Utah Office of Administrative Rules

NOTICE OF SUBSTANTIVE CHANGE

TYPE OF FILING: Repeal and Readopt

Filing ID: 58215

Rule or section number:

R414-2A

1. Agency Information

Title catchline:

Health and Human Services, Integrated Healthcare

Building:

Cannon Health Building

Street address:

288 N 1460 W

City, state:

Salt Lake City, UT

Mailing address:

PO Box 143325

City, state and zip:

Salt Lake City, UT 84114-3325

2. Contact Persons

Name:

Phone:

Email:

Craig Devashrayee

801-915-4493

cdevashrayee@utah.gov

Mariah Noble

385-214-1150

mariahnoble@utah.gov

Please address questions regarding information on this notice to the persons listed above.

3. General Information

A. Rule or section catchline:

R414-2A. Inpatient Hospital Services

B. Purpose of the new rule or reason for the change:

Based on an audit received from the Utah Office of Inspector General, the Department of Health and Human Services (department) determined this change is appropriate to clarify the 30-day readmission policy for Medicaid members admitted to inpatient hospitals.

The department will not proceed with the proposed repeal and readopt of this rule published in the July 15, 2026, issue of the Utah State Bulletin (Bulletin) and will let that rulemaking lapse.

(EDITOR'S NOTE: The proposed R&R on Rule R414-2A, ID 58093, was published in the July 15, 2026, Bulletin on page 79.)

C. Summary of the new rule or change:

To clarify the 30-day readmission policy for Medicaid members admitted to inpatient hospitals, the requirements of the repealed rule are updated and clarified in the readopted rule.

Updated language:

1) restructures rule authority;

2) adds new definitions;

3) clarifies eligibility requirements;

4) restructures hospital admission requirements;

5) restructures provisions for inpatient psychiatric care;

6) updates coverage and limitations;

7) updates routine and ancillary services;

8) removes provisions for provider-preventable conditions;

9) updates provisions for utilization control;

10) updates provisions for cost sharing; and

11) describes provisions to pay providers.

5. Fiscal Information

Provide an estimate and written explanation of the aggregate anticipated cost or savings to:

A. State budget:

The department does not anticipate a fiscal impact to the state budget because the readopted rule solely clarifies existing guidance on when Medicaid would cover a 30-day hospital readmission to the same hospital or an affiliated hospital within 30 calendar days of discharge from a prior inpatient admission.

B. Local governments:

The department does not anticipate a fiscal impact to local governments because they neither fund nor provide inpatient hospital services under the Medicaid program.

C. Small businesses ("small business" means a business employing 1-49 persons):

The department does not anticipate a fiscal impact to small businesses because the hospital provisions in this rule do not apply to this group.

D. Non-small businesses ("non-small business" means a business employing 50 or more persons):

The department does not anticipate a fiscal impact to hospitals that are non-small businesses because the readopted rule solely clarifies existing guidance on when Medicaid would cover a 30-day hospital readmission to the same hospital or an affiliated hospital within 30 calendar days of discharge from a prior inpatient admission.

E. Persons other than small businesses, non-small businesses, state, or local government entities ("person" means any individual, partnership, corporation, association, governmental entity, or public or private organization of any character other than an agency):

The department does not anticipate a fiscal impact to other persons and entities because the readopted rule solely clarifies existing guidance on when Medicaid would cover a 30-day hospital readmission to the same hospital or an affiliated hospital within 30 calendar days of discharge from a prior inpatient admission.

F. Compliance costs for affected persons:

The department does not anticipate any compliance costs for any single affected person or entity because the readopted rule solely clarifies existing guidance on when Medicaid would cover a 30-day hospital readmission to the same hospital, or an affiliated hospital within 30 calendar days of discharge from a prior inpatient admission.

6. Regulatory Impact Summary Table

Enter the cost or savings in the relevant cell. If there is no cost or savings, enter, "$0." If a cost or savings is inestimable, enter, "inestimable."

Fiscal Cost

FY2027

FY2028

FY2029

FY2030

FY2031

State Budget

Local Governments

Small Businesses

Non-Small Businesses

Other Persons

Total Fiscal Cost

Fiscal Benefits

FY2027

FY2028

FY2029

FY2030

FY2031

State Budget

Local Governments

Small Businesses

Non-Small Businesses

Other Persons

Total Fiscal Benefits

Net Fiscal Benefits

7. Regulatory Impact Analysis Approval

The Commissioner of the Department of Health and Human Services, Tracy S. Gruber, has reviewed and approved this regulatory impact analysis.

8. Family Impact Information

A. The agency has considered this rule's impact on family health, stability, and formation:

☒

9. Citation Information

Provide citations to the statutory authority for the rule. If there is also a federal requirement for the rule, provide a citation to that requirement:

Section 26B-1-213

Section 26B-3-108

11. Public Notice Information

The public may submit written or oral comments to the agency identified in box 1.

A. Comments will be accepted until:

10/15/2026

12. Effective Date Information

This rule change MAY become effective on:

10/22/2026

(NOTE: This is the date the agency anticipates making the filing effective. It is NOT the effective date)

13. Agency Authorization Information

Agency head or

designee and title:

Tracy S. Gruber, Commissioner

Date:

08/29/2026

R414. Health and Human Services, Integrated Healthcare.

R414-2A. Inpatient Hospital Services.

[R414-2A-1. Introduction and Authority.

This rule defines the scope of inpatient hospital services that are available to Medicaid members. This rule is authorized under Section

26B-3-108 and governs the services allowed under 42 CFR 440.10.

R414-2A-2. Definitions.

(1) "Admission" means the acceptance of a Medicaid member for inpatient hospital care and treatment when the member meets established

criteria for severity of illness and intensity of service and the required service cannot be provided in an alternative setting.

(2) "Inpatient" is an individual whose severity of illness and intensity of service requires continuous care in a hospital.

(3) "Inpatient Hospital Intensive Physical Rehabilitation" means an intense program of physical rehabilitation provided in an inpatient

rehabilitation hospital or an inpatient rehabilitation unit of a hospital.

(4) "Inpatient Hospital Services" are services that a hospital provides for the care and treatment of inpatients.

