TL;DR
Chapter 1 of the Medicare Benefit Policy Manual defines inpatient hospital services covered under Part A. It explains who is an inpatient, the two-midnight benchmark physicians use when ordering admission, the admission order and physician certification, the services included in an inpatient stay such as bed and board, nursing, drugs and supplies, and the coverage criteria for inpatient rehabilitation facility care.
Chapter 1 at a glance
- Current revision
- Rev. 10892
- Issued August 6, 2021
- Effective
- November 8, 2021
- Implemented November 8, 2021
- Sections
- 58
- 14 top-level sections
- Transmittals in history
- 8
- Listed at the end of the chapter
- Monthly searches
- 110
- Google Ads, US, October 2026
What chapter 1 governs for billing
Section 10 starts with the definition that drives inpatient billing. An inpatient is a person formally admitted to a hospital for bed occupancy to receive inpatient services, generally with the expectation of care spanning at least two midnights. The physician responsible for the patient decides whether to admit, and physicians are told to use the two-midnight expectation as a benchmark while still exercising medical judgment. When an admission is not reasonable and necessary, Part A does not pay, subject to the limitation on liability rules.
Section 10.2 makes the admission order a condition of payment for every inpatient case, including critical access hospitals, and requires separate physician certification of medical necessity only for long-stay and outlier cases. The rest of section 10 and sections 20 to 60 describe what an inpatient stay includes: bed and board in semi-private accommodations and when a private room is medically necessary, nursing and anesthetist services, drugs and biologicals, supplies and equipment, diagnostic and therapeutic services, and services of interns and residents.
Section 110 is the coverage standard for inpatient rehabilitation facility care. The patient must need active, ongoing therapy in more than one discipline, one of which is physical or occupational therapy, generally an intensive program of at least 3 hours a day at least 5 days a week, with physician supervision and an interdisciplinary approach, documented through the required preadmission screening, post-admission physician evaluation and individualized plan of care. The chapter also covers dental, pregnancy, infertility and religious nonmedical health care institution services and services related to noncovered care (70 to 130).
Sections billing teams use most
Section numbers and headings are CMS's; the notes are ours. Each section number opens the official chapter 1 PDF at the page where that section starts.
| Section | CMS heading | Why it matters |
|---|---|---|
| 10 | Covered Inpatient Hospital Services Covered Under Part A | Who is an inpatient and the two-midnight benchmark for admission decisions. |
| 10.2 | Hospital Inpatient Admission Order and Certification | The inpatient admission order and when physician certification is required. |
| 10.1 | Bed and Board | Bed and board, private rooms and when isolation makes a private room medically necessary. |
| 30 | Drugs and Biologicals | Drugs and biologicals furnished to inpatients. |
| 110.1.1 | Required Preadmission Screening | The required preadmission screening for inpatient rehabilitation. |
| 110.2 | Inpatient Rehabilitation Facility Medical Necessity Criteria | Inpatient rehabilitation facility medical necessity criteria. |
How chapter 1 shows up on claims and denials
Inpatient status disputes are the main source of chapter 1 denials. When review finds the admission was not reasonable and necessary because the expected stay did not support inpatient care, the Part A claim is denied with reason code 50, and the hospital may then bill payable services under Part B as set out in the Claims Processing Manual chapter 4. A missing or invalid admission order is treated as a failed condition of payment.
Inpatient rehabilitation claims are reviewed against section 110: the preadmission screening, the post-admission physician evaluation and the plan of care must all be in the record and show the patient could take part in and benefit from intensive therapy. Missing documents lead to a denial under program guidelines even when the patient was clearly ill.
Codes you are likely to see on the remittance when a claim runs into this chapter's rules. The code pages explain each code's meaning, root causes and the usual fix.
| Code | Type | When it appears |
|---|---|---|
| 50 | Claim adjustment reason code | Inpatient admission not reasonable and necessary. |
| 272 | Claim adjustment reason code | Coverage guidelines not met, for example a missing admission order or IRF documentation. |
| 96 | Claim adjustment reason code | Non-covered charges within an otherwise covered stay. |
Current revision and recent transmittals
The chapter PDF posted on cms.gov is current through Rev. 10892, issued August 6, 2021, effective November 8, 2021, implemented November 8, 2021 (change request 12353). That revision changed sections 110 (Inpatient Rehabilitation Facility (IRF) Services), 110.1 (Documentation Requirements), 110.1.1 (Required Preadmission Screening), 110.1.2 (Required Post-Admission Physician Evaluation), 110.1.3 (Required Individualized Overall Plan of Care), 110.1.4 (Required Admission Orders), 110.1.5 (Required Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI)), 110.2 (Inpatient Rehabilitation Facility Medical Necessity Criteria). Its subject line reads: “Internet Only Manual Updates to Publication (Pub.) 100-02 to Implement Updates to Policy and Correct Errors and Omissions (Inpatient Rehabilitation Facility (IRF)”.
