CMS Pub. 100-04, ch. 3, § 10.4

All items and nonphysician services furnished to inpatients must be furnished directly by the

hospital or billed through the hospital under arrangements. This provision applies to all

hospitals, regardless of whether they are subject to PPS.

A. - Other Medical Items, Supplies, and Services

The following medical items, supplies, and services furnished to inpatients are covered under

Part A. Consequently, they are covered by the prospective payment rate or reimbursed as

reasonable costs under Part A to hospitals excluded from PPS.

• Laboratory services (excluding anatomic pathology services and certain clinical

pathology services);

• Pacemakers and other prosthetic devices including lenses, and artificial limbs, knees,

and hips;

• Radiology services including computed tomography (CT) scans furnished to

inpatients by a physician's office, other hospital, or radiology clinic;

• Total parenteral nutrition (TPN) services; and

• Transportation, including transportation by ambulance, to and from another hospital

or freestanding facility to receive specialized diagnostic or therapeutic services not

available at the facility where the patient is an inpatient.

The hospital must include the cost of these services in the appropriate ancillary service cost

center, i.e., in the cost of the diagnostic or therapeutic service. It must not show them

separately under revenue code 0540.

EXCEPTIONS:

• Pneumococcal Vaccine - is payable under Part B only and is billed by the hospital

using the ASC X12 837 institutional claim format or on the Form CMS-1450.

• Ambulance Service - For purposes of this section "hospital inpatient" means a

beneficiary who has been formally admitted it does not include a beneficiary who is

in the process of being transferred from one hospital to another. Where the patient is

transferred from one hospital to another, and is admitted as an inpatient to the second,

the ambulance service is payable under only Part B. If transportation is by a hospital

owned and operated ambulance, the hospital bills separately using the ASC X12 837

institutional claim format or on Form CMS-1450 as appropriate. Similarly, if the

hospital arranges for the ambulance transportation with an ambulance operator,

including paying the ambulance operator, it bills separately. However, if the hospital

does not assume any financial responsibility, the billing is to the A/B MAC (B) by

the ambulance operator or beneficiary, as appropriate, if an ambulance is used for the

transportation of a hospital inpatient to another facility for diagnostic tests or special

treatment the ambulance trip is considered part of the DRG, and not separately

billable, if the resident hospital is under PPS.

• Part B Inpatient Services - Where Part A benefits are not payable, payment may be

made to the hospital under Part B for certain medical and other health services. See

Chapter 4 for a description of Part B inpatient services.

• Anesthetist Services "Incident to" Physician Services - If a physician's practice

was to employ anesthetists and to bill on a reasonable charge basis for these services

and that practice was in effect as of the last day of the hospital's most recent 12-month cost reporting period ending before September 30, 1983, the physician may

continue that practice through cost reporting periods beginning October 1, 1984.

However, if the physician chooses to continue this practice, the hospital may not add

costs of the anesthetist’s service to its base period costs for purposes of its transition

payment rates. If it is the existing or new practice of the physician to employ

certified registered nurse anesthetists (CRNAs) and other qualified anesthetists and

include charges for their services in the physician bills for anesthesiology services for

the hospital's cost report periods beginning on or after October 1, 1984, and before

October 1, 1987, the physician may continue to do so.

B. - Exceptions/Waivers

These provisions were waived before cost reporting periods beginning on or after October 1,

1986, under certain circumstances. The basic criteria for waiver was that services furnished

by outside suppliers are so extensive that a sudden change in billing practices would threaten

the stability of patient care. Specific criteria for waiver and processing procedures are in

§2804 of the Provider Reimbursement Manual (CMS Pub. 15-1).