(5) "Observation services" means services, often less than 24 hours, including use of a bed and monitoring by hospital staff, which are

reasonable and necessary to evaluate the medical condition or determine the need for a possible admission to the hospital.

(6) "Prepaid Mental Health Plan" means the Medicaid mental and/or substance use disorder managed care plan that covers inpatient and/or

outpatient mental health services and outpatient substance use disorder services for PMHP-enrolled Medicaid members.

R414-2A-3. Member Eligibility Requirements.

Inpatient hospital services are available to categorically and medically needy individuals.

R414-2A-4. Hospital Admission Requirements.

(1) An inpatient hospital must meet Medicare participation requirements.

(2) Each hospital that provides inpatient services must have a utilization review plan as described in 42 CFR 482.30.

(3) Each hospital that accepts a Medicaid member for treatment is responsible to verify that the member receives all medically necessary

services from Medicaid providers.

(4) Each hospital is financially responsible for any services a member receives from a non-Medicaid provider.

(5) Inpatient hospital intensive physical rehabilitation participation is subject to 42 CFR 482.56 and 42 CFR 412, Subpart B and Subpart P.

R414-2A-5. Prepaid Mental Health Plan.

Before admitting a Prepaid Mental Health Plan (PMHP) member for an inpatient psychiatric stay, a hospital must obtain prior authorization

from the PMHP serving the member's county of residence. If the hospital is not contracted with the PMHP, the PMHP may choose to transfer the

member to a contracted hospital.

R414-2A-6. Service Coverage.

(1) Inpatient hospital services must be medically necessary and ordered by an appropriate Medicaid-enrolled provider for the diagnosis and

treatment of a member's illness.

(2) Services performed for a member by the admitting hospital or by an entity wholly-owned or wholly-operated by the hospital within

three days of patient admission, are considered inpatient services. This three-day window applies to diagnostic and non-diagnostic services that are

clinically related to the reason for the member's inpatient admission regardless of whether the inpatient, outpatient, or observation diagnoses are the

same.

(3) Medical supplies, appliances, drugs, and equipment required for the care and treatment of a member during an inpatient stay are

included in the inpatient reimbursement.

(4) Outpatient hospital services during an inpatient episode are included in the inpatient reimbursement.

(5) Inpatient hospital psychiatric services are available to all Medicaid members. If the member is not enrolled in a PMHP, providers may

bill the State directly on a fee-for-service basis. Otherwise, the provider must bill the member's PMHP.

(6) Inpatient hospital intensive physical rehabilitation services must meet the classification criteria of 42 CFR 412.29.

(7) Inpatient hospital intensive physical rehabilitation services are covered for acute conditions from birth through any age and are

available one time per event.

R414-2A-7. Limitations.

Inpatient hospital care is limited to medical treatment of symptoms that lead to medical stabilization of the member. This medical

stabilization care is irrespective of any underlying psychiatric diagnosis.

(1) Detoxification for a substance use disorder in a hospital shall meet the criteria in the Department's evidence-based criteria tool for

inpatient detoxification. The Department does not cover any lesser level of detoxification in an inpatient hospital. The standards for the evidence-

based criteria tool shall be in accordance with Section R414-1-12.

(2) Abortion procedures require prior authorization. Refer to Rule R414-1B.

(3) Sterilization and hysterectomy procedures require prior authorization and must meet the requirements of 42 CFR 441, Subpart F.

(4) Organ transplant services are governed by Rule R414-10A.

(5) Take-home supplies, dressings, non-rental durable medical equipment, and drugs are included in the inpatient reimbursement.

(6) Coverage of sleep studies requires sleep center accreditation through one of the following nationally recognized accreditation

organizations:

(a) American Academy of Sleep Medicine (AASM);

(b) Accreditation Commission for Health Care (ACHC); or

(7) Hyperbaric oxygen therapy is limited to service in a facility in which the hyperbaric unit is accredited by the Undersea and Hyperbaric

Medical Society. Hyperbaric oxygen therapy is therapy that places the member in an enclosed pressure chamber for medical treatment.

(8) Medicaid does not cover inpatient services solely for pain management. Pain management is adjunct to other Medicaid services.

(9) Inpatient rehabilitation services require prior authorization.

(10) Observation services are limited to cases where observation and evaluation is required to establish a diagnosis and determine the

appropriateness of an inpatient admission or discharge. Observation is used to monitor the member's condition, complete diagnostic testing to

establish a definitive diagnosis and formulate the treatment plan.

(a) Medicaid covers observation services with a physician's written order that outlines specific medically necessary reasons for the service,

such as the member requires more evaluation to determine the severity of illness through laboratory, imaging, or other diagnostic test, and an order to

continue monitoring for clinical signs and symptoms to determine improving or declining health status.

(b) Outpatient procedures include an uneventful recovery period.

(i) Observation is used to monitor complications of outpatient procedures beyond an uneventful recovery period.

(c) Medicaid does not cover observation services for convenience of the hospital, member or family, or when awaiting transfer to another

facility.

(d) When an ordered hospital inpatient admission improves to the point of discharge with a stay less than 24 hours, the admission is

covered as inpatient when documentation supports the medical necessity.

(e) Inpatient admissions solely for observation or diagnostic evaluation do not qualify for reimbursement under the diagnosis-related group

(DRG) system.

(11) Medicaid does not cover admission solely for the treatment of eating disorders.

(12) Medicaid does not cover non-physician psychosocial counseling outside of the DRG.

(13) An undocumented immigrant who does not meet United States residency requirements may only receive emergency services,

including emergency labor and delivery, to treat an emergency medical condition.

(a) Medicaid does not cover prenatal and post-partum services for undocumented immigrants.

(b) Medicaid does not cover prescriptions for a member who is eligible to receive emergency services only.

(14) Inpatient hospital intensive physical rehabilitation services are not covered when the condition and prognosis meet the requirements

of placement into a long-term facility, skilled nursing facility, or outpatient rehabilitation service.

(15) Medicaid does not cover admission for deconditioning in an inpatient hospital intensive physical rehabilitation facility.

(16) Inpatient hospital intensive physical rehabilitation services for a member who has suffered a stroke or other cerebral vascular accident

may be provided only when admission and therapy is initiated within the first 60 days after onset of the incident.