The newest rows of the transmittal history printed at the end of the chapter (8 revisions in all). Rows whose subject could not be read reliably from the PDF table are left out; the PDF has the complete list.
| Revision | Issued | Subject | CR |
|---|---|---|---|
| R10892BP | August 6, 2021 | Internet Only Manual Updates to Publication (Pub.) 100-02 to Implement Updates to Policy and Correct Errors and Omissions (Inpatient Rehabilitation Facility (IRF) | 12353 |
| R234BP | March 10, 2017 | Clarification of Admission Order and Medical Review Requirements | 9979 |
| R232BP | December 22, 2016 | January 2017 Update of the Hospital Outpatient Prospective Payment System (OPPS) | 9930 |
| R179BP | January 14, 2014 | Manual Updates to Clarify Skilled Nursing Facility (SNF), Inpatient Rehabilitation Facility (IRF), Home Health (HH), and Outpatient (OPT) Coverage Pursuant to Jimmo vs. Sebelius | 8458 |
| R119BP | January 5, 2010 | Coverage of Inpatient Rehabilitation Services | 6699 |
| R45BP | February 10, 2006 | Revisions to Instructions for Contractors Other Than the Religious Nonmedical Health Care Institution (RNHCI) Specialty Contractor Regarding Claims for Beneficiaries with RNHCI Elections | 4218 |
Sections ordered by the date in the revision note printed under each heading.
| Section | Heading | Revision |
|---|---|---|
| 110 | Inpatient Rehabilitation Facility (IRF) Services | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1 | Documentation Requirements | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1.1 | Required Preadmission Screening | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1.2 | Required Post-Admission Physician Evaluation | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1.3 | Required Individualized Overall Plan of Care | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1.4 | Required Admission Orders | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.1.5 | Required Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI) | Rev. 10892, August 6, 2021; effective November 8, 2021 |
| 110.2 | Inpatient Rehabilitation Facility Medical Necessity Criteria | Rev. 10892, August 6, 2021; effective November 8, 2021 |
Section index
Every section in the chapter's table of contents, grouped under its top-level heading, with the PDF page where it starts. Open a heading to see its subsections.
1 Definition of Inpatient Hospital Services · p. 4
10 Covered Inpatient Hospital Services Covered Under Part A · p. 5 · 11 subsections
- Open section 10 in the PDF
- 10.1 Bed and Board · p. 8
- 10.1.1 Accommodations - General · p. 8
- 10.1.2 Medical Necessity - Need for Isolation · p. 9
- 10.1.3 Medical Necessity - Admission Required and Only Private Rooms Available · p. 10
- 10.1.4 Charges for Deluxe Private Room · p. 10
- 10.1.5 All Private Room Providers · p. 11
- 10.1.6 Wards · p. 11
- 10.1.6.1 Assignment Consistent With Program Purposes · p. 12
- 10.1.6.2 Assignment Not Consistent With Program Purposes · p. 12
- 10.1.7 Charges · p. 12
- 10.2 Hospital Inpatient Admission Order and Certification · p. 12
20 Nursing and Other Services · p. 20 · 2 subsections
- Open section 20 in the PDF
- 20.1 Anesthetist Services · p. 20
- 20.2 Medical Social Services to Meet the Patient's Medically Related Social Needs · p. 20
30 Drugs and Biologicals · p. 21 · 5 subsections
- Open section 30 in the PDF
- 30.1 Drugs Included in the Drug Compendia · p. 22
- 30.2 Approval by Pharmacy and Drug Therapeutics Committee · p. 22
- 30.3 Combination Drugs · p. 23
- 30.4 Drugs Specially Ordered for Inpatients · p. 23
- 30.5 Drugs for Use Outside the Hospital · p. 24
40 Supplies, Appliances, and Equipment · p. 24
50 Other Diagnostic or Therapeutic Items or Services · p. 25 · 4 subsections
- Open section 50 in the PDF
- 50.1 Therapeutic Items · p. 25
- 50.2 Diagnostic Services of Psychologists and Physical Therapists · p. 26
- 50.3 Diagnostic Services Furnished to an Inpatient by an Independent Clinical Laboratory Under Arrangements With the Hospital · p. 26
- 50.4 Diagnostic Services Furnished a Hospital Inpatient Under Arrangement With the Laboratory of Another Participating Hospital · p. 28
60 Services of Interns or Residents-In-Training · p. 28
70 Inpatient Services in Connection With Dental Services · p. 28
80 Health Care Associated With Pregnancy · p. 29
90 Termination of Pregnancy · p. 29
100 Treatment for Infertility · p. 30
110 Inpatient Rehabilitation Facility (IRF) Services · p. 30 · 14 subsections
- Open section 110 in the PDF
- 110.1 Documentation Requirements · p. 31
- 110.1.1 Required Preadmission Screening · p. 31
- 110.1.2 Required Post-Admission Physician Evaluation · p. 33
- 110.1.3 Required Individualized Overall Plan of Care · p. 33
- 110.1.4 Required Admission Orders · p. 34
- 110.1.5 Required Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI) · p. 34
- 110.2 Inpatient Rehabilitation Facility Medical Necessity Criteria · p. 34
- 110.2.1 Multiple Therapy Disciplines · p. 35
- 110.2.2 Intensive Level of Rehabilitation Services · p. 35
