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September 08, 2005

Medicare Disproportionate Share Adjustment – Counting Labor, Delivery, Recovery, and Postpartum Inpatient Days and Beds

In the August 1, 2003 Federal Register, the Centers for Medicare and Medicaid Services (CMS) finalized its clarification of policy position regarding excluding maternity labor and delivery room days from the Title XIX days (Medicaid, Section 1115, e.g., TennCare) and from the total days for purposes of determining the Medicare disproportionate share (DSH) adjustment.[1] Since Medicare policies are subject to varying interpretations, hospitals should determine the impact of such policies on their Medicare reimbursements and settlement determinations. They will want to appropriately protect their appeal rights and consider appealing adverse financial impacts that may be the subject of varying interpretations. For example, it could be contended that all maternity days should be included for purposes of the DSH determination. And, in addition, patients in birthing rooms (labor/delivery/recover/postpartum beds) first occupy a routine nursing bed prior to commencement of ancillary services since the bed provides a simultaneous multi-service function and therefore the days should be counted for DSH. Medicare regulations regarding counting patient days for DSH are found at 42 CFR§412.106(a)(1)(ii).[2] Following is the CMS policy clarification guidance regarding counting maternity labor and delivery room patient days.

Medicare’s (CMS) current policy regarding the treatment of labor and delivery bed days is that a maternity inpatient in the labor/delivery room at midnight is not included in the census of inpatient routine care if the patient has not occupied an inpatient routine bed at some time since admission.[3] For example, if a Medicaid patient is in the labor room at the census and has not yet occupied a routine bed, the bed day is not counted as a routine bed day of care in Title XIX days (Medicaid, Section 1115, e.g., TennCare) or total days and, therefore, is not included in the patient day counts.[4] If the patient is in the labor room at the census but had first occupied a routine bed, a routine bed day is counted in Title XIX days and total days, for purposes of the Medicare DSH reimbursement formula and for apportioning the cost of routine care on the cost report (consistent with CMS policy to treat days, costs, and beds similarly).

Many hospitals have restructured or are restructuring their maternity areas from separate labor and delivery rooms apart from the postpartum rooms, to single labor, delivery room, and postpartum (LDRP) rooms. In order to appropriately track the days and costs of LDRP rooms, CMS requires an apportionment between the labor and delivery ancillary cost center and the routine adults and pediatrics cost center for the cost report by determining the proportion of the patient's stay in the LDRP room that the patient was receiving ancillary services (labor and delivery) as opposed to routine adult and pediatric services (recovery and postpartum).

For example, assume that twenty-five percent (25%) of the patient's time in the LDRP room was for labor/delivery services and seventy-five (75%) percent for routine care, over the course of a 4-day stay in the LDRP room. In this instance CMS indicates that 75% of the time the patient spent in the LDRP room would be applied to the total bed days and costs (resulting in 3 routine adults and pediatrics bed days for this patient, 75% of 4 total days). The resulting days (or portion of days) are included in total days and in Title XIX days for all purposes. For purposes of determining hospital bed count, the time when the beds are unoccupied should be counted as available bed days using an average percentage (for example, 75% adults and pediatrics and 25% ancillary) based on all patients. In other words, 75% of the days the bed is unoccupied would be counted in the available bed count.

CMS recognizes that it may be burdensome for a hospital to determine for each patient in this type of room the amount of time spent in labor/delivery and the amount of time spent receiving routine care. Alternatively, CMS allows the hospital to calculate an average percentage of time patients receive ancillary services, as opposed to routine inpatient care during a typical month, to apply to the cost reporting period.


[1] The CMS guidance in the August 1, 2003 Federal Register also addresses the labor and delivery room implications on the count of bed days available and the determination of ancillary and routine services costs.

[2] 42 CFR §412.106, Special treatment: Hospitals that serve a disproportionate share of low-income patients.
(a)(1)(ii) …. the number of patient days in a hospital includes only those days attributable to units or wards of the hospital providing acute care services generally payable under the prospective payment system and excludes patient days associated with —

(A) Beds in excluded distinct part hospital units;

(B) Beds otherwise countable under this section used for outpatient observation services, skilled nursing swing-bed services, or ancillary labor/delivery services. This exclusion would not apply if a patient treated in an observation bed is ultimately admitted for acute inpatient care, in which case the beds and days would be included in those counts;

(C) Beds in a unit or ward that is not occupied to provide a level of care that would be payable under the acute care hospital inpatient prospective payment system at any time during the 3 preceding months (the beds in the unit or ward are to be excluded from the determination of available bed days during the current month); and

(D) Beds in a unit or ward that is otherwise occupied (to provide a level of care that would be payable under the acute care hospital inpatient prospective payment system) that could not be made available for inpatient occupancy within 24 hours for 30 consecutive days.

[3] Prior to December 1991, Medicare's policy on counting days for maternity patients required an inpatient day to be counted for an admitted maternity patient in the labor/delivery room at the census taking hour. This is consistent with Medicare policy for counting days for admitted patients in any other ancillary department at the census-taking hour. However, based on decisions adverse to the government regarding this policy in a number of Federal courts of appeal, including the United States Court of Appeals for the District of Columbia Circuit, the policy regarding the counting of inpatient days for maternity patients was revised.

[4] Provider Reimbursement Manual, CMS Publication 15 - Part 1, §2205.2 Counting Patient Days for Maternity Patients. A maternity patient in the labor/delivery room ancillary area at midnight is included in the census of the inpatient routine (general or intensive) care area only if the patient has occupied an inpatient routine bed at some time since admission. No days of inpatient routine care are counted for a maternity inpatient who is discharged (or dies) without ever occupying an inpatient routine bed. However, once a maternity patient has occupied an inpatient routine bed, at each subsequent census the patient is included in the census of the inpatient routine care area to which assigned even if the patient is located in an ancillary area (labor/delivery room or another ancillary area) at midnight. In some cases, a maternity patient may occupy an inpatient bed only on the day of discharge, where the day of discharge differs from the day of admission. For purposes of apportioning the cost of inpatient routine care, this single day of routine care is counted as the day of admission (to routine care) and discharge and, therefore, is counted as one day of inpatient routine care.

Posted by Michael McKibben at September 8, 2005 04:42 PM

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