R414-2A-8. Provider-Preventable Conditions.

(1) Medicaid does not pay for Provider Preventable Conditions (PPC).

(a) Medicaid utilizes the Medicaid Severity-Diagnosis Related Group (MS-DRG) to identify a PPC.

(b) For inpatient hospital claims, Medicaid does not cover PPCs in Medicare crossover patients.

(i) When present on admission, these diagnoses are not considered to be a PPC for that hospitalization.

(ii) Providers are expected to identify Present on Admission (POA) status for all diagnoses on each claim according to correct coding

standards.

(d) Providers must assure that all PPC-related diagnoses, services, and charges are noted as "non-covered charges" on the claim.

(i) The Department does not use non-covered charges in calculating the hospital reimbursement.

(e) The Department shall deny PPC-related claims that result in an outlier payment and medical records will be required.

(i) Providers will receive Remittance Advice (RA) that confirms the occurrence of a PPC outlier claim.

(ii) The Department requires providers to know which medical records and other required documents are needed.

(iii) Upon RA notification of a PPC, the provider shall submit the following documents within 30 days:

(A) "Outlier PPC Medical Record Documentation Submission Form";

(B) Complete medical records from the associated hospital stay;

(C) Itemized bill (tab de-limited text file or Excel spreadsheet), including a detailed listing of PPC-related charges as non-covered charges,

with total charges matching the total charges submitted on the claim.

(f) The Department will review and, if appropriate, re-process the claim based upon the review of the required documents submitted within

the 30-day period of RA notification.

(g) The Department shall deny review of the claim unless the required documentation is submitted within 30 days of RA notification.

(h) The Department requires providers to report PPCs in accordance with Section R414-1-28.

R414-2A-9. Reporting Routine Services.

Routine services in a hospital must be included in a daily service charge, also referred to as room and board. These types of routine

services that are not separately reported include:

(1) Room;

(2) Dietary services;

(3) Nursing services;

(4) Minor medical and surgical supplies;

(5) Medical and psychiatric social services;

(6) Use of hospital and facilities;

(7) Drugs, biologicals, supplies, appliances, and equipment, such as:

(a) Anything necessary or otherwise integral to the provision of a specific service, the delivery of services in a specific location, or both;

(b) Items and supplies that may be purchased over the counter;

(c) Reusable items, supplies, and equipment that are provided to all patients admitted to a given treatment area or unit receiving the same

service;

(d) Certain other diagnostic or therapeutic services;

(e) Medical or surgical services provided by certain interns or residents-in-training; and

(f) Transportation services, including transport by ambulance.

R414-2A-10. Utilization Control and Review Program for Hospital Services.

The Hospital Utilization Review Program is administered and operated in accordance with Title 63A, Chapter 13.

(1) The purpose of the hospital utilization review program is to ensure:

(a) efficient and effective delivery of services;

(b) services are appropriate and medically necessary;

(d) the State satisfies federal requirements for a statewide surveillance and utilization control program.

(2) The Hospital Utilization Review Program shall conduct assessments and audits to ensure the appropriateness and medical necessity of

the following:

(a) Admissions to a hospital or a designated distinct part unit within a hospital;

(b) Transfers from one acute care hospital to another acute care hospital, or to an inpatient rehabilitation hospital or psychiatric unit in

another acute care hospital (inter-facility transfer);

(c) Transfers from an acute care setting to an inpatient rehabilitation unit of a hospital or psychiatric unit within the same facility (intra-

facility transfer);

(d) Continued stays;

(e) Services, surgical services and diagnostic procedures;

(f) Principal diagnosis, principal surgical procedure or both, reflected on paid claims to ensure consistency with the attending physician's

determination and documentation as found in the member's medical record;

(g) Determine whether co-morbidity, as found on the claim, is correct and consistent with the attending physician's determination and

compatible with documentation found in the member's medical record; and

(h) Quality of care.

(3) The Hospital Utilization Review Program shall conduct assessments and audits to determine:

(a) Appropriate utilization;

(b) Compliance with state and federal Medicaid regulations;

(c) Whether documentation meets state and federal requirements for sufficiency, and whether it accurately describes the status of services

provided to the member; and

(d) Whether procedures that require prior authorization have been approved before the provision of services, except in cases that meet the

criteria listed in the Utah Medicaid Section 1: General Information Provider Manual (Retroactive Authorization).

(4) The Hospital Utilization Review Program shall make determinations of medical necessity, appropriateness of care, and suitability of

discharge planning in accordance with the following criteria and protocols:

(a) InterQual Criteria;

(b) Administrative rules or criteria developed by Medicaid for programs and services not otherwise addressed; and

(5) Hospital Utilization Readmission Policy and Reviews.

(a) Whenever information available to the reviewer indicates the possibility of readmission to acute care within 30 days of the previous

discharge, the staff administering and operating the Hospital Utilization Review Program may review any claim for:

(i) Readmission for the same or a similar diagnosis to the same hospital, or to a different hospital;

(ii) Appropriateness of inter-facility transfers; and

(iii) Appropriateness of intra-facility transfers.

(b) The Hospital Utilization Review Program shall review all suspected readmissions within 30 days of a previous discharge to ensure that

Medicaid criteria have been met for severity of illness, intensity of service, and appropriate discharge planning and financial impact to the

Department as noted in Subsection R414-2A-10(3).

(c) If a member is readmitted for the same or similar diagnosis within 30 days of discharge and, if after review as described in Subsection

R414-2A-10(5)(b), program review staff determines that readmission does not meet the criteria in Subsection R414-2A-10(3)(b), then the payment

shall be combined into a single DRG payment, unless it is cost effective to pay for two separate admissions. The first DRG (initial admission) shall

be the DRG that is paid. This policy does not apply to cases related to pregnancy, neonatal jaundice, or chemotherapy.

(6) Definition, Policy Application.

(a) When applying policy, a similar diagnosis is defined as:

(i) Any diagnoses code with similar descriptors;

(ii) Any exchange or combination of principal and secondary diagnosis; and

(iii) Any other sets of principal diagnoses established to be similar by Utah Medicaid policy in written criteria and published to the

hospitals prior to service dates.

