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Minnesota Department of Human Services Provider Manual
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Inpatient Hospital Authorization

Revised: 07-26-2017

  • Medical Review Agent Information
  • Requirements for IHA
  • Criteria to Determine Medical Necessity
  • Admissions Requiring IHA
  • Obtaining Inpatient Hospital Authorization
  • Reconsiderations
  • Concurrent, Continued Stay & Retrospective Reviews
  • Admissions Determined to be not Medically Necessary
  • Readmissions
  • Readmission Criteria
  • Need for Care – Certification and Recertification
  • Billing
  • Forms/Resources
  • Definitions
  • Legal References
  • Inpatient hospital authorization (IHA) is required for certain admissions to ensure all inpatient hospital services paid under Minnesota Health Care Programs (MHCP):

  • • Are medically necessary
  • • Are consistent with the recipient's diagnosis or condition
  • • Cannot be provided on an outpatient basis
  • An approved inpatient hospital authorization (IHA) determines a recipient’s need for inpatient services, not his or her eligibility.

    MHCP requires providers to request IHA and obtain approval from a medical review agent before submitting claims for inpatient hospital services.

    Providers may not seek payment from the recipient for inpatient hospital services for which an IHA is required but not issued.

    Medical Review Agent Information

    Submit authorization requests and required documentation to the Authorized Medical Review Agent.

    Requirements for IHA

    Although most admissions are exempt from IHA, the recipient must require the level of care or the intensity of service provided to an inpatient. For inpatient services requiring IHA, the admitting provider must request an IHA from the medical review agent any time before you submit the claim.

    Criteria to Determine Medical Necessity

    The medical review agent determines medical necessity of inpatient hospital services based on a thorough review of the patient’s medical condition(s) or records. This review is in conjunction with an industry standard evidence-based clinical decision tool.

    A determination that inpatient hospital services are medically necessary is not a guarantee of payment. For MHCP to pay for services, the provider must meet all state and federal requirements of an MHCP provider for inpatient services.

    To determine medical necessity for inpatient admission for detoxification, refer to Guidelines for Inpatient Hospital Detoxification at the end of this section. Medical management is based on the clinical needs of the patient and may occur on a medical or psychiatric unit, as determined by the physician.

    Admissions Requiring IHA

    The following admissions require IHA:

  • • Admissions to a Medicare rehabilitation distinct unit
  • • Readmissions to a Medicare rehabilitation distinct unit after an acute care hospitalization that interrupted the rehabilitation program if both admissions are eligible for separate payment (refer to the Readmission section)
  • • Admissions to hospitals outside Minnesota and the Minnesota local trade area
  • • Admissions to long-term acute care hospitals
  • • Admission to an extended psychiatric inpatient unit under contract with the Mental Health Division (see Mental Health Services using the Extended Psychiatric Inpatient Review Forms.
  • • Emergency Medical Assistance (EMA) kidney transplant. Refer to the EMA Kidney Transplant section for more information
  • The following admissions are excluded from inpatient hospital authorization requirements:

  • • Pregnant woman resulting in a delivery
  • • Newborn immediately after birth
  • Recipients under 21 years old at the time of admission who are hospitalized in an Institution for Mental Diseases (IMD) require completion of a Certificate of Need per 42 CFR 441 subp. C, D.

    Obtaining Inpatient Hospital Authorization

    An admitting physician or hospital must obtain an IHA from the medical review agent when a recipient’s admission falls into a group that requires authorization found on the Admissions Requiring IHA list above.

    Providers can request an IHA in writing, by telephone or by fax. Refer to Medical Review Agent Information. Faxed requests for IHA must follow the format and order specified in the following list of required information.

    The admitting physician or hospital must provide the following information to the medical review agent:

  • • Caller or requester name and telephone number
  • • Recipient's name, MHCP ID number, date of birth and sex
  • • Date of admission, or expected date of admission
  • • Admitting physician's name and NPI
  • • Hospital's name and NPI, city and state when appropriate
  • • Admitting or principal diagnosis and a secondary diagnosis descriptor with codes, according to the most recent ICD-CM manual
  • • Primary or principal procedure descriptor with code, when applicable, according to the most recent ICD-CM manual and anticipated surgery date
  • • Whether the recipient is a transfer from another hospital
  • • Specific medical criteria and information from the plan of care to determine whether admission is necessary
  • To assist in the IHA process, complete the MHCP Inpatient Hospital Authorization Form (DHS-4676) (PDF) before contacting the medical review agent for IHA. For admissions that require IHA, using the form will help ensure that the necessary information is available when contacting the medical review agent.

