 1974:

Year in Which Benefit Period Began Coinsurance Amount 2020 176.00 2019 $170.50 2018 $167.50 2017 $164.50 2016 $161.00 2015 $157.50 2014 $152.00 2013 $148.00 2012 $144.50 2011 $141.50 2010 $137.50 2009 $133.50 2008 $128.00 2007 $124.00 2006 $119.00 2005 $114.00 2004 $109.50 2003 $105.00 2002 $101.50 2001 $99.00 2000 $97.00 1999 $96.00 1998 $95.50 1997 $95.00 1996 $92.00 1995 $89.50 1994 $87.00 1993 $84.50 1992 $81.50 1991 $78.50 1990 $74.00 1989 $0 * 1988 $67.50 1987 $65.00 1986 $61.50 1985 $50.00 1984 $44.50 1983 $38.00 1982 $32.50 1981 $25.50 1980 $22.50 1979 $20.00 1978 $18.00 1977 $15.50 1976 $13.00 1975 $11.50 1974 $10.50

*Under Catastrophic Coverage, a coinsurance payment of $25.50 was due for days 1 – 8 of SNF care. No SNF coinsurance was due after day 8 in 1989.

For services furnished prior to January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible applicable for the year in which the individual's benefit period began.

For services furnished on or after January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible for the year in which the services were furnished.

There is also a Part B blood deductible which applies on a calendar year basis (see HI 00610.470 ). The Part A and Part B blood deductibles are applied separately.

The blood deductible applies only to whole blood and packed red cells. The term whole blood means human blood from which none of the liquid or cellular components have been removed. Where packed red cells are furnished, a unit of packed red cells is considered equivalent to a pint of whole blood. Other components of blood such as platelets, fibrinogen, plasma, gamma globlin, and serum albumin are not subject to the blood deductible. However, these components of blood are covered as biologicals.

Program payment may not be made for the first three pints of whole blood or equivalent units of packed red cells received by a beneficiary in a benefit period. However, payment may be made for blood processing beginning with the first pint or unit in a benefit period. The blood deductible is in addition to any other applicable deductible and coinsurance amounts for which the patient is responsible.

To be covered a Part A service and count toward the blood deductible, the blood must be furnished on a day which counts as a day of inpatient hospital services or extended care services. Thus, blood is not covered under Part A and does not count toward the Part A blood deductible when furnished to an inpatient after they have exhausted their benefit days in a benefit period, or where the individual has elected not to use lifetime reserve days. However, where the patient is discharged on their first day of entitlement, the provider is permitted to submit a billing form with no accommodation charge, but with ancillary charges including blood.

When the beneficiary is subject to the blood deductible, they have the option of replacing the blood on a pint-for-pint or unit basis, or paying the provider's charges for the unreplaced pints.

When a beneficiary elects to replace deductible pints or units, it is considered replaced if the patient or someone else, e.g., a volunteer blood bank organization, replaces the blood on their behalf. For Medicare purposes, replacement is made on a pint-for-pint or unit basis. Although a provider is free to persuade a beneficiary to arrange for donation of more blood than was required to meet the deductible provisions, no charge may be made to a beneficiary who does not comply with the request if they have replaced, or arranged to be replaced, on a pint-for-pint or unit basis, each of the blood deductible pints they received.

Where more blood is donated on behalf of the beneficiary than is needed for full replacement on a pint-for-pint or unit basis, the value of the excess blood is not deducted from the amount payable to the provider. However, such donations would tend to reduce the cost of blood to the provider. Where a provider accepts blood donated in advance for or by a beneficiary in anticipation of need, such donations are considered as replacement for any deductible pints or units subsequently furnished to the beneficiary in the future.

A beneficiary who receives blood (or packed red cells) which is subject to the blood deductible, has the option of arranging to replace the blood or paying the provider's charges for the unreplaced pints.

A beneficiary may not be charged for deductible blood which they have replaced, or arranged to replace. A deductible pint of whole blood or unit of packed red cells is considered replaced when a medically acceptable pint or unit is given or offered to the provider, or at the provider's request, to its blood supplier, whether or not the provider accepts the offer. A provider may not charge a beneficiary because its policy is not to accept blood from a particular organization which has offered to replace blood on the beneficiary's behalf. However, a provider is not barred from charging a beneficiary for deductible blood, if replacement blood offered by or on behalf of the beneficiary would endanger the health of either the donor or a recipient.

If the beneficiary does not replace, or make arrangements to replace, deductible blood (or packed red cells), the beneficiary may be charged the provider's usual and customary charges for the blood. Charges for processing blood or packed red cells, e.g., for administration, or storage are covered without regard to the deductible and billed to the program beginning with the first pint or unit.

For Medicare purposes, replacement is made on a pint-for-pint basis. Thus, a beneficiary cannot be charged for deductible blood if the beneficiary has replaced or arranged to replace each pint or unit furnished them.

Once a provider accepts a pint of replacement blood from a beneficiary or another source acting on the beneficiary's behalf, replacement has been made, i.e., the beneficiary may not be charged for blood, even though the blood is later found to be unfit and is discarded.

When a provider accepts blood donated in advance, in anticipation of need by a specific beneficiary, the donations are considered replacements for the pints or units subsequently furnished them.