(b) The evaluation criteria for utilization control are severity of illness, intensity of service, and cost effectiveness as noted in Subsection

R414-2A-10(5)(b).

(7) Appropriate remedial action will be initiated for inappropriate readmissions when identified though the hospital utilization post-

payment review process.

(8) Applicability to Outpatient Hospital Services.

(a) When a Medicaid member is readmitted to the hospital, or readmitted as an outpatient within 30 days of a previous discharge for the

same or similar diagnosis, Medicaid will evaluate both claims to determine if they should be combined into a single payment or paid separately.

(9) Recovery of Funds.

(a) The Department shall recover payment when post-payment review finds that services are not medically necessary, not appropriate, or

that quality of service is not suitable.

(b) The Department shall recover payment when it determines there is a violation of the 30-day re-admission policy.

(10) Hospital Utilization Review.

(a) Each month, the Hospital Utilization Review Program shall review at least 5 percent of a selected universe of claims adjudicated in the

previous month. At least 2.5 percent of the claims shall be a random sample. Up to 2.5 percent may be a focused review on a specific service. A

staff decision to focus on a specific service shall be made no later than the beginning of the sample cycle.

(b) The Department shall select the universe from paid inpatient hospital claims within the Data Warehouse. The universe from which the

random sample is selected is defined as all inpatient hospital claims adjudicated before the beginning of the review cycle, except for:

(i) Claims showing, as a principal diagnosis, any International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-

CM) delivery code in the ICD-10-CM Manual Chapter 15 -- Pregnancy, Childbirth, and the Puerperium, in the range of O00 through O9A.53, and

other ICD-10-CM codes or DRG or DRGs as specified by policy or administrative decision.

(ii) Claims that show $0 payment by Medicaid;

(iii) Medicare crossover claims;

(iv) Claims with other codes or diagnoses determined by the review program staff to be inappropriate for review.

(11) Utah State Hospital Utilization Review.

(a) The purpose of this utilization review is to ensure that Medicaid funds, as defined under 42 CFR 456, Subpart D, are expended

appropriately and to ensure that services provided to Medicaid members at the Utah State Hospital (USH) are necessary and of high quality. Review

program staff shall conduct oversight activities at USH.

(b) Oversight activities include quarterly clinical utilization reviews in which program staff review a sample of members who are under 21

years of age and are 65 years of age or older, and who were reviewed by USH utilization review staff during a previous quarter. These reviews are

performed to:

(i) Evaluate the USH utilization process; and

(ii) Address the clinical topic selected for that quarter's review.

(i) The programs have been implemented in accordance with written hospital policy;

(ii) The programs are effective in meeting stated goals;

(iii) Improvements or modifications have been made to increase the effectiveness of program design.

(12) Applicability to Inpatient Psychiatric Care and Inpatient Rehabilitation Services.

(a) Provisions in the Hospital Utilization Review Program also apply to inpatient psychiatric care and inpatient rehabilitation services.

R414-2A-11. Cost Sharing.

A Medicaid member is responsible for a copayment as established in the Utah Medicaid State Plan and incorporated by reference in Rule

R414-1.

R414-2A-12. Reimbursement.

Reimbursement for inpatient hospital services is in accordance with Attachment 4.19-B of the Utah Medicaid State Plan, which is

incorporated by reference in Rule R414-1.]

R414-2A-1. Authority and Purpose.

(1) Section 26B-3-106 authorizes this rule.

(2)(a) This rule defines the scope of inpatient hospital services available to Medicaid members and is used in conjunction with Rule R414-

1, the Utah Medicaid State Plan, as incorporated by reference in Rule R414-1, and other applicable state and federal requirements for the Utah

Medicaid program.

(b) This rule governs the services allowed under 42 CFR 440.10 (2026).

R414-2A-2. Definitions.

(1) "30-day readmission" means an inpatient admission to the same hospital or an affiliated hospital within 30 calendar days of discharge

from a prior acute inpatient admission.

(2) "Admission" means the acceptance of a Medicaid member for inpatient hospital care and treatment.

(3) "Affiliated hospital" or "same hospital" means a licensed facility billing under the same employer identification number as the initial

discharging hospital.

(4) "Against medical advice" means an instance when a Medicaid member chooses to leave a hospital despite documented medical advice

against discharge.

(5) "Clinically related" means a readmission for a diagnosis, condition, or complication that:

(a) is the same as, similar to, or a progression of the principal diagnosis of the initial admission;

(b) represents a known or reasonably foreseeable complication of care provided during the initial admission; or

(c) is determined by the department, based on evidence-based clinical standards and the medical record, to be causally linked to the initial

admission.

(6) "Cost effectiveness" means achieving a desired outcome at the lowest possible cost while considering the definition of medically

necessary service in Subsection R414-1-2(18) and how used resources align with Subsection R414-2A-9(1).

(7) "Department" means the Department of Health and Human Services.

(8) "Discharge planning" means the process mandated by 42 CFR 482.43.

(9) "Healthy outcomes medical excellence" or "HOME" means a managed care entity operated by the University of Utah that contracts

with the department to provide integrated physical health, mental health, and substance use disorder services to Medicaid members with a

developmental disability and associated behavioral health needs.

(10) "Initial admission" means the original inpatient hospital stay from which the Medicaid member was discharged, which triggers the 30-

day readmission review window.

(11) "Inpatient" means an individual whose severity of illness and intensity of service requires continuous care in a hospital.

(12) "Inpatient hospital intensive physical rehabilitation" means an intense program of physical rehabilitation provided in an inpatient

rehabilitation hospital or an inpatient rehabilitation unit of a hospital.

(13) "Inpatient hospital services" means the services a hospital provides for the care and treatment of an inpatient.

(14) "Leave of absence" or "LOA" means a planned temporary absence from a hospital with the intent of returning for the continuation of

the same or a similar course of treatment.

(15) "Managed care entity" means an organization that enters into a contract with the department to provide health care services to

Medicaid members, which may include a managed care organization, a prepaid inpatient health plan, or a prepaid ambulatory health plan.

(16) "Medicaid Enterprise System" or "MES" means the mechanized claims processing and information retrieval system, including

modular software and hardware, used by the department to manage, monitor, and administer Medicaid program operations, including transaction

processing, service utilization review, and management reporting.

