Is Your Medicare Bed Count Reducing Your DSH Payment or IME Payment?

Is Your Medicare Bed Count Reducing Your DSH Payment or IME Payment?

If your occupancy rate is less than 80% for inpatient areas, it is possible that reducing the number of beds would actually increase your bottom line.  A shift in bed count could make a difference of hundreds of thousands of dollars annually for some hospitals with these programs.

How does Medicare count hospital beds?
THEY DON’T (They make you do it!)

For the hospital inpatient bed count, a bed is counted if it is:

  • In service for inpatient admissions OR
  • Could reasonably be converted back to being in service within a 24 hour time period 

A bed is not counted if:

  • It is a bed/bassinet for healthy newborn nursery care 
  • It is part of the Emergency Department
  • It is used for a Skilled Nursing Facility
  • If it is part of a PPS excluded unit such as for rehabilitation or psychiatric care
  • If it is for postoperative recovery
  • It is part of an ancillary or outpatient portion of the hospital even if inpatients are seen there, but don’t have lodging there.  As a note, Labor & Delivery (L&D, not an LDP birthing suite) is primarily considered an outpatient portion of the hospital.  Postpartum and LDP birthing suites are considered inpatient.
  • It is an area designated for staff residence or rest
  • It is fully functional (has power and oxygen hookups, for example) but it is in a unit or ward that has in its entirety been unoccupied for IPPS level of care for the previous 3 months
  • It is NOT fully functional (power and or oxygen hookups have been removed, for example) and is part of an otherwise operational ward and has not been possible to make available for occupancy (within 24 hours) for 30 consecutive days.  (This situation might be most common for a room or rooms that are being remodeled or taken out of service permanently.)

For bed days available, the number of available beds is generally multiplied by the number of days in the period, EXCEPT if a change happens during the period.  

As an example:
A hospital starts the year with 120 beds. After 90 days, 10 beds (5 semiprivate 2 occupancy rooms) in an otherwise functional ward begin remodeling to become private rooms.  The remodeling lasts 90 days.  After those 90 days the remodeled rooms are brought back online.
hospital bed count example.JPG

For more information on counting beds and bed days available, see Provider Reimbursement Manual 1, Ch. 22, §2205 or 42 CFR §412.105(b)

For more information about optimizing bed count based on occupancy rate, see

For assistance in navigating these complex decisions, please reach out to our Reimbursement Senior Director:

Raymond A. Luebbert, CHFP

rluebbert(at) / 720-808-0729 

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