    If the medical review agent determines that the admission is medically necessary, they will issue an IHA number. You will be able to use each IHA number once and only for the admission requested on the claim for that admission.

    The admitting physician or hospital that obtains IHA must inform all other providers of inpatient hospital services of the IHA number. Include the IHA number on claims submitted for inpatient services.

    If the nurse reviewer for the medical review agent is unable to determine medical necessity, the reviewer will refer the case to a medical review physician. If the medical review physician determines that the admission is medically necessary, the medical review agent will issue an IHA number.

    If the medical review physician determines that the admission is not medically necessary, or is unable to determine if the admission is medically necessary, the medical review agent will notify the admitting physician or hospital by telephone. The provider may request, within 24 hours of notification, a second medical review physician's opinion.

    If the admitting physician or hospital requests a second physician opinion, the medical review agent will contact a medical review second physician. If the second medical review physician determines that the admission is medically necessary, the medical review agent will issue an IHA number. The second medical review physician will make the determination within 24 hours exclusive of weekends and holidays.

    If the second physician determines that the admission is not medically necessary or is unable to determine medical necessity, the medical review agent will deny IHA. The medical review agent will notify the admitting physician of the denial by telephone within 24 hours. The medical review agent will send a written notice of the determination to the hospital and admitting physician within five working days of the denial.

    If the inpatient admission is denied prior to services being provided, a written notice of the denial that clearly states the reason for the denial is sent to the admitting physician, the hospital and the recipient. The recipient also receives notice of his or her appeal rights. The physician and hospital will receive notice of their right to request reconsideration.

    Only a medical review physician can deny inpatient hospital services for not meeting medical necessity.

    Reconsiderations

    The admitting physician and hospital may request reconsideration of a decision to deny an inpatient hospital authorization by submitting the reconsideration requests according to the medical review agent within 30 days of notification of the denial.

    The reconsideration request must include the following:

  • • Written request for reconsideration
  • • Recipient's medical records and any additional information required to justify the admission
  • • Reason for the dispute
  • Reconsideration requests must:

  • • Be heard by at least three physician advisers not involved in the decision to deny or withdraw IHA
  • • Include one psychiatrist who practices outside a metropolitan statistical area (MSA) for all non-MSA psychiatric reviews
  • • Be completed within 60 days of the medical review agent's receipt of the information necessary to complete reconsideration
  • The outcome of the reconsideration is the majority opinion of the physician advisers. The admitting physician and hospital may appeal the reconsideration decision to the Commissioner of the Department of Human Services.

    Submit appeal requests in writing within 30 days of the date of receipt of the certified letter upholding the denial or withdrawal of IHA and sent to:

    Minnesota Department of Human Services
    Appeals and Regulations Division
    Attn: Administrative Law Manager
    444 Lafayette Rd. N.
    St. Paul, MN 55155-3841

    The admitting physician and hospital may appeal the commissioner's decision to the district court of the county in which the admitting physician or hospital is located by submitting written notice to the commissioner within 30 days of the commissioner's decision.

    Concurrent, Continued Stay and Retrospective Reviews

    The medical review agent or DHS may conduct concurrent, continued stay and retrospective reviews. The medical review agent will determine medical necessity of inpatient hospital services, including inpatient psychiatric treatment, based on a review of the patient's medical condition and records, in conjunction with industry standard evidence-based criteria.

    When determining medical necessity for inpatient hospital services, the medical review agent will follow industry standard medical necessity criteria to determine medical necessity for the following:

  • • Recipient’s admission
  • • Hospital services provided to the recipient
  • • Continued stay
  • • Whether all medically necessary inpatient hospital services were provided to the recipient
  • They will consult a medical review physician adviser if the medical record and other supporting information do not clearly demonstrate the medical necessity of the admission, continued stay, services provided or the reasons for the recipient's discharge and readmission.

  • • If the medical review physician adviser determines medical necessity was not established for cases issued an IHA, the medical review agent will notify the admitting physician and hospital by letter of the denial and their reconsideration rights within five working days of the determination.
  • • If the recipient is still an inpatient, the medical review agent will inform the hospital and physician by telephone within one working day in addition to the letter.
  • • If the admission was exempt from IHA but the physician adviser determines that medical necessity was not established, the medical review agent will notify the admitting physician and hospital of the decision of the denial and their reconsideration rights within five working days of the determination.
  • Admissions Determined to be Not Medically Necessary

    If an admission was determined to be not medically necessary, or the medical record does not adequately document that the admission was medically necessary, DHS may deny or recover all or part of the MHCP payment to the admitting physician, hospital and other providers of inpatient hospital services.

