Skip to Main Content

Institutionalized Members

Provider Type

  • Physicians (does not apply to Cal MediConnect)
  • Participating Physician Groups (PPG)
  • Hospitals
  • Ancillary

The Centers for Medicare & Medicaid Services (CMS) determines whether a Medicare Advantage organization (MAO) should be paid at the institutional rate for a member. CMS provides a substantial increase in monthly capitation for qualified institutionalized members when it is reported back to CMS each month that the member remains qualified. The institutional payment is prospective; however, the payment mechanism is retroactive. CMS makes a retroactive payment adjustment two months after the month a member satisfies the residency requirement.

CMS Definitions: Institutionalized and Special Needs Members

If a Medicare Advantage (MA)-eligible member is admitted to a Medicare or Medicaid certified institution and is receiving skilled nursing services, the member is considered skilled until the first 100 days are used. If the member has been admitted and reverted to custodial care after receiving skilled nursing care, or was just admitted as custodial, the member would be classified institutionalized after the first 30 days. The level of care (skilled nursing, rehabilitation, or custodial) does not need to be considered in order for the member to be classified as institutionalized.

A MA eligible member who continuously resides, or who is expected to continuously reside, for 90 days or longer in a skilled nursing facility (SNF) is defined as a special needs member.

Definition - Medicare-Certified Institution

A member can only be classified as institutionalized if the facility in which the member resides is a Medicare (title XVIII) or Medicaid (title XIX) certified institution. These facilities are:

  • A skilled nursing facility (SNF), as defined in section 1819(a), primarily engaged in providing skilled nursing care or rehabilitative services to residents. SNFs must have in effect an agreement with a hospital that ensures transfer of patients is affected between the two, whenever such transfer is medically appropriate
  • A nursing facility, as defined in section 1919(a), includes a SNF, but also includes institutions that provide health-related care and services to residents who, because of their mental or physical condition, require care and services, which can be made available to them only through institutional facilities
  • "Intermediate care facility for the mentally retarded," as defined in section 1905(d), that provides health or rehabilitative services for mentally retarded residents receiving active treatment under Medicaid
  • A psychiatric hospital or unit, as defined in section 1866 (d)(1)(B), is an institution, or distinct part of an institution, primarily engaged in providing, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons
  • A rehabilitation hospital or unit, as defined in section 1886 (d)(1)(B), is an institution that serves an inpatient population of whom the vast majority require intensive rehabilitative services for the treatment of certain conditions (for example, stroke, amputation, brain or spinal cord injuries, and neurological disorders)
  • A long-term care hospital, as defined in section 1886 (d)(1)(B), is a hospital that has an average inpatient length of stay greater than 25 days
  • A swing-bed hospital, as defined under section 1883, is a hospital that has entered into an agreement whereby its inpatient hospital facility is furnished by a SNF and would constitute extended care service

In addition to residing in one of the above-listed institutions, the member must be a resident for 30 consecutive days (or 90 for a special needs member) prior to the month the higher institutional rate is paid. This 30 or 90-day period must include the last day of the month (for example, January 2 through January 31). The term "calendar month" cannot be used. A calendar month can have 28 to 31 days and cannot be substituted for 30 days.

Last Updated: 10/30/2019