(17) "Non-covered day" means the portion of an acute inpatient hospital stay for which the department does not provide coverage or

reimbursement, including:

(a) a day associated with an interrupted stay when a Medicaid member is discharged and subsequently returns, creating a gap in acute care

services;

(b) a day categorized as custodial care, when services are provided primarily to meet personal needs or activities of daily living rather than

active medical or nursing intervention;

(d) a day used for Medicaid member or family convenience, including a stay extended for comfort or personal preference beyond the point

of medical stability;

(e) a day when a Medicaid member is medically ready for discharge but remains in the hospital awaiting placement in a lower level of

care, such as a nursing facility;

(f) a day when a Medicaid member's clinical status does not meet the established criteria for medical necessity, severity of illness, or

intensity of service;

(g) a period when a Medicaid member is out of the hospital on a leave of absence; and

(h) the period between a preventable initial discharge and a subsequent readmission, as described in Section R414-2A-9.

(18) "Non-preventable readmission" means a readmission that is not a planned readmission and is not a preventable readmission, as

determined through review of a medical record under Section R414-2A-9.

(19) "Observation services" means services, including use of a bed and monitoring by hospital staff, which are reasonable and necessary to

evaluate the medical condition or determine the need for possible admission to the hospital.

(20) "Planned readmission" means a readmission that is scheduled or expected as part of the Medicaid member's documented plan of care

for the condition treated in the initial admission, including a planned staged procedure, planned continuation of treatment, or a documented leave of

absence with intent to return for continuation of the same or similar course of treatment, as supported by the medical record.

(21) "Prepaid mental health plan" or "PMHP" means a managed care entity that contracts with the department to provide mental health and

substance use disorder services to a Medicaid member.

(22) "Present on admission status" or "POA status" means the status reported for each principal and secondary diagnosis to distinguish

between a condition that existed at admission and a condition that developed subsequently.

(23) "Preventable readmission" means a clinically related readmission for which the department determines, based on the medical record

from the initial admission and the readmission, that the provider failed to demonstrate compliance with at least one discharge-transition requirement.

(24) "Program" means the statewide surveillance and utilization control program for hospital services, administered in accordance with 42

CFR 456 and Title 63A, Chapter 13, Office of Inspector General of Medicaid Services.

(25) "Provider-preventable condition" means a condition that is:

(a) a health care-acquired condition, as defined in 42 CFR 447.26(b); or

(b) an other provider-preventable condition, as defined in 42 CFR 447.26(b), and as identified in the Utah Medicaid State Plan.

(26) "Single episode of care payment" means the consolidation of reimbursement for an initial stay and a clinically related readmission

into one prospective payment.

(27) "Utah Medicaid Integrated Care" or "UMIC" means a managed care entity that contracts with the department to provide integrated

medical and behavioral health services, including mental health and substance use disorder services, to a Medicaid member.

R414-2A-3. Medicaid Member Eligibility Requirements.

Inpatient hospital services are available to a Medicaid member who meets the eligibility requirements established in Rule R414-1.

R414-2A-4. Hospital Admission Requirements.

(1) An inpatient hospital shall meet the conditions of participation, as established in 42 CFR 482.

(2) Each hospital shall ensure that services provided to a Medicaid member are medically necessary, as described in Subsection R414-1-

2(18).

(a) Coverage of inpatient admissions requires the Medicaid member to meet established criteria for severity of illness and intensity of

service.

(b) The required service, as described in Subsection (2)(a), cannot be provided in an alternative setting.

(3) Each hospital providing inpatient hospital services shall have a written utilization review (UR) plan, as described in 42 CFR 482.30,

that provides for the review of each Medicaid member's need for the services the hospital furnishes.

(4) Each hospital shall comply with the provider and Medicaid member agreement requirements established in Section R414-1-13.

(5) For a Medicaid member receiving psychiatric services, the hospital shall ensure the admission is medically necessary, as defined in

Subsection R414-1-2(18), and shall comply with the certification, recertification, and plan of care requirements described in 42 CFR 441, Subpart D.

(6) Inpatient hospital intensive physical rehabilitation participation is subject to 42 CFR 482.56 and 42 CFR 412, Subparts B and P.

R414-2A-5. Inpatient Psychiatric Services and Managed Care.

(1) Before admitting a Medicaid member of a PMHP for an inpatient psychiatric stay, the facility providing services must obtain prior

authorization from the managed care entity responsible for the Medicaid member's psychiatric benefits. This includes:

(a) the PMHP serving the Medicaid member's county of residence; or

(b) the UMIC plan or HOME program plan in which the Medicaid member is enrolled.

(2)(a) A managed care entity is responsible for determinations of coverage and reimbursement of inpatient hospital psychiatric services for

the managed care entity's enrolled Medicaid members.

(b) The department is responsible for determinations of coverage and reimbursement of admissions when a Medicaid member is not

enrolled in a managed care entity responsible for psychiatric services.

(3) A managed care plan shall cover a psychiatric-related inpatient stay for a Medicaid member in accordance with the certification and

recertification requirements of 42 CFR 441.152.

R414-2A-6. Service Coverage.

(1) Inpatient hospital services shall be medically necessary and ordered by an appropriate Medicaid-enrolled provider for the diagnosis and

treatment of a Medicaid member's illness.

(2) The department covers the overall inpatient hospital services of an admitting hospital or entity wholly owned or wholly operated by a

hospital within three days of admission.

(3) The three-day window established in Subsection (2) applies to diagnostic and non-diagnostic services clinically related to the reason

for admission, regardless of whether the inpatient, outpatient, or observation diagnoses are the same.

(4) Services performed for a Medicaid member by the admitting hospital or an affiliated hospital within 30 calendar days of discharge

from a prior acute inpatient admission for a clinically related diagnosis are subject to review as a preventable readmission or planned readmission.

(5) If the department determines the readmission is a preventable readmission or planned readmission, the claims shall be consolidated and

reported as a single episode of care resulting in a single payment.

(a) The department shall determine preventable readmission in accordance with Subsection R414-2A-2(23) and Section R414-2A-9.