    If admission IHA is denied or if the medical review agent determines that the admission did not meet inpatient criteria, you may bill the services as outpatient observation hospital services only if the following apply:

  • • An inpatient bill has not been submitted
  • • The recipient was in the hospital (total time) less than 48 hours; refer to Hospital Services
  • Readmissions

    The medical review agent may retrospectively review the medical records of inpatients readmitted to the hospital. The initial admission and the readmission are reviewed to monitor quality of care (for example, under-utilization of services, fragmented care, premature discharge), to determine if payment should be made for one or both hospitalizations, or if payment should be made according to transfer payment established by Minnesota rule. If a readmission is denied because it is considered continuous with the previous admission, reconsideration may be requested.

    Medical records with clearly documented situations of patient preference, AMA (leaving hospital against medical advice), patient noncompliance, physician or hospital convenience, or scheduling conflicts will not be sent through physician review. Situations of episodic illness (same or different episode) or prevailing medical standards, practice, and usage will be sent to a medical review physician if the medical review agent cannot make a determination or the provider disagrees with the determination.

    Medical records of an admission must clearly state the following:

  • • The reason a recipient was discharged from the hospital
  • • The recipient's status at discharge
  • Medical records of a readmission must clearly state the following:

  • • The reason a recipient was readmitted
  • • The recipient's medical status at readmission
  • Readmission Criteria

    Criteria used to determine whether a readmission is considered a second admission, as continuous with the first admission, or eligible for transfer payment are as follows.

    Second admission
    The medical review agent determines both the admitting and readmitting hospitals, whether they are the same or different, retains their IHA numbers or, if IHA was not required, retains payment. A second admission is a readmission that resulted from one of the following circumstances:

  • • The recipient left the hospital against medical advice
  • • The recipient had a new episode of the same diagnosis of an episodic illness or condition
  • • The recipient was discharged and readmission was medically necessary according to prevailing medical standards, practice and usage
  • Continuous with the initial admission
    The medical review agent informs the hospital of the need to combine admissions.

    A readmission that is continuous with the initial admission is the result of one of the following circumstances:

  • • The recipient was discharged from the admitting hospital without receiving the procedure or treatment for the condition diagnosed during the admission because of the physician's or hospital's preference or because of a scheduling conflict.
  • • If the admitting and readmitting hospitals are the same, the medical review agent will determine that the admission is eligible to retain the IHA number and will withdraw the readmission IHA number.
  • • If the admitting and readmitting hospitals are not the same and the recipient is transferred, the requirements regarding a readmission eligible for a transfer payment apply (see below).
  • • The recipient's discharge was not appropriate according to prevailing medical standards, practice, and usage.
  • • If the admitting and readmitting hospitals are the same, the initial admission is eligible to retain the IHA number and the medical review agent will withdraw the readmission IHA number.
  • • If the admitting and readmitting hospitals are different, the medical review agent will withdraw the initial admission IHA number and determine that the readmission is eligible to retain the IHA number.
  • • The preference of the recipient or the recipient’s family that the treatment be delayed, and that the recipient be discharged without receiving the necessary procedure or treatment, and then be readmitted to the same hospital for the necessary procedure or treatment. In this situation, "preference" differs from AMA discharge because the choice is compatible with prevailing medical standards.
  • • If the admitting and readmitting hospitals are the same, the initial admission is eligible to retain the IHA number and the medical review agent will withdraw the readmission IHA number.
  • • If the admitting and readmitting hospitals are not the same, the requirements regarding a readmission eligible for a transfer payment apply (see below).
  • • The readmission results from the same episode of the same diagnosis or disease of an episodic illness or condition.
  • • For readmission to physical rehabilitation after transfer to acute care, it is necessary to determine if the recipient’s treatment can resume at or near the pre-transfer stage.
  • • If treatment can resume at or near the pre-transfer stage, combine the admission and readmission.
  • • If the patient physically regressed or the functional level deteriorated during the acute care hospitalization and the patient must repeat the treatment program, the readmission is considered a second admission. Although the decision is not based on the length of stay (LOS) in rehabilitation or an acute hospitalization, the LOS must be considered when determining whether a new IHA should be issued.
  • • For readmission within 15 days to a long-term acute care hospital (LTAC) after transfer or discharge to a short-term acute care hospital:
  • • The medical review agent may issue a second IHA only if the LTAC provides documentation to verify the recipient was readmitted for the same reason as the initial admission. A second IHA is not always possible.
  • • Readmissions beyond the 15 days are considered new admissions and will follow the same process of authorization as the first admission, even if the second admission is for the same reason.
  • Eligible for transfer payment
    The medical review agent determines that MHCP will make payment to each hospital as a transfer payment, according to the transfer payment established in the payment rule for the inpatient hospital services necessary for the recipient’s diagnosis and treatment.

