Utah Department of Administrative Services Office of Administrative Rules

File No. 35390

This rule was published in the November 15, 2011, issue (Vol. 2011, No. 22) of the Utah State Bulletin.

Health, Health Care Financing, Coverage and Reimbursement Policy

Rule R414-2A

Inpatient Hospital Services

Notice of Proposed Rule


DAR File No.: 35390
Filed: 10/31/2011 09:52:33 AM


Purpose of the rule or reason for the change:

The purpose of this change is to implement a change in inpatient hospital services policy.

Summary of the rule or change:

This amendment removes language that defines an inpatient as one who requires at least 24 hours of care in a hospital. It also removes language which defines an inpatient stay as one that exceeds 24 hours.

State statutory or constitutional authorization for this rule:

  • 42 CFR 447.272
  • Section 26-1-5
  • Section 26-18-3

Anticipated cost or savings to:

the state budget:

The Department does not anticipate any impact to the state budget because inpatient hospital services have always needed to meet medical necessity criteria.

local governments:

There is no impact to local governments because they do not fund or provide inpatient hospital services to Medicaid recipients.

small businesses:

The Department does not anticipate any impact to small businesses because inpatient hospital services have always needed to meet medical necessity criteria.

persons other than small businesses, businesses, or local governmental entities:

The Department does not anticipate any impact to Medicaid providers and to Medicaid recipients because inpatient hospital services have always needed to meet medical necessity criteria.

Compliance costs for affected persons:

The Department does not anticipate any impact to a Medicaid provider or to a Medicaid recipient because inpatient hospital services have always needed to meet medical necessity criteria.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule amendment removes an obsolete 24 hours of care requirement to qualify as an inpatient stay for Medicaid reimbursement. The new standard, which is consistent with current practice, requires a showing of medical necessity. No adverse fiscal impact is expected as there should be no change in current approvals or denials for reimbursement.

David Patton, PhD, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Health Care Financing, Coverage and Reimbursement Policy
288 N 1460 W
SALT LAKE CITY, UT 84116-3231

Direct questions regarding this rule to:

  • Craig Devashrayee at the above address, by phone at 801-538-6641, by FAX at 801-538-6099, or by Internet E-mail at cdevashrayee@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:


This rule may become effective on:


Authorized by:

David Patton, Executive Director


R414. Health, Health Care Financing, Coverage and Reimbursement Policy.

R414-2A. Inpatient Hospital Services.

R414-2A-2. Definitions.

(1) "Admission" means the acceptance of a Medicaid client for inpatient hospital services.

(2) "Diagnosis Related Group (DRG)" is the CMS-coding that determines reimbursement for the resources that a hospital uses to treat a client with a specific diagnosis or medical need and is further described in Section R414-2A-9 of this rule.

(3) "Hyperbaric Oxygen Therapy" is therapy that places the patient in an enclosed pressure chamber for medical treatment.

(4) "Inpatient" is an individual whose severity of illness and intensity of service requires [24 hours or more of] continuous care in a hospital , as noted by InterQual Criteria as noted in Section R414-1-12.

(5) "Inpatient Hospital Services" are services that a hospital provides for the care and treatment of inpatients with disorders other than mental illness, under the direction of a physician or other practitioner of the healing arts.

(6) "Leave of Absence" from an inpatient facility is a patient's absence for therapeutic or rehabilitative purposes where the patient does not return by midnight of the same day.

(7) "Observation" means monitoring a patient to evaluate the patient's condition, symptoms, diagnosis, or appropriateness of inpatient admission.

(8) "Other Practitioner of the Healing Arts" means a doctor of dental surgery or a podiatrist.

(9) "Prepaid Mental Health Plan" means the prepaid, capitated program through which the Department pays contracted community mental health centers to provide all needed inpatient and outpatient mental health services to residents of the community mental health center's catchment area who are enrolled in the plan.


R414-2A-9. Reimbursement Methodology.

(1) Payments for inpatient hospital services are paid on a prospectively determined amount for each qualifying patient discharge under a Diagnosis Related Group (DRG) system. DRG weights are established to recognize the relative amount of resources consumed to treat a particular type of patient. The DRG classification scheme assigns each hospital patient to one of over 500 categories or DRGs based on the patient's diagnosis, age and sex, surgical procedures performed, complicating conditions, and discharge status. Each DRG is assigned a weighting factor which reflects the quantity and type of hospital services generally needed to treat a patient with that condition. A preset reimbursement is assigned to each DRG. The DRG system allows for outliers for those discharges that have significant variance from the norm.

(2) For purposes of reimbursement, the day of admission is counted as a full day and the day of discharge is not counted.

(3) When a patient receives SNF-level, ICF-level, or other sub-acute care in an acute-care hospital or in a hospital with swing-bed approval, payment is made at the swing-bed rate.

(4) Reimbursement for services in the emergency department is limited to codes and diagnoses that are medically necessary emergency services. The provider manual lists appropriate emergency codes. The provider must list the discharge diagnosis on the claim form as one of the first five diagnoses.

(5) If a patient is readmitted for the same or a similar diagnosis within 30 days of a discharge, the Department may review and evaluate both claims to determine if, based on severity of illness and intensity of service, the claims should be combined into a single DRG payment or paid separately. Cost effectiveness may also be part of this determination but is not a primary factor.

(6) Exceptions to the 30-day readmission policy must still meet the severity of illness requirements for the allowance of a second DRG payment and are limited to:

(a) pregnancy;

(b) chemotherapy; and

(c) hyperbilirubinemia appearing in newborn infants within the first week of life.

(7) The Department pays for physician interpretation of laboratory services separately from the DRG payment. Laboratory technical services are included within the DRG for the inpatient admission.

(8) If an observation stay meets the intensity and severity for inpatient hospitalization,[and exceeds 24 hours,] the patient becomes an inpatient and the observation services are reimbursed as part of payment under the DRG.


KEY: Medicaid

Date of Enactment or Last Substantive Amendment: [January 1, ]2011

Notice of Continuation: November 8, 2007

Authorizing, and Implemented or Interpreted Law: 26-1-5; 26-18-3; 26-18-3.5


Additional Information

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at http://www.rules.utah.gov/publicat/bull-pdf/2011/b20111115.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

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For questions regarding the content or application of this rule, please contact Craig Devashrayee at the above address, by phone at 801-538-6641, by FAX at 801-538-6099, or by Internet E-mail at cdevashrayee@utah.gov.