The SC Department of
Health and Human Services

An inpatient is a patient who is admitted to a medical facility on the recommendation of a physician or dentist, is receiving specialized institutional and professional services on a continuous basis, and is expected to require such specialized services for a period generally greater than 24 hours. Exceptions to the 24-hour requirement for inpatients include but are not limited to deaths (including ER admission), false labor, deliveries, and medical transfers. Inpatient services are defined as those items and services which are medically appropriate to the inpatient hospital setting and meet the medical necessity requirements outlined in the criteria and policies of the Quality Improvement Organization (QIO). These items and services must be directed and documented by a licensed physician in accordance with hospital bylaws in a facility meeting hospital criteria.  

The South Carolina Medicaid State Plan limits coverage of inpatient hospital services to general acute care hospital and psychiatric hospital services for individuals under age 21. Inpatient rehabilitative services provided in a distinct medical rehabilitation facility or a separately licensed specialty hospital are not reimbursable. Medicaid will reimburse rehabilitation services rendered to Medicaid beneficiaries on an inpatient or outpatient basis at a general acute care hospital.

Reimbursement Info

Inpatient hospital reimbursement is based on the hybrid prospective payment system methodology. All services rendered during an inpatient stay are included in the diagnosis related group (DRG) reimbursement. Outpatient services that result in an inpatient admission are deemed to be inpatient services and are included in the DRG payment. Outpatient services rendered on the day of admission are included in the DRG payment regardless of relation to the inpatient admission. All outpatient services rendered during an inpatient stay are included in the DRG payment, including charges for tests or procedures performed by another general acute care hospital. In such cases the admitting hospital is responsible for reimbursing the performing hospital for its services. The formulas used to calculate inpatient hospital payments are located in Section 3 of the provider manual.

Prior Approval Info

SCDHHS contracts with a quality improvement organization (QIO), Qualis, to perform presurgical review of select surgical procedures.

CMR will answer questions regarding pending reviews only. General prior approval (PA) questions should be directed to the appropriate program representative. Qualis staff can be reached at (877) 717 - 8592.

All documentation must be mailed. Providers must send all available information along with the request ( i.e., history and physical, photographs, and recommendations). Qualis will not accept medical review documentation via facsimile.

PA requests for beneficiaries enrolled in Physician Enhanced Program (PEP), Medical Home Local Network (MHLN), or hospice programs must receive a PA from these programs before contacting the QIO.

PA requests for beneficiaries enrolled in a Managed Care Organization (MCO) program must be handled by the MCO only.

Requesting physicians are responsible for providing the PA number to any facility or medical provider who will submit a Medicaid claim related to the service.

A list of procedure codes requiring prior authorization from Qualis can be found in Section 4 of the provider manual.

Retrospective Reviews

Medicaid requires the Quality Improvement Organization (QIO), Qualis, to retrospectively review a sample of paid hospital claims. The review policies applicable to retrospective review include but are not limited to medical record documentation, DRG validation, hospital-issued denials, and discharge planning. Screening criteria may be obtained upon request from Qualis. When the QIO retrospective review determines that the service/procedure did not require an inpatient admission, SCDHHS will recoup the paid inpatient claim and allow the hospital to receive payment for a one-day stay. The hospital receives notification from SCDHHS that a recoupment is forthcoming.

Revenue Codes

Quality Improvement Organization

SC Department of Health and Human Services (SCDHHS) contracts for external utilization review services with a Quality Improvement Organization (QIO). Qualis is the current QIO contractor. The QIO review consists of:

• Pre-surgical review for all hysterectomies
• A retrospective review of a sample of paid inpatient/outpatient hospital claims
• Select project studies
• Managed care organizations’ external quality assurance evaluations
• Medical record review for select procedures

The QIO may also review or reconsider cases in the following situations:

• The hospital and/or physician may request a reconsideration of any case initially denied by the hospital utilization review committee. The patient may request that the QIO review any admission or partial admission denied by the hospital UR committee.
• The patient may request that the QIO review the termination of administrative days issued by the hospital.
• When the attending physician and hospital UR committee disagree, the case should be referred to the QIO. The QIO will make a determination within one business day of the time medical records are received.

A hospital is defined as a general acute care institution licensed as a hospital by the applicable South Carolina licensing authority and certified for participation in the Medicare (Title XVIII) Program.

All hospitals must be enrolled in the South Carolina Medicaid Program. In-state hospitals must also contract with the South Carolina Department of Health and Human Services (SCDHHS) to provide inpatient and outpatient services. Out-of-state hospitals within the medical service areas (normally within 25 miles of the state’s borders) may follow the same contractual procedures as in-state providers. Please refer to Section 1, Requirements for Provider Participation, of the provider manual for instructions regarding provider enrollment.

Hospitals located more than 25 miles from the South Carolina borders do not contract with SCDHHS. These hospitals must complete an enrollment form and sign a provider agreement. Out-of-state referrals by physicians when the needed services are not available within the South Carolina Medical Service Area must be preauthorized. See “Out-of-State Services” in Section 2 of the provider manual for more information.

In order to receive Medicaid reimbursement for services, hospitals must meet the program requirements outlined in the provider manual.

Hospital Treatment-Out-of-State

The term South Carolina Medical Service Area (SCMSA) refers to the state of South Carolina and areas in North Carolina and Georgia within 25 miles of the South Carolina state border. Charlotte, Augusta, and Savannah are considered within the service area. Services provided to Medicare/Medicaid beneficiaries in the SCMSA do not require prior approval from Medicaid.

The South Carolina Medicaid program will compensate medical providers outside the SCMSA in the following situations:

• Out-of-state referrals by physicians when needed services are not available within the SCMSA



• All pregnancy-related services, including delivery out-of-state hospital services are limited to true emergencies or those services for which prior approval from SCDHHS has been obtained. A true emergency is described as an accident or disease in which the health of the beneficiary would be endangered if necessary care and services were postponed until return travel to South Carolina.

Out-of-State Hospitals

In order to participate in the Medicaid program, an out-of-state hospital must enroll with South Carolina Medicaid by completing a provider enrollment package. By signing the provider enrollment forms, the provider agrees to payment at the South Carolina rate of reimbursement and to comply with all federal and state laws and regulations.

Claims and all needed information must be submitted within one year from the date of service or date of discharge for inpatient claims or reimbursement will be denied.

For assistance with out-of-state hospital claims, please contact the out-of-state program representative at (803) 898-2665 or by fax at (803) 255-8351.