Extended care services covered under Part A include unreplaced blood (after satisfaction of the three pint blood deductible) and processing costs beginning with the first pint. However, blood transfusions are ordinarily performed by hospitals and not by SNF's. Thus, in the usual case, where an SNF patient needs blood, a participating hospital provides the blood and the laboratory services and performs the transfusion under arrangements with the SNF. In such a case, the hospital's charge for such blood and services is a blood cost and/or a blood processing cost to the SNF.

NOTE: Ambulance transportation of the patient between the hospital and SNF for the purpose of obtaining a blood transfusion is covered under Part B if the conditions for coverage of ambulance services are met.

Section 1861(v)(1) of the Social Security Act, as amended in 1972 by section 223 of P.L. 92-603, gives the Secretary the authority to set limits on reimbursable costs of providers for services furnished to Medicare beneficiaries. These limits may be based on estimates of costs necessary in the efficient delivery of needed health services. The limits shift the burden of justifying high cost to the provider which must request an exception to the limits based on certain criteria specified in regulations. Limits on home health agency and skilled nursing facility costs were first established in 1979.

Regulations implementing section 223 of P.L. 92-603 were published in the Federal Register on June 6, 1974. The regulations provided that prospective limits on Medicare reimbursable costs would be determined for various classes of providers depending on characteristics such as the type of services rendered, geographic, economic and demographic factors, size, mix of services, and type and mix of patients. The limits had to be based on cost report data or other indicators of current costs adjusted to reflect prospective periods to which the limits would apply. The regulations provided for the cost limits to be published as a Notice in the Federal Register. In addition, the regulations established the right of a provider to obtain reclassification, exemption from, or exception to the cost limits where justified by evidence presented. New providers were allowed a 5-year period to recover unreimbursed costs so that “start-up” conditions would not be a disadvantage. Companion regulations specified the conditions under which Medicare beneficiaries could be charged for amounts in excess of the cost limits. (See 11197. Provider Charges to Beneficiaries for Excess Costs).

The regulations were revised effective July 1, 1979. The new regulations established several new exceptions and specified a time limit for the filing and processing of requests for exceptions. An exemption for new providers of inpatient services was established to replace the administratively cumbersome process for recovery of unreimbursed costs. An exception was created covering newly established home health agencies. Also, the new regulations provided that CMS could, at its discretion, conduct an operational review of a provider and make future exception determinations contingent on the results of the review.

Although the methods for establishing the 223 limits vary by provider type, they all have several features in common. The limits are derived from reported costs of comparable facilities. Comparability is achieved by classifying providers according to predetermined criteria. The criteria are uniformly applied so that the basis for classification is identical for each facility. The result is a classification system that produces reasonably homogeneous groups so that costs from similar providers are compared. For each group costs beyond a certain statistical threshold are presumed, in the absence of evidence to the contrary, to be greater than the costs necessary to deliver health services efficiently. The cost limits, therefore, restrict the recognition of “reasonable cost” to a standard cost representative of that experienced by similar providers.

The initial system of hospital cost limits established in 1974, was rudimentary. Hospitals were classified using only two variables—bed size and economic environment. The latter variable was defined according to geographic location (urban vs. rural) and area per capita income levels. At that time, per capita income statistics were the best means available for distinguishing between high cost and low cost markets. Since no methods existed for measuring the effects of factors such as case mix and scope of service, limits were applied only to inpatient general routine costs which are less sensitive to differences in the types of cases treated. Routine costs are basically the costs of room, board, and general nursing services and exclude any costs associated with ancillary services and special care units, such as intensive or coronary care. Limits were set at the 90th percentile plus 10 percent of the median cost in each group. This permitted a wide margin for the effects of variables not recognized in the system.

The basic method for defining routine cost limits remained essentially unchanged until it was substantially revised for the hospital limits effective July 1, 1979. All urban hospitals were classified into four bed size groups without any distinction for economic environment. Rural hospitals were categorized into three bed size groups in the same way. The revisions were based on a number of suggestions from the hospital industry as well as CMS"s experience in administering the cost limits. In particular, a days of care adjustment was included to assure that the limits would not unfairly penalize hospitals where more intensive services may result in a shorter length of stay. At the same time, costs not reflective of relative efficiency of operation such as capital, malpractice insurance, and medical education expenses were excluded in deriving and applying the limits. The portion of cost attributable to wages was adjusted for differences in area wage levels by an index developed from hospital wages paid in each the locale. Hospital costs were adjusted for inflation using a “market basket” of goods and services hospitals typically purchased in furnishing routine care. An adjustment was provided to increase the limits for hospitals located in States furnishing fewer days of care per 1,000 Medicare beneficiaries than the national average. Limits were set at the 80th percentile of group cost. A further adjustment was provided effective July 1, 1980 to account for additional costs which result from teaching programs but which are not specifically identified as teaching costs. Also, the proportion of costs subject to adjustment by the wage index was increased to more closely approximate the actual economic environment. Because these improvements resulted in more homogeneous groupings, the level of the limits was set at 112 percent of the mean cost in each group effective July 1, 1980. (See Note below.)

