Medicare Inpatient Claims with Non-Covered Procedures

on Wednesday, 18 November 2009. All News Items

In Transmittal 1838 released October 28, 2009, CMS published information concerning the requirement for separate claims when both covered and non-covered procedures are performed during an inpatient hospital admission. 

Inpatient hospital MS-DRG assignment is determined by the patient’s principal diagnosis, secondary diagnoses, and any procedures performed, as well as age, gender, and discharge disposition.  When both covered and non-covered procedures are reported during an inpatient hospital admission, the Medicare claims processing system is unable to decipher what procedure code(s) is/are non-covered when grouping to the MS-DRG.  Therefore, effective for inpatient discharges on and after April 1, 2010, hospitals must submit ICD-9 CM codes for non-covered procedures performed in the same inpatient stay with covered procedure(s) on a separate claim. 

Hospitals must separate a hospital stay into two claims when both covered and non-covered procedures are reported. 

  • One claim with covered services/procedures unrelated to the non-covered ICD-9-CM procedures on a Type of Bill (TOB) 11X (with the exception of TOB 110), and
  • The other claim with the non-covered services/procedures on a TOB 110 (no-pay claim).
    The Statement Covers Period should match on both the covered and the non-covered claims.

Medicare will deny no-pay claims as non-covered with:

  • claim adjustment reason code 50 and
  • group code CO (Contractual Obligation) if a Hospital Issued Notice of Non-Coverage (HINN) was not issued or
  • group code PR (Patient Responsibility) if a HINN was issued.

Note: Hospitals do not have to submit claims for statutorily non-covered services (e.g. cosmetic surgery), but may voluntarily wish to do so; for example, to receive a Medicare denial.  This transmittal requires that ICD-9 CM codes for non-covered procedures not be reported on the same inpatient claim with covered services.  If the hospital wishes to bill non-covered procedure(s) and related non-covered charges for whatever reason (e.g. a Medicare denial), the hospital may submit such services/charges on a TOB 110 (no-pay claim).

Refer to the complete transmittal or MLN Matters Article 6547 for more information.

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