    An “eligible for transfer payment” is an inpatient discharge followed by a readmission that resulted from one of the following circumstances:

  • • The preference of the recipient or his or her family to delay treatment, be discharged from inpatient care without receiving the necessary procedure or treatment, and then be readmitted to a different hospital for the necessary procedure or treatment. This situation involves inpatient discharge with admission to another facility occurring within hours. In this case, both hospitals will retain their IHA numbers, or if the hospitals did not need IHA, both hospitals retain transfer payment.
  • • The readmission results from a referral from one hospital to a different hospital because the recipient's medically necessary treatment is outside the scope of the admitting hospital's available services. In this case, both hospitals will retain their IHA numbers if:
  • • The admitting hospital admitted the recipient as an emergency
  • • At the time of admission, the admitting hospital was unaware and had no reason to believe that the recipient's treatment was outside the scope of the hospital's available services
  • • The admitting hospital has a physician or hospital scheduling conflict and the readmission is at a different hospital. In this case, both hospitals will retain their IHA numbers
  • Need for Care – Certification and Recertification

    Certification and recertification requirements apply only to MA recipients as stipulated in the Code of Federal Regulations (CFR). These requirements are included in the following section.

    Certification of Need for Care
    A physician, physician assistant or nurse practitioner, acting within the scope of practice as defined by state law and under the supervision of a physician, must verify a recipient's need for continued placement at an inpatient hospital level of care. The initial certification consists of the admitting physician’s written order and plan of care documented in the medical record.

    Recipients under 21 years old at the time of admission who are hospitalized in an Institution for Mental Diseases (IMD) require certification of need for services (PDF).

    Recertification of Need for Care

    Providers must complete recertification at least every 60 days after the admission.

    To be valid, the recertification must be:

  • • In writing
  • • In the recipient's medical record
  • • Signed by a physician, physician’s assistant or nurse practitioner
  • • Dated at the time of signature
  • Providers may complete the recertification in the progress notes at the time of a multidisciplinary team meeting or by completing the Inpatient Hospital Recertification (DHS-1931) (PDF).

    If the recipient is not covered under MA on the date of admission, but applies during the hospital stay and is approved, the 60-day recertification period begins on the day the county approves the MA eligibility.

    If recertification of a recipient's need for inpatient hospital services was required but was not documented in the medical record, the medical review agent must deny that portion of the admission that was not recertified (Minnesota Rule 9505.0525, subp. 10F).

    Billing

    When billing for inpatient hospital services, enter the IHA number in the Authorization/Certification field on the Claim Information tab in MN–ITS.

    An inpatient claim will deny for payment if the admission requires IHA but the IHA number is not included on the claim or the IHA number was included on another claim that paid.

    An inpatient claim that includes an authorization number but IHA is not required will be processed as if the number was not included on the claim.

    If an IHA number and a medical authorization number are issued, the IHA number must be the first number entered in FL-63.

    If admission IHA is denied, patient billing is prohibited.

    Forms and Resources

  • MHCP Inpatient Hospital Authorization Form (DHS-4676) (PDF)
  • Inpatient Hospital Authorization for Detoxification
  • Inpatient Hospital Recertification Form (DHS-1931) (PDF)
  • Definitions

    Admission: The time of birth at a hospital or other act that allows the recipient to officially enter a hospital to receive inpatient hospital services under the supervision of a physician who is a member of the medical staff.

    Admitting Physician: The physician who orders the recipient's admission to the hospital.

    Authorization Number: The number the medical review agent issues that establishes that all or part of the inpatient hospital services are medically necessary.

    Certification of Need for Care: Admitting physician or hospital providing services certifies the admission to the hospital in the medical record; a physician, physician assistant or a nurse practitioner dates and signs it.