The evolution of hospital cost limits provided the foundation for limits on inpatient routine costs of skilled nursing facilities (SNFs). The system, which took effect October 1, 1979, is similar in design to the system used for hospital cost limits. Comparability is achieved by classifying SNFs according to location (urban or rural) and status as either a freestanding or hospital-based facility. SNFs are classified in this manner because hospital-based SNFs as a class, incur higher costs as a result of the Medicare cost allocation requirements for distributing hospital overhead costs to the SNF departments. The initial limits were set at 115 percent of mean cost in each group. A revised set of limits incorporating several refinements and reducing the limits to 112 percent of mean cost in each group became effective October 1, 1980.

Section 223 limits on home health costs were first established July 1, 1979. The initial limits were based on a classification system which distinguished only between urban and rural providers. Limits were set at a fairly high level, the 80th percentile of per visit costs in each group.

Although CMS calculated limits for each type of home health service (skilled nursing, physical therapy, occupational therapy, speech therapy, medical social service, and home health aide service), the various cost finding methods used by providers made it impractical to apply the limits directly to the per visit costs of individual services. Therefore, HHA cost limits were applied on an aggregate basis. That is, the limits for each type of service were multiplied by the number of visits for that service. The sum of the resulting amounts was then compared to the agency"s aggregate allowable Medicare cost.

Effective July 1, 1980, HHA cost limits adopted several features common to the hospital and skilled nursing facility methodologies. The revised system was based on an urban/rural classification system with separate categories for hospital-based and freestanding agencies. The latter distinction recognized the different cost allocation Medicare requires of hospital-based facilities. The new methodology also incorporated the hospital wage index to recognize differences in area wage levels (an HHA specific index is presently not available) and relied on an HHA market basket for inflation adjustments. (See Note below.)

Cost limit systems for hospitals, SNFs and HHAs have continued to evolve into more sophisticated systems as experience has been gained. The effective dates of all three sets of limits are as follows:

HOSPITALS SNFs HHAs 07/01/74 10/01/79 07/01/79 07/01/75 10/01/80 07/01/80 07/01/76 10/01/81 07/01/81 07/01/77 10/01/77 10/01/78 07/01/79 07/01/80 07/01/81

NOTE: P.L. 97-35, the Omnibus Reconciliation Act of 1981, directed the Secretary to establish hospital cost limits at 108 percent of the group mean and HHA cost limits at the 75th percentile of costs. These changes become effective October 1, 1981.

A provider which anticipates that its costs for items or services will exceed the applicable cost limit, and believes it is eligible to charge beneficiaries based on its excess costs, and wishes to impose such charges, may submit to its intermediary a request for validation of the specified charges. The provider’s charge to the beneficiary for an item or service may not exceed the amount by which its allowable costs (or, if less, the customary charge) for the item or service, in the second preceding cost reporting period exceeds the current applicable cost limit for such items or services. (In the case of a new provider, an estimated equivalent is calculated for the cost for the second preceding cost period.) The provider may make such charges only if the following conditions are met:

The intermediary determines that the charges, based on excess costs, have been calculated in accordance with CMS instructions and notifies the CMS Regional Office in writing of the validated amounts.

The CMS RO publishes, in a newspaper or general circulation serving the provider’s locality, notice to the public that the provider is authorized to make the specified charges to Medicare beneficiaries (e.g., for general routine service costs) because its costs exceed those determined to be necessary in the efficient delivery of health services under Medicare. (The CMS RO arranges for the publication of the notice with the assistance of the servicing DO.) The CMS RO provides a copy of the notice and the press release for the DO servicing the provider. The following language is used:

Notice is hereby given, in accordance with section 1866(a)(2)(B)(ii) of the Social Security Act, that (Name of Provider) is entitled to charge its Medicare patients during the period (Date at least 15 days after publication and not before beginning of applicable cost year) to (End of applicable cost year) for certain services in addition to the payment for such services by the Centers for Medicare & Medicaid Services because the (Hospital, Skilled Nursing Facility, etc.) expects to incur costs in providing such services which will exceed the costs determined to be necessary for the efficient delivery of health care under the Medicare program. These charges may not be made, however, where the services furnished the patient are emergency services or where the physician attending the patient has a direct or indirect financial interest in the (Hospital, Skilled Nursing Facility, etc.). The permissible charges, which are in addition to charges permitted for deductible, coinsurance, and non-covered services, are as follows: (Example) Room, board, and other general routine services, $5.00 per day. Regional Administrator. Centers for Medicare & Medicaid Services.

In arranging for the beneficiary's admission, first service or start of care, the provider gives or sends to the beneficiary (or the beneficiary's representative) a schedule of all the items or services which the individual might need and for which the provider imposes a charge based on excess cost. This schedule should be given no later than the time of admission or the initiation of services.

No charge may be made for emergency services, i.e., services furnished in an emergency and not available in an equally accessible participating hospital which does not impose excess cost charges.

If the admitting physician has a direct or indirect financial interest of 5 percent or more in the provider, the latter cannot impose charges for excess costs upon the beneficiary.

Authorization to make charges for excess costs is effective only prospectively and does not extend beyond the end of the cost period for which the cost limit is applicable. Thus, where all requirements for imposing charges for excess costs (e.g., public notice of the charges) are not met, until after the beginning of the cost period for which the charges would be applicable, the charges can be made only during the remainder of the cost period.

Where program reimbursement for items or services to which the limits are applied plus the provider’s charges to beneficiaries exceed the provider’s actual cost for the cost period, program reimbursement will be reduced by the amount of the excess.

