CMS Pub. 100-02, ch. 5, § 30.4.2.1

at Time of Admission to PPS Hospital - Discharge Before October 1,

1997

(Rev. 1, 10-01-03)

A3-3106.2.D.2.a, HO-219.2.D.2.a

The section applies to discharges before the outlier policy was changed effective October

1, 1997, to eliminate day outliers.

If the beneficiary has one or more regular benefit days (not lifetime reserve days)

remaining in the benefit period upon entering the acute or rehabilitation hospital,

Medicare will pay the entire prospective payment amount for nonoutlier days. Therefore,

there will be no advantage to a beneficiary to use lifetime reserve days for nonoutlier

days if at least one day of the regular 90 days of coverage remains when the beneficiary

enters the hospital. In this situation, the beneficiary will be deemed to have elected not to

use lifetime reserve days for the nonoutlier part of the stay. The beneficiary may also

elect not to use lifetime reserve days for outlier days but such an election must apply to

all outlier days.

NOTE: This policy is not applicable to Long Term Care Hospital PPS short stay

outliers. See §30.6 for the LTCH PPS short stay outlier LTR policy.

EXAMPLE 3:

Mr. Spencer was admitted to a hospital on April 1, 1995, and discharged on June 29,

utilizing 89 regular days of inpatient care. On August 1, he entered the hospital again.

For this DRG, outlier days would have begun August 26, but Mr. Spencer was discharged

on August 23, prior to the commencement of outlier days. Since the first two days of the

second stay were regular coverage days, Medicare will reimburse the hospital the

prospective reimbursement amount for the entire stay. Since no outlier days are

involved, there is no advantage to the beneficiary in using lifetime reserve days.

Therefore, Mr. Spencer will be deemed to have elected not to use any lifetime reserve

days for that stay.

Even though lifetime reserve days are not used for nonoutlier days where the beneficiary

has at least one regular day available at the time of admission, payment will be made for

outlier days occurring after regular coverage days have been exhausted unless:

a. The beneficiary elects not to use lifetime reserve days for the outlier days; or

b. The beneficiary is deemed to have elected not to use lifetime reserve days for the

outlier days.

A beneficiary is deemed to have elected not to use lifetime reserve days for outlier days if

the average daily charge for the outlier days for which lifetime reserve days would

otherwise be available is equal to or less than the daily coinsurance amount for the

lifetime reserve days. In that situation, the beneficiary would be required to pay for all of

the hospital's charges for such outlier days regardless of his or her election and therefore

would not benefit from the use of lifetime reserve days. If the beneficiary elects not to

use lifetime reserve days for outlier days, such an election must apply to all outlier days.

If the beneficiary elects not to use lifetime reserve days for outlier days Medicare will

pay for the nonoutlier portion of the stay and will make no payment for the outlier days.

EXAMPLE 4:

Mr. Johnson, who had never used any of his lifetime reserve days, was admitted to the

hospital on April 1, 1995, and discharged on June 29, utilizing 89 regular days of covered

inpatient care. On August 1, Mr. Johnson entered the hospital again and was discharged

on September 5. For this DRG, outlier days began on August 26. Medicare will

reimburse the hospital the prospective payment amount for the nonoutlier portion of the

stay. The average daily charges were $450 for the outlier portion of the stay. The

lifetime reserve day coinsurance amount is $406. Since the average daily charge for the

outlier days is more than the daily coinsurance amount for lifetime reserve days, there is

no deemed election not to use lifetime reserve days for the outlier portion of the stay. For

outlier days Mr. Johnson has the option:

1. To make no lifetime reserve election, in which case Medicare will pay for the

nonoutlier portion of the stay and for the 10 outlier days, August 26 through

September 4, and Mr. Johnson will have utilized 10 lifetime reserve days; or

2. To elect not to use his lifetime reserve days for the 10 outlier days, in which case

Medicare will pay only for the nonoutlier portion of the stay, and Mr. Johnson

will not have used any lifetime reserve days.