(b) An exception to claim consolidation may only be granted when the department determines, and documents in the program's review

record, that separate reimbursement is more cost effective to the department than a single episode of care payment.

(6) Medical supplies, appliances, drugs, and equipment required for the care and treatment of a Medicaid member during an inpatient stay

are included in the inpatient reimbursement.

(7) Outpatient hospital services during an inpatient episode are included in the inpatient reimbursement.

(8) Inpatient hospital psychiatric services shall be medically necessary, as defined in Subsection R414-1-2(18), and shall comply with this

rule and the Utah Medicaid Hospital Services Provider Manual, as incorporated by reference in Rule R414-1.

(9) Inpatient hospital intensive physical rehabilitation services shall meet the classification criteria of 42 CFR 412.29.

(10) The department shall cover inpatient hospital intensive physical rehabilitation services for acute conditions from birth through any age

and are available one time for any given event.

R414-2A-7. Limitations.

(1)(a) Inpatient hospital services shall be limited to medical treatment of symptoms that lead to medical stabilization of the Medicaid

member.

(b) Medical stabilization care described in Subsection (1)(a) shall be provided irrespective of any underlying psychiatric diagnosis.

(2) Detoxification in a hospital for a substance use disorder shall meet the evidence-based threshold for clinical instability criteria for

inpatient detoxification.

(a) The department may not cover any lesser level of detoxification in an inpatient hospital.

(b) The standards for evidence-based thresholds for clinical instability shall be in accordance with Section R414-1-12.

(3) An inpatient hospital may only perform an abortion procedure in accordance with Rule R414-1B.

(4) An inpatient hospital may only perform a sterilization or hysterectomy procedure in accordance 42 CFR 441, Subpart F.

(5) The department shall govern organ transplant services in accordance with Rule R414-10A.

(6)(a) Take-home supplies, dressings, non-rental durable medical equipment, and drugs provided by a hospital at the time of discharge are

included in the inpatient reimbursement and are not separately reportable.

(b) Subsection (6)(a) does not apply to durable medical equipment (DME) or supplies provided by an external Medicaid-enrolled DME

provider for use in a Medicaid member's home after discharge.

(7) An inpatient hospital that performs sleep studies and hyperbaric oxygen therapy must follow evidence-based standards of care to

qualify for determinations of inpatient coverage of services.

(8) The department does not cover inpatient hospital services solely for pain management, except when required to stabilize an emergency

medical condition, as defined in Section R414-1-2. The department otherwise covers pain management adjunct to other covered services.

(9) Observation services are not an inpatient service and are governed in accordance with Rule R414-3A.

(10) The department may not cover an inpatient admission when the Medicaid member's severity of illness does not match the acuity level

of care required for an inpatient stay.

(11) The department may not cover admission solely for the treatment of an eating disorder unless the Medicaid member meets the

evidence-based threshold for clinical instability.

(12) The department shall govern services provided to an individual with undocumented immigration status in accordance with Rule

R414-518.

(13) The department may not cover an inpatient hospital intensive physical rehabilitation services admission for deconditioning.

(14) Inpatient hospital intensive physical rehabilitation services for a Medicaid member who has suffered a stroke or other cerebral

vascular injury shall be provided based on current medical necessity and clinical instability.

(15) The department may not cover an inpatient admission primarily for the provision of services determined by the department to be:

(a) experimental;

(b) investigational; or

(16) The department shall issue a technical denial when a provider fails to submit complete medical records within 30 days of a written

request in accordance with Section R414-1-14.

(a) For purposes of readmission review, complete medical records must include at least:

(i) an admission history and physical;

(ii) a discharge summary;

(iii) a discharge planning documentation required under 42 CFR 482.43;

(iv) a medication reconciliation; and

(v) documentation of follow-up care for any high-risk condition.

(b) The department shall conduct the recovery of funds resulting from a technical denial in accordance with Section R414-1-14.

(17) The department may not cover or reimburse a provider-preventable condition in accordance with 42 CFR 447.26 and Attachment

4.19-A of the Utah Medicaid State Plan.

R414-2A-8. Routine and Ancillary Services.

(1)(a) Routine services, including supplies, items, or services integral to a Medicaid member's care or specific service delivery, are

comprised in the daily room and board facility charge and are not be reported separately. An inpatient hospital shall provide these services in

accordance with the definition of inpatient hospital services ordinarily furnished in a hospital under 42 CFR 440.10 and 42 CFR 409, Subpart B.

(b) Additional reporting requirements are maintained in the Utah Medicaid Hospital Services Provider Manual.

(2) Services that may be reported separately from the inpatient hospital facility payment are outlined in 42 CFR 409, the Utah Medicaid

State Plan, and the Utah Medicaid Hospital Services Provider Manual.

R414-2A-9. Statewide Surveillance and Utilization Control Program for Hospital Services.

The program is administered and operated in accordance with Title 63A, Chapter 13, Office of Inspector General of Medicaid Services, and

42 CFR 456.

(1) The department shall implement a statewide program of surveillance and utilization control for hospital services that meets the state

and federal requirements to:

(a) safeguard against unnecessary or inappropriate use of Medicaid services and excess payments;

(b) ensure that each hospital furnishing inpatient hospital services has a written UR plan that provides for the review of an individual's

need for the services the hospital furnishes;

(c) conduct ongoing evaluations of the medical necessity, appropriateness, cost effectiveness, and quality of inpatient hospital services,

including medical record reviews to verify physician certifications and plans of care services are appropriate, cost effective, and medically necessary;

(d) promote the most effective and efficient use of available health facilities and services consistent with individual needs and

professionally recognized standards of health care;

(e) initiate appropriate remedial action or recovery of funds when a review identifies:

(i) inappropriate utilization;

(ii) substandard quality of care;

(iii) inadequate discharge planning that did not include assessment of:

(A) post-discharge needs;

(B) functional status;

(D) community resources; or

(iv) a failure to comply with state and federal Medicaid regulations.