Where a provider requests a review of the applicable costs limits and the limit is raised as a result (e.g., because of a typical services) the provider is responsible for refunding to the beneficiary (or whoever paid the charges) amounts which, on the basis of the correction of the cost limit, were erroneously collected. Where the total erroneously collected on this basis from a beneficiary during the cost period is $5 or less, the provider need not make a refund unless the payer requests it. However, any amounts which are not refunded, either because they are within this tolerance or because the provider is unable to locate the beneficiary, will be offset against program payment.

The hospital"s decision that its services were not emergency services will ordinarily be subject to review only if the decision is questioned by the beneficiary or the beneficiary's representative. If the decision is questioned, the hospital obtains a written statement from the beneficiary as to why the beneficiary thinks the services were emergency services and has the attending physician complete an CMS-1771. Attending Physician"s Statement and Documentation of Medicare Emergency. (Change the reference to “participating hospital” or “hospital which participates under the Medicare program” to “hospital which makes no charges for excess costs”.) A copy of the patient"s hospital records, including a minimum history, physical examination, doctor"s orders, and all progress notes may be submitted in lieu of the CMS-1771. A statement that an emergency did not exist or the history or the diagnosis, without supporting information, is not sufficient. The statement concerning the character of the services is made by the physician attending the patient at the hospital. In exceptional situations, with an appropriate explanation showing justification, (e.g., the attending physician is dead) the certification may be made by another physician who has full knowledge of the circumstances at the time of admission.

The hospital forwards the beneficiary statement, the CMS-1771, or other evidence with a full explanation as to why it believes the services furnished were not emergency services through its intermediary to the CMS RO, with a request for a determination as to whether the services constitute emergency services.

The CMS RO reviews the evidence submitted by the hospital concerning the services in question and requests any necessary additional evidence. Unless the hospital has conceded that the services were furnished in the most accessible hospital, the regional office completes or has the DO complete an CMS-1771A (Emergency Services Accessibility Documentation and Determination) by personal or phone contact with the hospital.

As is the case in determining payment to nonparticipating hospital for emergency services, the CMS RO calls upon the Community Health Service (Public Health Service) regional office for assistance in evaluating the medical necessity of the case, including an accessibility determination if medical factors are involved.

The CMS RO sends the beneficiary a notice of its determination and a copy to the provider. If the services are found to be emergency services, the hospital must desist from further efforts to collect the charges and refund any amounts collected for them.

When the CMS RO makes a determination, it notifies the beneficiary and the provider. The notice includes one of the following paragraphs.

The medical facts related to the services you received have been carefully reviewed. Based on this review, we have found that no emergency existed which required immediate treatment by this hospital to prevent a threat to life or health. Therefore, the hospital was authorized to charge for the excess cost of the services.

The medical facts of your case have been carefully reviewed. Based on this review we have found that an emergency existed but that adequate treatment could have been provided in another hospital that does not impose charges for excess costs and was as accessible as the one in which you received care. Therefore, the hospital you used is authorized to make the charges described.

The medical facts related to the services you received have been carefully reviewed. Based on the review, we have found that an emergency existed which required immediate treatment by this hospital to prevent a threat to life or health. Therefore, the hospital is not free to charge you for the services and should refund any amount collected from you or any other person on such charges and we have so advised the hospital.

The Notices include the reconsideration filing time limit of 60 days.

When any provider in the DO’s service area has been authorized to make charges for excess costs, the DO must be alert to the possibility of complaints from beneficiaries regarding these charges for covered services. Notice having been given to the public and to the beneficiary concerning the provider’s right to charge (see HI 00601.600 ), the DO should be able to explain the basis for the charges. To assist the DO, the CMS RO issues lists of providers authorized to make specified charges and updates these lists periodically.

A beneficiary who believes that a high-cost provider’s charge for services is unwarranted because the services constitute emergency services files their protest with the provider. If the beneficiary telephones their protest to the DO, they should be referred to the provider. If the beneficiary makes their protest in person, obtain their statement on an SSA-795, explaining why the beneficiary thinks the services were emergency services. Forward a copy of the SSA-795 to the hospital for necessary action, and send the original to the CMS RO as a control.

Unless the hospital concedes that the services in question were furnished in the most accessible hospital, the CMS RO may call upon the DO to complete an HCFA-1771A by contact with the hospital. The references to “participating hospital” and “nonparticipating hospital” should be changed to “hospital which makes no charges for excess cost” and “hospital which charges for excess cost” respectively.

Where a beneficiary complains that an excess cost provider is charging more than the allowable excess costs, there is no appeal available. However, forward any such complaint to the CMS RO to resolve the issue. It will find either that the beneficiary is mistaken and provide them with an explanation; or, if the provider is wrong, assure that it rectifies its actions.