    Concurrent Review: A medical record review completed to determine medical necessity of inpatient hospital services while the recipient is in the hospital. The review consists of admission review, continued stay review, and, when appropriate, procedure review.

    Continued Stay Review: A review and determination of the medical necessity of continued inpatient hospital services during a recipient's hospitalization.

    Diagnostic Categories: The diagnostic classifications established under Minnesota Statutes 256.969, subd. 2, containing one or more Medicare diagnosis related groups (DRGs).

    Diagnostic Category Validation: The process of comparing documentation in the medical record to the information submitted on the inpatient hospital billing form to determine the accuracy of the information upon which the diagnostic category was assigned.

    Diagnosis Related Groups (DRGs): An inpatient classification, which provides a way to relate the type of patients a hospital treats to the costs incurred by the hospital in order to establish prospective payment rates.

    Inpatient Hospital Authorization (IHA): The determination by the medical review agent that all or part of a recipient's inpatient hospital services are medically necessary and cannot be provided at a less intensive level of care.

    Inpatient Hospital Service: A service provided by or under the supervision of a physician after admission to a hospital. This includes outpatient services provided by the same hospital that immediately precede the admission.

    Institution for Mental Diseases (IMD): A hospital of more than 16 beds primarily engaged in providing diagnosis, treatment and care of persons with mental diseases.

    Local Trade Area: The geographic area surrounding the person's residence, including portions of states other than Minnesota, commonly used by other people in the same area to obtain similar necessary goods and services (MN Rule 9505.0175, subp. 22).

    Medically Necessary: An inpatient hospital service consistent with the recipient's diagnosis or condition in conjunction with industry standard evidence-based criteria, and care that the recipient requires that cannot be provided on an outpatient or other basis.

    Medical Review Agent: The authorized representative that administers procedures for IHA, medical record reviews and reconsiderations, and other functions as stipulated in the terms of the contract.

    Medical Review Physician: The physician for the medical review agent who reviews a case for medical necessity when the nurse for the medical review agent has recommended it for denial.

    Out-of-Area Hospital: A hospital located outside Minnesota that is not a local trade area hospital.

    Physician Adviser: A physician who practices in the specialty area of the admitting, principal or secondary diagnosis or a specialty area related to the admitting, principal, or secondary diagnosis.

    Principal Diagnosis: The condition established, after study, to be responsible for causing the admission to the hospital for inpatient hospital services.

    Principal Procedure: A procedure performed for definitive treatment of the principal diagnosis rather than one performed for diagnostic exploratory purposes or a procedure necessary to take care of a complication. When multiple procedures are performed for definitive treatment, the principal procedure is the procedure most closely related to the principal diagnosis.

    Readmission: An admission that occurs within 15 days of a discharge not including the day of discharge or the day of readmission. DHS may conduct a retrospective review to determine if the admission and readmission are considered separate admissions, transfer admissions or a readmission that is a continuation of the previous admission.

    Recertification: A provider must certify an admission for every 60 days of continuous hospitalization. A physician, physician’s assistant or nurse practitioner must document, date and sign the recertification in the medical record.

    Reconsideration: A review of a denial or withdrawal of inpatient hospital authorization (IHA) or payment.

    Retrospective Review: A review conducted after a recipient receives inpatient hospital services. The review focuses on validating the diagnostic category, verifying recertification, where applicable, and determining the medical necessity of the admission, the medical necessity of any inpatient hospital services provided, and if all medically necessary inpatient hospital services were provided.

    Transfer: The movement of a patient after admission from one hospital directly to another hospital with a different NPI, or to or from a unit of a hospital to another unit recognized as a rehabilitation distinct part by Medicare. Transfer also includes recipients who move to or from extended inpatient psychiatric services capacity under contract with DHS. Moving a recipient from a medical or surgical service to the acute psychiatric unit within the same hospital are not considered transfers under MHCP and must be billed as one continuous hospitalization.

    Legal References

    Minnesota Statutes 256.969, subd. 2
    Minnesota Statutes 256B.0625, subd.1

    Minnesota Statutes 256B.04

    Minnesota Statutes 256D.03

    Minnesota Statutes 256L.03
    , subd. 3(b)
    Minnesota Rules 9505.0175
    , subp. 22
    Minnesota Rules 9505.0525, subp. 10F

    Minnesota Rules 9505.0500 to 9505.0540

    Minnesota Rules 9500.1090 to 9500.1140

    42 CFR 456.50
    to 456.245
    42 CFR 482.30

    42 CFR 441 subp. C, D

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