(2) The program shall conduct assessments and audits to ensure medical necessity, appropriate utilization, and cost effectiveness of:

(a) each admission to a hospital or a designated distinct part unit, including a review of any suspected 30-day readmission to determine

clinical relatedness and preventability within a hospital;

(b) each inter-facility transfer between acute care hospitals, inpatient rehabilitation hospitals, or psychiatric units;

(d) evaluation of whether the medical record demonstrates safe discharge, including whether discharge planning complied with 42 CFR

482.43 and whether documentation supports separate reimbursement for a subsequent clinically related admission, as described in Subsection (5);

(e) coding and documentation integrity that:

(i) match the attending physician's documentation in the medical record;

(ii) verify any principal diagnosis and surgical procedure; and

(iii) verify the accuracy of POA status for every principal and secondary diagnosis to determine if the cause of readmission developed

post-discharge; and

(f) ongoing review to ensure services are safely administered, evidence-based, and patient-centered.

(3) The program shall conduct assessments and audits to determine appropriate utilization, such as:

(a) compliance, including:

(i) adherence to state and federal Medicaid regulations; and

(ii) compliance with the department's published policies and procedures, including the Utah Medicaid Hospital Services Provider Manual;

(b) cost effectiveness;

(d) whether documentation meets state and federal requirements for sufficiency, accurately describes the status of services provided to the

Medicaid member, and includes mandatory post-discharge reporting for high-risk conditions; and

(e) whether procedures that require prior authorization have been approved before the provision of services.

(4) Exceptions to the program requirement to conduct assessments and audits to determine appropriate utilization must be in accordance

with the policies outlined in the Utah Medicaid Section I: General Information Provider Manual, incorporated by reference in Rule R414-1.

(5) The program shall make determinations of medical necessity, appropriateness of care, cost effectiveness, and suitability of discharge

planning in accordance with:

(a) standardized clinical review criteria used to assess whether a readmission is clinically related and the medical record demonstrates

compliance with discharge-transition requirements material to safe discharge, including discharge planning, care coordination, medication

reconciliation, follow-up arrangements, and access to post-acute care when clinically indicated;

(b) the clinically based, patient-focused medical review determined by the department;

(c) rule or criteria developed by the department for any program or service not otherwise addressed by evidence-based tools;

(d) the prospective payment methodology and clinical logic used to categorize inpatient stays; and

(e) requirements that:

(i) each clinical review tool, standardized criteria, and payment logic used by the program to evaluate medical necessity, preventability, or

cost effectiveness is applied to inform, but does not supplant, the department's regulatory authority under this rule;

(ii) each determination of coverage, reimbursement, consolidation of claims, and recovery of funds is governed by rule, the Utah Medicaid

State Plan, and applicable federal law;

(iii) in determining whether a readmission is preventable, the program shall evaluate if the medical record demonstrates, as clinically

indicated for the Medicaid member's condition:

(A) that inpatient hospital level of care was no longer medically necessary at the time of discharge and that discharge to the next setting of

care was appropriate;

(B) discharge planning consistent with 42 CFR 482.43, including timely identification of post-discharge needs, discharge planning

evaluation, and inclusion of the evaluation in the medical record;

(C) documented care coordination, medication reconciliation, transmission of necessary clinical information, or timely follow-up

arrangements needed for safe discharge; or

(D) documented patient or caregiver education, or access to medically necessary post-acute services, supplies, or community-based

supports, needed for safe discharge; and

(iv) the department's determination of a preventable readmission shall be based on the presence, absence, insufficiency, or untimely

completion of documentation in the medical record and on whether the documented discharge process reasonably supports separate reimbursement

for the later admission.

(6)(a) The program shall review any readmission to an affiliated hospital or the same hospital, as defined in Section R414-2A-2, occurring

within 30 days of a previous discharge from an admission.

(b)(i) The program shall evaluate each readmission to ensure compliance with Medicaid criteria for clinical stability at discharge and the

adequacy of discharge planning in accordance with Subsection (5).

(ii) The department shall determine whether a readmission is preventable if the medical record does not demonstrate discharge planning

consistent with 42 CFR 482.43.

(c) If a Medicaid member is readmitted for the same or a clinically related diagnosis, as defined in Section R414-2A-2, the department

shall require the billing entity to combine the initial and readmission claims into a single episode of care, resulting in a consolidated diagnosis-related

group (DRG) payment, if the department determines that the readmission is:

(i) a planned readmission, including a leave of absence; or

(ii) a preventable readmission based on the standards in Subsection (5).

(d) The department shall exempt a 30-day readmission from claims consolidation, and allow separate reimbursement, for the following

exception and exclusion categories:

(i) a transfer to a different facility billing under a different taxpayer identification number for a higher level of care;

(ii) an admission to specialized, non-acute inpatient facility types that include:

(A) an inpatient rehabilitation facility or designated unit;

(B) a psychiatric inpatient facility;

(D) a critical access hospital; or

(E) a cancer specialty hospital;

(iii) a planned therapeutic admission for chemotherapy, radiation, dialysis, or blood transfusion;

(iv) a high-risk complex clinical condition that includes:

(A) sickle cell disease, trait, or anemia;

(B) hepatic failure or cirrhosis of the liver; or

(v) an obstetrical admission;

(vi) a neonatal or newborn admission; or

(vii) a readmission in which a patient left the initial admission against medical advice.

(e) The department shall only reimburse a 30-day readmission as a separate claim if:

(i) the readmission is determined to be a non-preventable readmission; or

(ii) the diagnosis falls under a specific exclusion category defined in the Utah Medicaid Hospital Services Provider Manual.

(f) Any exclusion category referenced in the Utah Medicaid Hospital Services Provider Manual shall be:

(i) published before the dates of service under review;

(ii) applied uniformly to similarly situated providers; and

(iii) consistent with the authority granted under this rule.

(g) The program shall retain written justification supporting the determination for audit and appeal purposes when the department

authorizes separate reimbursement under a cost effectiveness exception.

(7) The department may apply this rule through both pre-payment and post-payment mechanisms, including claim edits, manual reviews,

audits, and recovery actions, in accordance with 42 CFR Part 456 and Section R414-1-14.

(a) The department shall use pre-payment mechanisms, including any programmatic edit and claim review process within the MES, to

identify any potential 30-day readmission and ensure each claim is appropriately reviewed before payment in accordance with this rule.

