(Medicare Benefit Policy Manual)

On July 1, Mrs. Smith was discharged from a hospital after being hospitaliz ed for 105 days.  The hospital billed Medicare for 90 regular days plus 15 lifetime reserve days.  On October 20 (more than 90 days following discharge), Mrs. Smith learned that a private insurer could pay for the last 15 days of the stay.  She informed the hospital that she wished to file a retroactive election not to use lifetime reserve days for the last 15 days of the stay.  The hospital agreed to the request, and Mrs. Smith filed an election form.  The hospital refunded the Medicare payment and billed the private insurer instead.  30.4 - Period Covered by Election  (Rev. 1, 10- 01-03)  A3-3106.2.D, HO -219.2.D   30.4.1 - Hospitals Not Reimbursed Under Prospective Payment System  (Rev. 1, 10- 01-03) A3-3106.2.D.1, HO -219.2.D.1  A beneficiary election not  to use reserve days for a particular hospital stay may apply to the entire stay or to a single period of consecutive days in the stay but cannot apply to selected days in a stay.  If an election (whether made prospectively or retroactively) not to use res erve days is made effective with the first day for which reserve days are available, it may be terminated at any time.  After termination of the election, all hospital days would be covered to the extent that reserve days are available.  (Thus, an individual who has private insurance that covers hospitalization beginning with the first day after 90 days of benefits have been exhausted, may terminate the election as of the first day not covered by the insurance plan.)  If an election not to use reserve days is made effective beginning with any day after the first day for which reserve days are available, it must remain in effect until the end of that stay unless the entire election is revoked in accordance with 40.2 .  30.4.2 - Hospitals Reimbursed Under Prospective Payment System  (Rev. 1, 10- 01-03)  The rules described in 30.4.1  apply, and also for PPS discharges on and after October 1, 1997, and involving cost outlier status, a beneficiary whose 90 days of benefits are exhausted before cost outlier status is reached must elect to use lifetime reserve days for the hospital to be paid cost outlier payments.  Cost outlier status is reached on the day that charges reach the cost outlier status for the applicable DRG for inpatient PPS or CMS in the case of IRF PPS.  Use of reserve days must begin on the day following that day, to perm it payment for outlier charges.  If the beneficiary elects not to use lifetime reserve days where benefits are exhausted the hospital may charge the beneficiary for the charges that would have been paid as cost outlier.  For discharges before October 1, 1997, cost outlier status has no impact on reserve days, but the following rules applied for day outlier claims.  Day outliers were discontinued for discharges on and after October 1, 1997.   See the Medicare Claims Processing Manual, Chapter 1, Inpatient Ho spital Services, for billing and payment requirements.   30.4.2.1 - Beneficiary Has One or More Regular Benefit Days Available 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 d ays 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 r eserve 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 L TR 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.  S ince 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 b e 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.   30.4.2.2 - Beneficiary Has No Regular Days Available at Time of Admission - Discharge Before October 1, 1997  (Rev. 1, 10- 01-03) A3-3106.2.D.2.b, HO -219 .2.D.2.b   If the beneficiary enters the hospital after completely exhausting regular benefit days, available lifetime  reserve days will be used automatically for each day of the stay unless the beneficiary elects not to use lifetime reserve days or is deemed to have elected not to use lifetime reserve days.  A beneficiary is deemed to have elected not to use lifetime reserve days if the total charges for the stay, i.e., the charges for which the beneficiary would be liable by electing to not use lifetime reserve days, are equal to or less than the charges for which the beneficiary would be liable even after electing to us e lifetime reserve days.  In the latter case, charges are equal to 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 would be available be cause lifetime reserve days are exhausted.  (See 30.1(3) .)  In the case of a hospital reimbursed under the prospective payment system, an election by a beneficiary not to use lifetime reserve days must apply to the entire hospital stay.  If the beneficiary elects not to use lifetime reserve days, Medicare will not pay for any portion of the stay.  Similarly, a deemed election not to use lifetime reserve days must apply to the entire stay and will preclude any payment for th e stay.   EXAMPLE 5:   Mr. Amos was admitted to a hospital on March 10, 1995, and discharged on June 8 utilizing 90 regular days of coverage.  On August 1, he entered the hospital again and was discharged on September 8.  For this DRG, outlier days began on August 26.  At the time of the second admission, Mr. Amos still had 60 lifetime reserve days available.  The hospital charges for this stay were $17,000.  The sum of the coinsurance amounts for the lifetime reserve days needed to pay for this stay is $15,428 ($406 per day X 38 days).  Since the charges for the stay are greater than the sum of lifetime reserve days coinsurance amounts, there is no deemed election not to use lifetime reserve days.  Mr. Amos has the option:   1. To make no lifetime reserve electio n, in which case Medicare will pay for the entire stay including the outlier days, and Mr. Amos will use 38 lifetime reserve days; or   2. To elect not  to use lifetime reserve days, in which case Medicare will not pay for any portion of the stay.   EXAMPLE 6:   Same facts as Example 5 except the beneficiary has only 35 lifetime reserve days available at the time of the second admission and total charges for the stay are $13,000.  Included in the hospital charges is $1,200 for the last 3 days of the stay.  The sum of the coinsurance amounts for the lifetime reserve days that could be used is $14,210 ($406 per day X 35 days).  Since the charges for the entire stay, $13,000, are less than $15,410 (the sum of the coinsurance amounts for days for which lifetime reserv e days are available ($14,210) plus the total charges for the outlier days for which lifetime reserve days are not available ($1,200)), the beneficiary is deemed to have elected not to use any lifetime reserve days for the stay.   30.5 - Election Where Bene ficiary Is Incapacitated  (Rev. 1, 10- 01-03)  A3-3106.2.E, HO -219.2.E   If a beneficiary is physically or mentally unable to file an election not to use reserve days, certain other individuals may file the election on the beneficiary's behalf:   1. If the charges will be paid by other hospital insurance or if some other person agrees to pay the hospital for the services, an election not to use reserve days may be filed by any of the individuals who may sign a Request for Payment on behalf of the beneficiary (e.g. , relative, legal guardian).   2. If an incapacitated beneficiary does not have other hospital insurance, and no other person agrees to pay the hospital for the services, only the beneficiarys legal representative may file an election on the beneficiary's beh alf.  30.6  Lifetime Reserve Days and Long Term Care Hospital (LTCH) Prospective Payment System (PPS)  (Rev. 1, 10- 01-03)   When a Long Term Care Hospital inpatient stay triggers a full LTC -DRG payment (i.e., it exceeds the short -stay outlier threshold), Medicares payment is for the entire stay up to the high cost outlier threshold, regardless of patient coverage.  But for lengths of stay equal to or below 5/6  of the average length of stay for a specific LTC -DRG, Medicares payment is only for covered day s.