CMS Pub. 100-04, ch. 3, § 40

A. - General

Days of utilization are charged based upon actual days of coverage including grace and

waiver days. The number of covered days used are maintained by CMS to track the

beneficiary's eligible days in a benefit period. The hospital collects the coinsurance, if

applicable, for only the number of days charged against the beneficiary's utilization record

maintained by CMS. For example, if the mean length of stay for a DRG is 10 days and the

beneficiary is discharged after 3, only 3 days of utilization is charged. In a like situation, if

the DRG mean length of stay is 10 days and the beneficiary is discharged after 15, the 15

days are charged against the utilization record.

NOTE: There are some exceptions to this rule under LTCH PPS. See §150.4.

Coinsurance, if applicable, is payable by the beneficiary for the number of days used. The

hospital subtracts the coinsurance amount from the DRG payment. Days after benefits are

exhausted are not charged against the beneficiary's utilization even though the hospital may

receive the full DRG payment.

The basic prospective payment amount will be paid if:

• There is at least l day of utilization left at the time of admission and that day is also a

day of entitlement (e.g., a day before the beneficiary discontinued voluntary Part A

entitlement by not paying the premium).

• There is at least l day for which payment may be made under the guarantee of

payment. (If benefits are exhausted prior to admission and no payment may be made

under guarantee of payment, only Part B benefits are available.)

• The beneficiary becomes entitled after admission. The hospital may not bill the

beneficiary or other persons for days of care preceding entitlement except for days in

excess of the outlier threshold.

Utilization is not counted for any days treated as noncovered, except as described below:

• Utilization is not counted for any nonentitlement days, or days after benefits are

exhausted (including guarantee of payment days), even if those days are treated as

covered for outlier calculation or treated as Medicare patient days for the cost report.

• The length of stay exceeds the day/cost outlier threshold (Day outliers were

discontinued at the end of FY 1997), utilization is counted for medically unnecessary

days which are noncovered but for which the hospital may not charge the beneficiary

because the requirements of §40.2 were not met. See §40.2.2 for identification of

these days.

• If the adjusted cost of the stay exceeds the cost outlier threshold, utilization is

counted for any medically unnecessary days on which all Part A services are treated

as noncovered under §40.2.B and for which the hospital may not charge the

beneficiary. (Where only ancillary services are denied, all days are counted as

covered.)

Lifetime reserve days (LTR) for an inpatient hospital stay for which prospective payment

may be made is subject to the following:

If the beneficiary had one or more regular benefit days (full or coinsurance days) remaining

in the spell of illness when admitted, there is no advantage in using lifetime reserve days.

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

(Day outliers were discontinued at the end of FY 1997) portion of the stay. IPPS uses

Occurrence Span code 70 for the covered non-utilization period after regular benefit days are

exhausted or when only LTR days are exhausted. For example:

EXAMPLE 1: No Cost Outlier, only LTR Days available and Exhaust prior to discharge

Dates of Service 01/05 - 01/16

Medically necessary days 11

Benefit days available VC 83 1 LTR

Covered days VC 80 1

Noncovered days VC 81 10

Cost report days 11

OC A3 01/15(includes covered non-utilization

period)

OSC 70 01/06 - 01/15

Room & Board revenue code 11 Total & Covered units

Medicare approved revenue codes Charges in covered

Reimbursement Full DRG payment, no cost outlier

Beneficiary Liability: LTR copayment amount

EXAMPLE 2: No Cost Outlier, Coinsurance Days available and Exhaust prior to discharge

Dates of Service 01/05 - 01/16

Medically necessary days 11

Benefit days available VC 82 3 Coinsurance

Covered days VC 80 3

Noncovered days VC 81 8

Cost report days 11

OSC 70 01/08 - 01/15

Room & Board revenue code 11 Total & Covered units

Medicare approved revenue codes Charges in covered

Reimbursement Full DRG payment, no cost outlier

Beneficiary Liability Coinsurance copayment amount

After regular benefits have been exhausted, lifetime reserve days will be used automatically

for outlier days unless the beneficiary elects not to use them, or the average daily charges for

outlier days to be reimbursed as lifetime reserve days do not exceed the lifetime reserve day

coinsurance amount. (In the latter case the beneficiary is deemed to have elected not to use

lifetime reserve days for outlier days.) An election not to use lifetime reserve for outlier days

applies to all outlier days in an admission.

• If the beneficiary had no regular benefit days remaining when admitted, available

lifetime reserve days are used automatically for each day of the stay. Exceptions

exist if the beneficiary elects not to use lifetime reserve days, or the charges for

which the beneficiary is liable, if electing not use lifetime reserve days, do not exceed

the charges for which the beneficiary would be liable if the lifetime reserve days were

used. Using lifetime reserve days, the beneficiary would be responsible for the sum

of the coinsurance amounts for the lifetime reserve days that would be used plus the

total charges for outlier days, if any, for which no lifetime reserve days are available.

(In the latter case the beneficiary will be deemed to have elected not to use any

lifetime reserve days.)

An election by the beneficiary not to use lifetime reserve days applies to the entire stay and

precludes any payment for the stay. A deemed election not to use lifetime reserve days

applies to the entire stay and precludes any payment for the stay unless payment may be

made under the guarantee of payment.

The number of days for which utilization is charged may be different from the number used

in Pricer to compute outlier status or the number of Medicare patient days shown on the cost

report.