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Provider Manual

Hospital Inpatient Utilization Review

Last Updated on January 24, 2019
  • Medicare Advantage members admitted to “Hospital Inpatient” status must meet InterQual inpatient criteria for the hospital to receive inpatient reimbursement.
  • When Medicare Advantage members are admitted to “Hospital Outpatient Observation” status as defined by Medicare, hospitals will receive reimbursement for the stay per Medicare outpatient observation guidelines.
  • The physician services provided to Medicare Advantage members, whose inpatient hospitalization has been denied due to the lack of inpatient criteria, will not be reimbursed.

Providers are responsible for determining the medical necessity for a Security Health Plan Medicare Advantage member to be hospitalized as “inpatient” or “observation.” Security Health Plan uses InterQual criteria to review hospital inpatient admissions for medical necessity. In cases where inpatient criteria are not met, Security Health Plan will not reimburse for the inpatient DRG, per diem rate (Critical Access Hospital), or physician services.

Security Health Plan has identified some hospital admissions that do not meet inpatient InterQual criteria. In these cases, the members’ conditions lacked severity of illness, or the level of service provided lacked intensity. Medicare may reimburse for these situations under “Hospital Observation” status, if the physician admits the recipient to “Hospital Observation” status and bills for such outpatient observation services. Security Health Plan also reimburses for “Hospital Observation” status per Medicare guidelines and reimbursement rates for eligible members.

The physician’s admission order must clearly indicate whether the admission is for “Inpatient Hospital” or “Hospital Observation” status.

Medicare information is available on the Centers for Medicare and Medicaid Services (CMS) web site at

If you have additional questions, please contact your Security Health Plan provider network specialist at 1-800-548-1224 or 715-221-9588.