(b) The program shall conduct post-payment monitoring to identify any:

(i) inappropriate readmission;

(ii) unauthorized transfer;

(iii) failure to comply with documentation standards; or

(iv) noncompliance with this rule.

(i) the readmission violated the single episode of care payment requirements;

(ii) the readmission was a planned readmission;

(iii) the readmission was a preventable readmission, based on the standards in Subsection R414-2A-2(23); or

(iv) the provider failed to comply with mandatory discharge planning, documentation, or reporting requirements for a high-risk condition.

(8)(a) The program shall initiate appropriate remedial action when post-payment monitoring or a utilization review identifies an

inappropriate readmission, unauthorized transfer, or pattern of noncompliance with the single episode of care payment requirements.

(b) Remedial action may include:

(i) directing the provider to correct a billing error through claim adjustment and consolidation;

(ii) implementation of a provider-specific proactive pre-payment review strategy for future claims; or

(iii) the department conducting recovery of funds for any overpayment identified during the review process in accordance with Section

R414-1-14.

(c) When the program identifies a systemic pattern of preventable readmissions or inadequate discharge planning, the department may

require the provider to develop and implement a formal quality improvement plan to address any root cause of care transition failure.

(9) As applied to outpatient hospital services, a Medicaid member who is readmitted to the hospital as an inpatient or treated in an

outpatient hospital setting within 30 days of a previous discharge for the same or clinically related diagnosis, the program shall evaluate both claims.

(10)(a) The department shall recover payment when the program finds that:

(i) services are not medically necessary;

(ii) services are not medically appropriate, as defined in Section R414-1-2, including experimental, investigational, or unproven practices

described in Rule R414-1A, unless such practices are part of a qualifying clinical trial, as defined in Section 210 of the Consolidated Appropriations

Act of 2021 and the Utah Medicaid Section I: General Information Provider Manual; or

(iii) the quality of service is not aligned with evidence-based standards of care.

(b) The department shall recover payment when a review determines there is a violation of the 30-day readmission policy described in

Subsection (6), including:

(i) a readmission that violates the single episode of care payment requirements described in Subsection (5), including a readmission for

which the medical record does not demonstrate compliance with discharge-transition requirements material to safe discharge;

(ii) failure of a provider to combine claims for a planned readmission or a preventable readmission into a single episode of care payment;

(iii) failure to comply with documentation or reporting requirements.

(c) If the department determines a readmission is a preventable readmission or planned readmission, the provider shall cancel the original

separate claim and resubmit a consolidated claim to receive reimbursement in accordance with the department's billing instructions.

(d) The department shall conduct recovery of funds in accordance with the overpayment and refund procedures established in Section

R414-1-14.

(i) A provider shall refund the payment upon written request from the department.

(ii) If a provider refuses to grant access to records or services cannot be verified:

(A) the provider shall refund the funds; or

(B) the department may deduct an equal amount from a future reimbursement.

(iii) Unless appealed, a provider shall refund Medicaid within 30 days of written notification.

(e) When the department notifies a provider that the provider shall consolidate a readmission into a single episode of care payment, the

provider shall:

(i) cancel the separate claims;

(ii) submit a consolidated claim reflecting the combined episode; and

(iii) comply with timelines and billing instructions issued by the department.

(11) The program shall conduct utilization review procedures for the Utah State Hospital (USH) in accordance with 42 CFR 456, Subpart

D to ensure that Medicaid funds are expended appropriately and services to Medicaid members at USH are necessary and of high quality.

(12) The program shall implement policies that apply to inpatient psychiatric care and inpatient rehabilitation services.

(a) The program shall evaluate each readmission to an inpatient psychiatric or rehabilitation facility for clinical relatedness and

preventability, as described in Subsection (5).

(b) The program shall apply a single episode care of payment for any determination of a preventable readmission or planned readmission

within these specialized settings, and the determination is subject to the documentation standards outlined in the Utah Medicaid Hospital Services

Provider Manual.

R414-2A-10. Cost Sharing.

(1) A Medicaid member is responsible for cost sharing as established in the Utah Medicaid State Plan and Rule R414-1.

(2) For readmissions consolidated into a single episode of care payment under Subsection R414-2A-9(6)(c), the Medicaid member may

only be responsible for the cost sharing requirements associated with the initial admission.

(3) A provider may not collect additional copayment from a Medicaid member for a readmission that the department determines to be a

preventable readmission or a planned readmission.

R414-2A-11. Reimbursement.

(1) The department shall reimburse a provider for inpatient hospital services in accordance with Attachment 4.19-A of the Utah Medicaid

State Plan.

(2) For the purposes of determining a hospital length of stay, the day of admission is counted as a full day, and the day of discharge is not

counted.

(3) The department shall provide a single episode of care payment for a readmission determined to be a preventable readmission or

planned readmission, as defined in Section R414-2A-2.

(a) Any day between the initial discharge and the readmission is considered a non-covered day.

(b) Each non-covered day between a discharge and a readmission is not eligible for separate reimbursement.

(c) The department may not provide separate reimbursement for any portion of an episode that is a preventable readmission or planned

readmission.

(4) The department may not reimburse for a non-covered day, as defined in Section R414-2A-2, including any day lacking medical

necessity or custodial care or used for patient convenience.

(5) The department shall reimburse a 30-day readmission as a separate claim if:

(a) the readmission is determined to be a non-preventable readmission;

(b) the diagnosis falls under a specific exclusion category listed in Subsection R414-2A-9(6)(d) and published in the Utah Medicaid

Hospital Services Provider Manual; or

(c) the department determines that separate reimbursement is more cost effective to the department than a single episode of care payment.

(6) If a readmission involves a transfer between a DRG reimbursed unit and a non-DRG specialized unit within the same hospital, the

department shall determine the primary reimbursement methodology for the combined episode.

(7) Requirements for claim submission, reporting of a non-covered day, and other operational billing procedures are maintained in the

Utah Medicaid Hospital Services Provider Manual.

KEY: Medicaid

Date of Last Change: [November 10, 2023]2026

Notice of Continuation: September 14, 2022

Authorizing, and Implemented or Interpreted Law: 26B-1-213; 26B-3-108; 26B-3-110

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Rule 2a: Inpatient Hospital Services