Accurately counting and reporting a hospital’s number of available beds on the Medicare cost report has significant implications for teaching hospitals receiving Medicare GME funding. IME payments, which comprise two-thirds of a teaching hospital’s Medicare GME funding, are largely tied to the hospital’s intern and resident-to-bed ratio (often referred to as the IRB ratio). Therefore, a hospital’s number of countable beds directly affects its IME payments. Given the payment implications, CMS provides specific guidance regarding how hospitals are expected to count and report beds on their Medicare hospital cost report.

A Hospital’s Bed Count Isn’t Simply the Hospital’s Number of Licensed Beds

CMS does not rely on a hospital’s licensed bed count because of potential inaccuracies and variations in licensing among states. Therefore, a hospital should not simply report its number of licensed beds as its Medicare bed count without further analysis. Instead, hospitals must look to CMS authorities and guidance that define and govern how hospital beds are counted for cost reporting purposes. 

A hospital’s number of beds “is determined by counting the number of available bed days during the cost reporting period and dividing that number by the number of days in the cost reporting period.” To determine the number of available bed days, hospitals must multiply: (1) the number of eligible beds (generally beds in units or wards providing services payable under the IPPS), and (2) the number of days during the cost reporting period those beds would be considered “available beds”. This product is then divided by the number of days in the cost reporting period (365 or 366) to determine the hospital’s bed count.

The concept of counting the number of “available beds” is intended to capture changes in the size of a facility as beds are added to or taken out of service, rather than the “day-to-day fluctuations in patient rooms and wards being used.”  A bed is considered available if it is permanently maintained for lodging inpatients, housed in patient rooms or wards, and can be made available for use within 24 hours. Therefore, beds in an unoccupied wing of the hospital are still counted, if the hospital uses the bed when needed. If, however, a bed or group of beds within a unit cannot be made available within 24 hours for 30 consecutive days for any reason, the beds should be excluded from the hospital’s available bed count for those 30 days. 

Additionally, any beds in a unit or ward not occupied to provide IPPS-level care during the preceding three months are excluded from the bed count for the current month. However, if any bed within a unit is used to provide IPPS-level care at any time during the preceding three months, the hospital must count all of the beds in the unit during the current month. CMS presumes that beds available at any time during the cost reporting period are available during the entire period.

Types of Beds That Are Counted

For Medicare purposes, beds are generally counted if the nature of the care provided in a unit or ward is payable under the IPPS. In short, when determining bed count, CMS is not focusing on care provided to individual patients, but rather the level of care generally provided in the unit or ward.

Thus, aside from newborn beds or bassinets and custodial care beds, a hospital should count all adult and pediatric beds in patient rooms or wards that are “maintained for lodging inpatients, including beds in intensive care units, coronary care units, neonatal intensive care units, and other special care inpatient hospital units.” Beds in distinct labor and delivery rooms that are unoccupied or occupied by an inpatient receiving IPPS-level care also should be counted. 

Beds That Are Specifically Excluded

Hospitals should exclude beds in the following locations:

• Hospital-based skilled nursing facilities or inpatient area(s) of the facility not certified as an acute care hospital;
• PPS excluded units such as psychiatric or rehabilitation units;
• Postanesthesia or postoperative recovery rooms;
• Outpatient areas;
• Emergency rooms;
• Ancillary departments;
• Nurses' and other staff residences; and,
• Other areas that are regularly maintained and utilized for only a portion of the stay of patients or for purposes other than inpatient lodging.

Additionally, in most cases, the count of available bed days should exclude beds otherwise countable under the IPPS that are used for outpatient observation, skilled nursing swing beds, or inpatient hospice services.  

Consequences of an Inaccurate Bed Count

Overcounting a hospital’s beds can lead to lower IME payments. Conversely, undercounting a hospital’s beds generally leads to higher IME payments, potentially subjecting a hospital to the Medicare overpayment requirements, government audits, and enforcement of fraud and abuse laws. Given these risks, hospitals should take care to count and report an accurate number of available beds. 

The GME @ Dentons team listed above can answer your questions about accurately counting and reporting beds and how these issues affect your Medicare GME payments.