CMS Pub. 100-04, ch. 3, § 20.3.1.3

for Cost Reporting Periods beginning on or after October 1, 2009

(Rev. 2627, Issued 01-04-13, Effective 10-01-12, Implementation 10-01-12)

Observation Days

For cost reporting periods beginning on or after October 1, 2009, observation days for patients

later admitted as an inpatient will no longer be included in the Medicare disproportionate patient

percentage (DPP). In addition, observation bed days for patients later admitted as an inpatient

will no longer be counted towards a hospital’s available bed day count for DSH and IME.

Between October 1, 2003, and October 1, 2009, hospitals had reported on their cost report the

Medicaid observation patient days for admitted patients and total observation patient days for

admitted patients for inclusion in the Medicaid fraction of the Medicare DPP, and for the

determination of the available bed day count for DSH and IME. However, effective for cost

reporting periods beginning on or after October 1, 2009, observation patient days are no longer

included in the DPP, and observation bed days will no longer be counted towards the available

bed day count for DSH or IME.

Labor and Delivery Patient Days

For cost reporting periods beginning on or after October 1, 2009, we will include in the Medicare

disproportionate patient percentage (DPP) patient days associated with maternity patients who

were admitted as inpatients and were receiving ancillary labor and delivery services at the time

the inpatient routine census is taken, regardless of whether the patient occupied a routine bed

prior to occupying an ancillary labor and delivery bed and regardless of whether the patient

occupies a “maternity suite” in which labor, delivery, recovery and postpartum care all take place

in the same room. Prior to October 1, 2009, patient days associated with beds used for ancillary

labor and deliver were not counted in the DPP. However, for cost reporting periods beginning on

or after October 1, 2009, but before cost reporting periods beginning on or after October 1,

2012, if a patient, admitted to the hospital as an inpatient, occupies an ancillary bed for labor and

delivery, the patient days associated with the ancillary labor/delivery services will be counted in

the DPP. For cost reporting periods beginning on or after October 1, 2009 but before cost

reporting periods beginning on or after October 1, 2012, this policy applies only to counting

patient days, and does not change the policy of determining the number of available beds in 42

CFR 412.106(a). Beds associated with ancillary labor/delivery services are not included in the

available bed day count.

Reporting Inpatient Days in the Numerator of the Medicaid Fraction

Hospitals can report days in the numerator of the Medicaid fraction by one of three

methodologies. For cost reporting periods beginning on or after October 1, 2009, hospitals can

report Medicaid-eligible days based on date of discharge, date of admission, or dates of service.

A hospital is required to notify CMS (through the fiscal intermediary or MAC) in writing if the

hospital chooses to change its methodology of counting days in the numerator of the Medicaid

fraction. The written notification should be submitted at least 30 days prior to the beginning of

the cost reporting period to which the change would apply. The written notification must specify

the changed methodology the hospital wishes to use and the cost reporting period for which the

methodology would apply. The change in methodology would be effective on the first day of the

specified cost reporting period for the entire cost reporting period. The change would be effective

for all future cost reporting periods unless the hospital submits a subsequent written notification

to change its methodology.