Who pays when an inpatient goes to another hospital for a test? The Medicare bundling rule

The stay pays for the trip

When a hospital inpatient goes to another hospital or a freestanding center for a scan, a procedure, or a treatment and comes back, Medicare pays for that ride through the admitting hospital’s inpatient payment. The transport company’s customer is the hospital, and the hospital cannot pass the bill to Part B or to the patient.

The rule starts with the definition. Under 42 CFR 409.10, inpatient hospital services include “transportation services, including transport by ambulance,” right alongside bed and board, nursing, and drugs. The Medicare Benefit Policy Manual repeats that list in Chapter 1.

CMS’s claims manual turns the definition into an instruction. Chapter 3, section 10.4 says every item and nonphysician service furnished to an inpatient must be furnished by the hospital directly or billed through the hospital “under arrangements,” and it applies to all hospitals, whether or not they are paid under the prospective payment system. Its list of services covered by the inpatient payment includes transportation, ambulance included, to and from another hospital or freestanding facility for specialized diagnostic or therapeutic services the admitting hospital does not offer. The hospital puts that cost into the cost center for the test or treatment. It must not show it separately under revenue code 0540.

Two more provisions close the loop:

• The Part B exclusion. Under 42 CFR 411.15(m), Medicare excludes any service furnished to a hospital inpatient by an outside entity unless the hospital has an arrangement with that entity for the service.
• The ambulance chapter. Chapter 15, section 10.4 calls this movement “patient transportation.” It is covered as an inpatient hospital service, and “cannot be classified and paid for as an ambulance service under Part B.” CMS last revised that section in Transmittal 4021 (Change Request 10550, April 13, 2018).

Why a separate ambulance claim gets rejected or recouped

Medicare enforces the bundle with automated edits, so a Part B claim for an inpatient’s round trip will not stick. Chapter 3, section 10.5 describes how the Common Working File compares the date on an ambulance supplier’s claim with the admission and discharge dates on hospital inpatient claims. A line dated inside the stay is rejected, and the Part B contractor denies it.

The order the claims arrive in does not matter. When the hospital’s inpatient claim reaches the system after the ambulance claim was paid, the Common Working File sends an unsolicited response. The Part B contractor then adjusts the ambulance claim and recoups the money. Chapter 15, section 30.1.4 describes the same edit from the ambulance side.

For a transport company, that means a paid claim can be taken back once the hospital bills. The fix is billing the right party from the start: the admitting hospital, at the rate in your agreement.

Trips that stay billable on their own

Not every trip during a hospital stay falls into the bundle. These are the situations CMS carves out:

• Admission and discharge dates. Ambulance services dated the same day as the admission or discharge date on the inpatient claim are separately payable and not subject to the bundling edit.
• Transfers. When a patient is discharged from one hospital and admitted as an inpatient at another, the ambulance trip is payable under Part B, provided Medicare’s coverage criteria are met. Benefit Policy Manual Chapter 10, section 10.3.3 explains why: in transit, the patient is not a patient of either provider. Chapter 3 adds that for this purpose a hospital inpatient does not include someone in the process of being transferred.
• Rehab, psychiatric, and long-term care hospital patients. When an inpatient of an inpatient rehabilitation facility, inpatient psychiatric facility, or long-term care hospital goes by ambulance to an acute care hospital for specialized services, the edit checks for occurrence span code 74 on the facility’s claim. An ambulance line dated within that span, or one day after it, is separately payable. Outside it, the line is rejected.

Each of these still has to meet Medicare’s ambulance coverage rules, including the requirement that other transportation be contraindicated by the patient’s condition. Our guide to NEMT versus ambulance covers where that line falls, and the A0428 entry covers the basic life support nonemergency code.

A leave of absence keeps it one stay

Hospitals sometimes place a patient on a leave of absence when readmission is expected and the patient does not need hospital care in between, for example when surgery cannot be scheduled right away. Chapter 3, sections 40.2.5 and 40.2.6 treat the whole episode as one stay: one bill and one DRG payment, with leave days reported using occurrence span code 74. Medicare is not billed for leave days, and the hospital may not charge the patient for them. The manual also notes that a beneficiary cannot be an inpatient of two institutions at the same time.

