1. (a) The following denials are issued as a result of the review process.

   1. (1) Admission and continued stay denials. A practicing physician consultant makes all decisions regarding any aspect of the review process that involves determining medical necessity, cause of readmission, or appropriateness of setting regarding the service provided. In the event the practicing physician determines the services were not medically necessary, should have been provided in the first admission, or were not provided in the appropriate setting the hospital shall be notified of that decision.

   2. (2) Technical denials. A technical denial shall be issued when a hospital fails to make available for review a complete medical record on the date of an onsite review or, for mail-in hospitals, within specified time frames.

      1. (A) If the complete medical record is not available or is not made available during the onsite review or, for mail-in hospitals, within the specified time frames, a preliminary technical denial shall be issued. Preliminary technical denials shall be issued onsite for onsite reviews. The facility must submit a complete medical record within 60 calendar days from the exit conference date. For mail-in hospitals, preliminary technical denials shall be issued by certified mail or FAX machine, and the facility shall have 60 calendar days from the receipt date of the notice to submit a complete medical record.
      2. (B) If the complete medical record is received by the department or its contractor within 60 days after the preliminary technical denial, a final technical denial shall not be issued, and the case will be reviewed. If the complete medical record is not received by the department or its contractor within the 60 calendar days, a final technical denial shall be issued, and payment shall be recouped. Medical records not received by the department or its contractor within the 60 calendar days must be denied review on the merits, and any claim the hospital has to the Medicaid funds at issue must be barred. Extensions of time are not granted for the filing of a medical record beyond the 60 calendar days.
   3. (3) Readmission denial. If it is determined that the services provided in the second or subsequent admissions were the direct result of a premature discharge or should have been provided in the first or previous admission, the admission in question shall be denied, and monies shall be recouped.
   4. (4) Day outlier denial. If it is determined that not all of the days during the admission were medically necessary, those days shall be denied as covered days, and monies shall be recouped.
   5. (5) Cost outlier denial. If it is determined that services delivered were not medically necessary, not ordered by a physician, not rendered or billed appropriately, or not substantiated in the medical record, monies for those services shall be recouped.
2. (b) Except as otherwise noted in this subsection, when an inpatient admission or continued stay is not medically necessary and an admission denial or continued stay denial is issued, the department or its contractor shall recoup all monies paid to the hospital for the admission or days of stay that were denied, and no money shall be payable for any of the services provided for the admission or continued stay days denied. An exception shall be made in the case of TMRP hospitals in the event that the patient was originally placed in observation, and the hospital has been notified by the department or its contractor that they may submit a revised claim solely for medically necessary outpatient services provided during the observation period. A physician's order must be present to document that the patient was originally placed in observation on an outpatient basis. The revised claim and a copy of the notification must be submitted to the address indicated in the notification and must be received within 180 days of receipt of the notification. Payment shall be considered for the medically necessary services provided during the first 23 hours. Observation services can be provided in any part of the hospital where a patient placed in observation can be assessed, examined, monitored and/or treated in the course of the customary handling of patients by the facility.
3. (c) When a technical denial becomes final, the department or its contractor recoups all monies paid to the hospital for admission, and no money is payable for any of the services rendered. These services may not be rebilled on an outpatient basis.

Source Note:The provisions of this §371.206 adopted to be effective June 14, 1989, 14 TexReg 2624; amended to be effective February 1, 1991, 16 TexReg 232; amended to be effective January 1, 1993, 17 TexReg 8457; transferred effective September 1, 1993, as published in the Texas Register January 28, 1994, 19 TexReg 589; amended to be effective November 22, 1995, 20 TexReg 9274; amended to be effective March 25, 1996, 21 TexReg 2079; transferred effective September 1, 1997, as published in the Texas Register February 18, 2000, 25 TexReg1308.