Subchapter Table of Contents Section Latest Transmittal HI 00610.001 Scope of Benefits(SMI) HI 00610.010 Incurred Expenses TN 2 11-22 HI 00610.020 When SMI Expenses Are Incurred TN 2 11-22 HI 00610.030 Physicians' Services TN 7 01-25 HI 00610.040 Provider-Based Physicians' Services TN 2 11-22 HI 00610.050 Services of Interns and Residents TN 2 11-22 HI 00610.060 Supervising Physicians in the Teaching Setting TN 2 11-22 HI 00610.070 Radiological and Pathological Services to Hospital Inpatients TN 2 11-22 HI 00610.080 Coverage of Chiropractic Services HI 00610.090 Services of Physical Therapists in Independent Practice TN 2 11-22 HI 00610.100 Services and Supplies TN 6 02-23 HI 00610.110 Drugs and Biologicals TN 2 11-22 HI 00610.120 Diagnostic X-Ray, Diagnostic Laboratory, and Other Diagnostic Tests TN 2 11-22 HI 00610.130 Diagnostic Laboratory Services Furnished by an Independent Laboratory HI 00610.140 Psychologists Practicing Independently TN 3 11-22 HI 00610.150 Otologic Evaluations TN 3 11-22 HI 00610.160 Portable X-Ray Services HI 00610.170 X-Ray, Radium and Radioactive Isotope Therapy HI 00610.180 Surgical Dressings, and Splints, Casts, and Other Devices Used for Reduction of Fractures and Dislocations TN 3 11-22 HI 00610.190 Rental and Purchase of Durable Medical Equipment (DME) TN 3 11-22 HI 00610.200 Definition of Durable Medical Equipment TN 3 11-22 HI 00610.210 Necessary and reasonable TN 3 11-22 HI 00610.220 Repairs, Maintenance, Replacement and Delivery HI 00610.230 Coverage of Supplies and Accessories HI 00610.240 Miscellaneous Issues Included in the Coverage of Equipment TN 5 02-23 HI 00610.250 Ambulance Service TN 5 02-23 HI 00610.260 Air Ambulance Service HI 00610.270 Prosthetic Devices HI 00610.280 Leg, Arm, Back, and Neck Braces, Trusses, and Artificial Legs, Arms and Eyes HI 00610.290 Dental Services TN 3 11-22 HI 00610.300 Examples of Durable Medical Equipment Covered and Not Covered TN 3 11-22 HI 00610.302 Ambulatory Surgery HI 00610.304 Antigens HI 00610.306 Pneumococcal Vaccine and Its Administration HI 00610.310 Treatment of End-Stage Renal Disease TN 4 12-22 HI 00610.320 Dialysis Settings HI 00610.330 Physician's Services for ESRD TN 4 12-22 HI 00610.340 Home Dialysis Aides Organ Transplants HI 00610.345 Organ Transplants HI 00610.350 Payment for Medical and Other Health Services Furnished by Hospitals and SNF's TN 4 12-22 HI 00610.360 Outpatient Hospital Services HI 00610.370 Outpatient Physical Therapy and Speech Pathology TN 4 12-22 HI 00610.375 Comprehensive Outpatient Rehabilitation Facility (CORF) Services TN 4 12-22 HI 00610.380 Outpatient Occupational Therapy Services HI 00610.390 Home Health Benefits TN 4 12-22 HI 00610.400 Duration of Home Health Services Under SMI HI 00610.410 Home Health Agencies Furnishing Medical and Other Health Services TN 4 12-22 HI 00610.420 Special Option While Under a Home Health Plan TN 5 02-23 HI 00610.430 Annual Part B Cash Deductible TN 4 12-22 HI 00610.431 Special Carryover Rule for Expenses Incurred Prior to 1981 HI 00610.440 Coinsurance HI 00610.450 Exceptions to Part B Deductible and Coinsurance HI 00610.460 Group Practice Prepayment Plan HI 00610.470 Medical Insurance Blood Deductible HI 00610.480 Noninpatient Psychiatric Services Limitation — Expenses Incurred for Physician's Services HI 00610.490 Noninpatient Psychiatric Services Limitation Computation HI 00610.510 Determining When the Limitation Applies TN 4 12-22

Medical insurance (Part B) covers the following types of services when a medical necessity exists.

Physicians' services are those professional services performed by a physician for a patient including diagnosis, therapy, surgery and consultation. The term “physician” includes a doctor of medicine or osteopathy legally authorized to practice by a State. It also includes certain services performed by a doctor of dentistry, doctor of podiatric medicine, and chiropractor; and a doctor of optometry with respect to establishing the necessity for prosthetic lenses. The term “physician” does not include such practitioners as Christian Science Practitioners or naturopaths.

Hospital services provided to outpatients are covered under Part B.

These are the same types of home health services as are provided under Hospital Insurance except that there is no prior hospitalization requirement. There is a 100 visit limit on Part B home health services in each calendar year.

Effective 7-1-81, the prior hospitalization requirement under Hospital Insurance and the 100 visit limitation under both Hospital and Supplementary Medical Insurance are eliminated.

These include a number of different medical services and supplies which may be necessary in the treatment and diagnosis of an illness or injury. They may be furnished as part of a doctor's treatment, or by a provider, an independent laboratory, the outpatient department of a hospital, by a medical clinic, or by an ambulatory surgical center. They include services and supplies (e.g., drugs and biologicals which cannot be self-administered) furnished as an incident to a physicians' professional service, of kinds which are commonly furnished in physicians' offices either without charge or the charge for which is usually included in the physicians' bills.

