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2012 Texas Medicaid Provider Procedures Manual

Inpatient and Outpatient Hospital Services Handbook : 3. Inpatient Hospital (Medical/Surgical Acute Care Inpatient Facility) : 3.6 Inpatient Utilization Review : 3.6.2 Recommendations to Enhance Compliance with Texas Medicaid Fee-for-Service Hospital Claims Submission

The following information highlights an area for physician and hospital providers where collaboration in client care delivery exists but can improve. Texas Medicaid, through its hospital UR activities, has identified this area for both compliance with provider responsibilities and the reduction of the submission of inappropriate inpatient hospital claims. To enhance compliance with Texas Medicaid fee-for-service hospital claims submission and decrease the submission of inappropriate inpatient hospital claims, providers should adhere to the following suggestions:
Physicians and hospital personnel, primarily case managers, UR, and billing staff, should become familiar with the Hospital Inpatient Screening Criteria used by the HHSC staff in performing reviews of hospital medical records related to paid, inpatient hospital claims for admissions prior to September 1, 2006. The criteria provide guidelines for review staff to assist with the determination of medical necessity of inpatient stays. The Medicaid Hospital Inpatient Screening Criteria are available on the HHSC website at
Initially admit clients in observation status if the physician feels that it is reasonable to expect that the client may be able to be discharged within 48 hours. If the client is initially admitted in observation status (per physician order), the stay is more than 48 hours, and the hospital submits an inpatient claim, the hospital is given the opportunity to resubmit the first 48 hours of services on an outpatient claim if the inpatient claim is subsequently denied per retrospective UR.
When a client is admitted to the hospital as an inpatient and is discharged in less than 48 hours, the hospital may request that the physician change the admission order from inpatient status to outpatient observation status. This practice is acceptable when the physician makes the changes to the admitting order before the hospital submits the claim for payment.
This correction in admission status avoids errors in claims submission and the potential need for a more lengthy appeal process. If the physician admitting orders do not accurately reflect the services provided, the hospital inpatient claim may be denied and the inappropriate payment recovered from both the hospital and the admitting physician.

Texas Medicaid & Healthcare Partnership
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