- 110.2.3 Ability to Actively Participate in Intensive Rehabilitation Therapy Program · p. 37
- 110.2.4 Physician Supervision · p. 37
- 110.2.5 Interdisciplinary Team Approach to the Delivery of Care · p. 38
- 110.2.6 IRF Waivers and Flexibilities During the Public Health Emergency for the COVID-19 Pandemic · p. 40
- 110.3 Definition of Measurable Improvement · p. 42
120 Services Related to and Required as a Result of Services Which Are Not Covered Under Medicare · p. 43
130 Religious Nonmedical Health Care Institution (RNHCI) Services · p. 44 · 8 subsections
- Open section 130 in the PDF
- 130.1 Beneficiary Eligibility for RNHCI Services · p. 45
- 130.2 Election of RNHCI Benefits · p. 45
- 130.2.1 Revocation of RNHCI Election · p. 47
- 130.2.2 RNHCI Election After Prior Revocation · p. 47
- 130.3 Medicare Payment for RNHCI Services and Beneficiary Liability · p. 48
- 130.4 Coverage of RNHCI Items Furnished in the Home · p. 48
- 130.4.1 Coverage and Payment of Durable Medical Equipment Under the RNHCI Home Benefit · p. 49
- 130.4.2 Coverage and Payment of Home Visits Under the RNHCI Home Benefit · p. 51
Using this chapter in a denial or appeal
Start with the remittance. The claim adjustment reason code says what happened to the line, the remark code narrows it, and the group code says who is liable. Match that to the section of the chapter that sets the rule, then read the section in the official PDF rather than a summary: the wording that matters, such as a time limit, a modifier requirement or a documentation element, is usually a single sentence. Check the revision note under the section heading, because a rule that changed after the date of service may not apply to the claim, and an effective date earlier than the issue date can make a new rule reach back.
When the chapter supports the claim, cite it precisely in the redetermination request: the publication number, chapter, section and revision. When it does not, the fix is usually a corrected claim or better documentation rather than an appeal, and a coding or format rejection is corrected and resubmitted because it carries no appeal rights. Manual instructions bind the Medicare Administrative Contractor, so they settle most first-level disputes; at the hearing level, administrative law judges give them substantial deference without being bound by them. If the issue turns on whether a service is covered at all, read the matching Benefit Policy Manual chapter and any national coverage determination or local coverage determination as well, because coverage and billing rules are written in different places.
How QuickIntell works with Benefit Policy Manual chapter 1
QuickAuth coordinates requirement checks, documentation, submission and status tracking with human review, so the coverage conditions in this chapter are looked at before the service. QuickRCM handles claim readiness and the coverage denials that follow.
Frequently asked questions: chapter 1
Where is the two-midnight rule in the Medicare manuals?
Chapter 1 section 10 of the Medicare Benefit Policy Manual explains that a patient is generally an inpatient when admitted with the expectation of care spanning at least two midnights, and tells physicians to use that expectation as a benchmark for admission decisions.
Is a physician certification required for every inpatient stay?
No. Section 10.2 requires an admission order for every inpatient case but separate physician certification only for long-stay and outlier cases.
What are the IRF coverage criteria?
Section 110 requires active and ongoing therapy in more than one discipline including physical or occupational therapy, generally an intensive program of at least 3 hours a day at least 5 days a week, physician supervision and an interdisciplinary approach, with specific documentation.
Sources
Every figure on this page is taken from the CMS publications below, as released by the Centers for Medicare & Medicaid Services. Projection built 2026-10-10. Verify against the primary file before billing or contracting decisions. The reference methodology explains how each figure is computed from these files.
- Medicare Benefit Policy Manual, Chapter 1: Inpatient Hospital Services Covered Under Part AVersion Rev. 10892, issued 2021-08-06 · effective 2021-11-08 · file bp102c01.pdfSHA-256 2579dcd1e3359f87…
- Medicare Benefit Policy Manual (Pub. 100-02)Version 17 chapter PDFs; newest revision Rev. 13889 (chapter 15), issued 2026-07-30 · effective 2026-09-27 · file 100-02-benefit-policy-manual/*.pdf (17 chapters; SHA-256 of their sha256sum listing)SHA-256 be35772e4f9f80b4…
Disclaimer
This guide summarizes a CMS manual chapter in our own words for billing teams; section headings and transmittal subjects are quoted from the chapter PDF. The chapter itself is the authority, and it changes by transmittal. Not legal, clinical or billing advice.
Found a figure that does not match the CMS file? Report a data correction with the CMS file and the value you expected; the request reaches the editorial team through the contact form.