They also include diagnostic tests, such as X-rays and laboratory tests; radiation therapy; portable diagnostic X-ray services furnished in the patient's home; surgical dressings, and splints, casts, and similar devices; rental or purchase of durable medical equipment, such as a wheelchair, hospital bed, or oxygen equipment prescribed by a doctor to be used in the patient's home; prosthetic devices (other than dental) to replace all or part of an internal body organ (including contiguous tissue) or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ such as cardiac pacemakers and replacements or repairs of such devices; and ambulance services.

Part B also covers outpatient physical therapy and speech pathology services when such services are furnished by or under arrangements made by participating providers of services.

In general, medical insurance benefits are 80 percent of reasonable charges for covered services after an annual deductible has been met. There is also a Part B blood deductible equal to the charge of the first three pints of blood furnished in a calendar year. Expenses incurred for this blood deductible do not count as incurred expenses toward the annual cash deductible and are not creditable to the Part A blood deductible.

Citations:

Social Security Act, Section 1832

20 CFR 405.230-405.245

SMI includes coverage for expenses incurred in connection with:

A. Physicians' (see HI 00401.295 ) services, including surgery, consultation and home, office, and institutional calls, and services and supplies furnished incident to a physician's professional services;

B. Outpatient hospital services furnished incident to physicians' services;

C. Outpatient diagnostic services furnished by a hospital;

D. Outpatient physical therapy and effective 1/1/73, outpatient speech pathology services;

E. Diagnostic X-ray tests, laboratory tests, and other diagnostic tests;

F. X-ray, radium, and radioactive isotope therapy;

G. Surgical dressings, and splints, casts, and other devices used for reduction of fractures and dislocations;

H. Rental or purchase of durable medical equipment for use in the patient's home;

I. Ambulance service;

J. Prosthetic devices which replace all or part of an internal body organ;

K. Leg, arm, back, and neck braces, and artificial arms, legs and eyes;

L. Home health services for up to 100 visits during a calendar year. Effective July 1, 1981, the 100 visit limitation is eliminated.

M. Home dialysis supplies and equipment, self-care home dialysis support services, and institutional dialysis services and supplies;

N. Rural health clinic services;

O. comprehensive outpatient rehabilitation facility services;

P. certain ambulatory surgical center facility services;

Q. antigens;

R. pneumococcal vaccine and its administration.

Payment for physician services and additional medical and other health services is made on a reasonable charge (see HI 00401.305 ) basis. Payment is made to the beneficiary or to the physician or other party who renders services, depending on whether the itemized bill or the assignment procedure is used. Payment for covered medical insurance services rendered to beneficiaries by participating providers of services (hospitals, SNF's and HHA's) may be made only to the provider. Providers furnishing such medical and other health services (other than L, N, O and P) will be reimbursed by the intermediary on the basis of whichever is lower; the provider's customary charge or the reasonable cost of the covered services.

Clinics as suppliers of outpatient physical therapy and speech pathology services are reimbursed by the carrier on a reasonable cost basis. Intermediaries reimburse other providers of these services.

An organization which furnishes medical and other health services on a prepayment basis may elect to be paid on the basis of reasonable costs in lieu of reasonable charges (see HI 00208.095 ).

Payment may not be made under Part B for services furnished an individual if the individual is entitled to have payment made for those services under Part A. An individual is considered entitled to have payment made under Part A if the expenses incurred were used to satisfy a Part A deductible or coinsurance amount, or if payment would be made under Part A except for the lack of a request for payment or physician certification.

Membership dues, subscription fees, charges for service policies, insurance premiums, and other payments analogous to premiums which entitle enrollees to services, to repairs or replacement of devices, equipment or parts without charge or at a reduced charge, are not expenses incurred for covered items or services. Examples of such arrangements are memberships in ambulance companies, insurance for replacement of prosthetic lenses, and service contracts for durable medical equipment.

Ordinarily Part B expenses for items or services are considered to have been incurred on the date the individual receives the particular item or service. However, in the case of artificial limbs or other items made to the patient's order, the expense is considered to be incurred on the date the item is ordered, even though the item is not delivered until later. (See E. below for exceptions where the individual was not entitled on the date the individual ordered a custom-made item or was out of the country when such an item was ordered.)

Example:

In September 1980, John James, an SMI beneficiary, paid a supplier $25 (determined to be reasonable) for rental of a wheelchair for 1 month; however, John did not get the wheelchair until October 10, 1980. John submitted to the carrier an SMI claim (form HCFA-1490) with John's receipted bill showing payment in September and delivery on October 10, 1980. The only other Part B expense John had that year was $25 incurred in July. The charge for the wheelchair is considered to be “incurred” on October 10, 1980, the date of delivery. Accordingly, $25 will be carried over towards John's 1981 deductible.

Most surgeons and obstetricians bill patients an all inclusive package charge intended to cover all services associated with the surgical procedure or delivery of the child. All expenses for surgical and obstetrical care, including preoperative/prenatal examinations and tests and postoperative/ postnatal services are considered incurred on the date of surgery or delivery, as appropriate. This policy applies whether the physician bills on a package charge basis or itemizes the physician's bill separately for these items. See HI 00601.005 .

Occasionally, a physician's bill may include charges for additional services not directly related to the surgical procedure or the delivery. Such charges are considered incurred on the date the additional services are furnished.

The above policy applies only where the charges are imposed by one physician or by a clinic on behalf of a group of physicians. Where charges are imposed by more than one physician for surgical or obstetrical services, all preoperative/prenatal and postoperative/postnatal services performed by the physician who performed the surgery or delivery will be considered incurred on the date of the surgery or delivery. Expenses for services rendered by other physicians will be considered incurred on the date they were performed.

Allergists commonly bill separately for the intial diagnostic workup and for the treatment. When it is necessary for the physician to provide treatment over an extended period, the allergist may bill in a lump sum for all of the treatments. It is a common practice for the entire physician's charge to be divided over the period of the treatment and billed periodically; e.g., monthly or quarterly.

Expenses for allergists' services are considered incurred when the services are actually rendered. When an allergist bills periodically for a course of treatment; the carrier may in the absence of contrary information assume that the physician's periodic bill relates to services rendered prior to the billing date.

When treatment is discontinued for any reason, no payment may be made towards that portion of the fee or charge which relates to any services which were not rendered. Similarly, no payment can be made for any of the services covered by an inclusive lump-sum charge which were performed in a month before the patient's coverage had begun or after the patient's coverage had terminated.

Expenses for medical supplies, equipment, and other items not specifically made to order for the beneficiary are considered to have been incurred on the date the item was delivered. Therefore, if the order is cancelled before delivery, no reimbursement can be made. When the date of delivery is not specified on the bill, the carrier assumes, in the absence of evidence to the contrary, that the date of purchase was the date of delivery.

If a custom-made item was ordered but not furnished to a beneficiary because the individual died or because the order was cancelled by the beneficiary or because the beneficiary's condition changed and the item was no longer medically necessary or appropriate reimbursement can be made based on the supplier's expenses. (See paragraph 2. below for determination of the amount of reasonable charge.) In such cases, the expense is considered incurred on the date the beneficiary died or the date the supplier learned of the cancellation or that the item was no longer medically necessary or appropriate for the beneficiary's condition. If the beneficiary died or the beneficiary's condition changed and the item was no longer medically necessary or appropriate, payment can be made on either an assigned or unassigned claim. If the order was cancelled by the beneficiary for any other reason payment can be made to the supplier only.

The reasonable charge will be based on the services furnished and materials used, up to the date the supplier learned of the beneficiary's death or of the cancellation of the order or that the item was no longer medically necessary or appropriate. The carrier should determine the services performed and the amount of reasonable charge appropriate in the particular situation. The carrier should take into account any salvage value of the device to the supplier.

Where a supplier breaches an agreement to make a prosthesis, brace or other custom-made device for a Medicare beneficiary, e.g., an unexcused failure to provide the article within the time specified in the contract, payment may not be made for any work or material expended on the item. Whether a particular supplier has lived up to its agreement, of course, depends on the facts in the individual case.

Physicians' services mean the professional services performed by a physician or physicians for a patient including diagnosis, therapy, surgery, and consultation. The services must be rendered by the physician. A service may be considered to be a physician's service where the physician either examines the patient in person or is able to visualize some aspect of the patient's condition without the interposition of a third person's judgment. Direct visualization is possible by means of X-rays, electrocardiogram and electroencephalogram tapes, tissue samples, etc. Thus, for example, the interpretation by a physician of an actual electrocardiogram or electroencephalogram reading that has been transmitted via telephone (i.e., electronically rather than by means of a verbal description) is a covered service.

Professional services of the physician are covered if provided within the United States, and may be performed in a home, office, institution, or at the scene of an accident. A patient's home is anywhere the patient makes the patient's residence, e.g., a home for the aged, a nursing home, a relative's home.

Where inpatient services in a foreign hospital are covered, payment may also be made for (1) physicians' services rendered to the beneficiary while the beneficiary is an inpatient, and (2) physician's services rendered to the beneficiary outside the hospital on the day of the beneficiary's admission as an inpatient, provided the services were for the same condition for which the beneficiary was hospitalized. This provision became effective for services rendered on and after 1/1/73.

The definition of “physician,” for purposes of coverage of services furnished outside the United States, is expanded to include a foreign practitioner of one of the practices described in HI 00401.295 provided the practitioner is legally licensed to practice in the country in which the services were rendered. ( For coverage of ambulance services in connection with a covered foreign hospital stay, see HI 00610.250 .)

Services by means of a telephone call between physicians and beneficiaries (including those in which the physician provides advice or instructions to or on behalf of a beneficiary) and visits for the sole purpose of obtaining or renewing a prescription the need for which was previously determined, so that no examination of the patient is performed, are not covered services.

A consultation is reimbursable when it is a professional service furnished a patient by a second physician or consultant at the request of the attending physician. Such a consultation includes the history and examination of the patient as well as the written report, which is furnished to the attending physician for inclusion in the patient's permanent medical record. These reports must be prepared and submitted for retention in provider records when they involve patients of institutions responsible for maintaining such records, and in attending physicians' office records for other patients.

Concurrent care exists where services more extensive than consultative services are rendered by more than one physician during a period of time. The reasonable and necessary services of each physician rendering concurrent care could be covered where each is required to play an active role in the patient's treatment, for example, because of the existence of more than one medical condition requiring diverse specialized medical services.

To determine whether concurrent physicians' services are reasonable and necessary, the carrier decides (1) whether the patient's condition warrants the services of more than one physician on an attending (rather than consultative) basis, and (2) whether the individual services provided by each physician are reasonable and necessary.

While it would not be highly unusual for concurrent care performed by physicians in different specialties (e.g., a surgeon and an internist) or by physicians in different subspecialties of the same speciality (e.g., an allergist and a cardiologist) to be found reasonable and necessary, the need for such care by physicians in the same specialty or subspecialty (e.g., two internists or two cardiologists) would occur infrequently since in most cases both physicians would possess the skills and knowledge necessary to treat the patient. However, circumstances could arise which would necessitate such care. For example, a patient may require the services of two physicians in the same specialty or subspecialty when one physician has further limited practice to some unusual aspect of that specialty, e.g., tropical medicine. Similarly, concurrent services provided by a family physician and an internist may or may not be found to be medically necessary, depending on the circumstances of the specific case. If it is determined that the services of one of the physicians are not warranted by the patient's condition, payment may be made only for the other physician's (or physicians') services.

Once it is determined that the patient requires the active services of more than one physician, the individual services must be examined for medical necessity, just as where a single physician provides the care. For example, even if it is determined that the patient requires the concurrent services of both a cardiologist and a surgeon, payment may not be made for any services rendered by either physician which, for that condition, exceed normal frequency or duration, unless, of course, there are special circumstances requiring the additional care.

The carrier must also assure that the services of one physician do not duplicate those provided by another, e.g., where the family physician visits during the post-operative period primarily as a courtesy to the patient.

Hospital admission services performed by two physicians for the same beneficiary on the same day could represent reasonable and necessary services, provided, as stated above, that the patient's condition necessitates treatment by both physicians. The level of difficulty of the service billed for may vary between the physicians, depending on the severity of the patient. For example, the admission services performed by a physician who has been treating a patient over a period of time for a chronic condition would not be as involved as the services performed by a physician who has had no prior contact with the patient and who has been called in to diagnose and treat a major acute condition.

A correct coverage determination can be made on a concurrent care case only where the claim is sufficiently documented for the carrier to determine the role each physician played in the patient's care (i.e., the condition or conditions for which the physician treated the patient). If in any case the role of each physician involved is not clear, the carrier requests clarification.

Patient-initiated second opinions relating to the medical need for surgery, or for major nonsurgical diagnostic and therapeutic procedures (e.g., invasive diagnostic techniques such as cardiac catheterization and gastroscopy) are covered. In the event that the recommendation of the first and second physician differ, a third opinion is also covered. Second and third opinions are covered even though the surgery or other procedure, if performed, is determined not covered.

Payment (based on the reasonable charge ordinarily allowed for consultations and related services), may be made for the history and examination of the patient, and for covered diagnostic services required to properly evaluate patient need for a procedure and to render a professional opinion.

When a hospital radiologist does the initial interpretation of a radiological exam which the hospital radiologist or a qualified technician performed on a hospital patient, the interpretation is clearly covered as a physician's service. In addition, when a hospital radiologist interprets an X-ray that has already been interpreted by another physician, that interpretive service almost always constitutes patient care and, thus, would also qualify as a physician's service. The radiologist's interpretation is a specialist's evaluation of the interpretation of the attending physician or the emergency room physician, and the radiologist's findings could affect the course of treatment initiated or cause a new course of treatment to begin. The fact that the particular patient is no longer on the hospital premises at the time the radiologist interprets the X-ray should not be controlling in deciding whether there was a physician's service, since the patient may be recalled. If, on the other hand, the radiologist is interpreting the X-ray solely for “quality control” purposes, e.g., randomly selecting films to appraise the technician's performance, quality of the film or equipment, the service should be considered a hospital service reimbursable under Part A of the Medicare program. These same rules would apply to a cardiologist's diagnostic interpretations previously interpreted by an attending or an emergency room physician.

Part of an attending/emergency room physician's overall workup or treatment of a patient would include the interpretation of an X-ray or EKG ordered by the attending/emergency room physician. Thus, a separate charge would not be allowed for an X-ray or EKG interpretation performed by the attending physician after the hospital's radiologist's or cardiologist's interpretation (including in those terms any physician working in either capacity).

Charges for the services of a physician in completing Form CMS-1490S, a statement in lieu of an CMS-1490S, or an itemized bill are not covered.

See Form CMS-1490S https://www.cms.gov/medicare/cms-forms/cms-forms/downloads/cms1490s-english.pdf

The services of provider-based physicians (e.g., those on salary, or percentage arrangement, lessors of departments, etc., whether or not they bill patients directly) include two distinct elements, the professional component, and the provider component.

The professional component of provider-based physicians' services includes those services directly related to the medical care of the individual patient. Services to individual patients must be billed by the physician, or, with the physician's authorization, by the provider. When such services are performed by a faculty member of a medical, osteopathic, dental or podiatry school, billing by the school with the physician's authorization is an additional alternative.

Provider-based physicians often perform professional services other than those directly related to the medical care of individual patients. These may involve teaching, administrative, and other services that benefit the provider's patients as a group. Such services, not directly related to an individual patient, if compensated, are considered in computing reimbursable provider costs. Reimbursement for such costs is made under Part A when they relate to inpatient services and under Part B when they relate to outpatient services and inpatient ancillary services when Part A benefits are not payable.