For the transport company, that means the admission and discharge dates on the hospital’s claim usually span the leave. The occurrence span code 74 bypass in section 10.5 is written only for rehab, psychiatric, and long-term care hospital patients. Before billing Part B for a trip during an acute care leave, ask the hospital’s billing office how the stay will be billed.

Wheelchair vans and stretcher vans

Most of the CMS text talks about ambulances, because an ambulance is the only vehicle Medicare pays a transport company for directly. Chapter 6 of the claims manual says Medicare does not cover an ambulette, wheelchair van, litter van, or any other non-ambulance vehicle, under either Part A or Part B. The inpatient definition is wider: section 409.10 lists “transportation services, including transport by ambulance,” among inpatient hospital services, and Chapter 3, section 10.4 tells the hospital to carry the cost of a trip to another facility in the cost of the test or treatment.

For a wheelchair van or stretcher van company, the practical point is simple. There is no Medicare claim to file for an inpatient’s round trip in any vehicle. The ride is a service the hospital buys, priced in your agreement with the hospital, the same as any other facility account.

Medicaid patients: New York and Texas

State Medicaid programs set their own rules. New York and Texas land in the same place as Medicare:

• New York. The Medicaid Transportation Policy Manual folds every necessary ride for a Medicaid inpatient into what an Article 28 hospital is paid for the stay. For a round trip to a second hospital for a diagnostic test or a therapy, the manual names the admitting hospital as responsible and says it reimburses “the ambulance (or other transportation) service.” The rule traces to an October 2006 Medicaid Update.
• Texas. The Texas Medicaid Ambulance Services Handbook (October 2026), section 2.2, says the inpatient hospital stay benefit includes medically necessary emergency and nonemergency ambulance transportation during the stay, and ambulance transport during the stay will not be reimbursed to the ambulance provider. Nonemergency prior authorization is not approved while the client is a hospital inpatient, except for a one-time transport right after discharge.

If your state is not one of these, read the inpatient section of its hospital manual or ask the hospital’s billing office how it treats outside transport before the first trip.

How a skilled nursing stay compares

Skilled nursing facilities run on a similar idea, called consolidated billing, but the exceptions are wider. Under 42 CFR 411.15(p) and Chapter 6 of the claims manual, the facility pays for most ambulance trips while a resident’s Part A coverage is running. The difference is that CMS pulls out a list of hospital services so intensive that receiving one temporarily suspends the resident’s facility status, and the ambulance trip for them is billed to Part B, both legs.

The comparison below covers ambulance trips that meet Medicare’s coverage rules. Non-ambulance vehicles are covered by neither Part A nor Part B in a nursing facility.

The nursing facility rules have more detail, including the same-day midnight test for transfers between two facilities. Our guide to skilled nursing facility transportation walks through them.

What the transport agreement with the hospital should say

Because the hospital is the payer, the agreement does the work a Medicare claim would otherwise do. Medicare’s definition of “arrangements” in 42 CFR 409.3 means arrangements where the payment to the hospital discharges the liability of the beneficiary or anyone else to pay. Under 42 CFR 489.21, the hospital agrees not to charge a beneficiary for services Medicare covers. And under 42 CFR 482.12(e), the hospital’s governing body is responsible for contracted services and must keep a list of them with their scope and nature.

A workable agreement covers these points:

1. Who pays. The hospital pays for round trips taken while the patient keeps inpatient status, at stated rates by vehicle type, mileage, and wait time.
2. No billing to the patient or Medicare. The transport company agrees not to bill the patient, Medicare, or a secondary insurer for bundled trips.
3. Patient status on every request. The hospital confirms on each order whether the patient is an inpatient, the admission date, and whether the patient returns or is being admitted elsewhere. That one field decides who pays.
4. Admission-day and discharge-day trips. The agreement states how these are handled, since they are separately billable when Medicare coverage criteria are met.
5. Invoices and documentation. Each invoice lists the patient, date, origin, destination, times, and the hospital staff member who ordered the trip.
6. Denials and recoupments. The parties agree on what happens when a trip was billed to the wrong payer, including how the hospital pays for a trip whose Part B payment was recouped.

Ask the hospital’s case management and patient access teams who orders outside transport and which department receives the invoice, so the people who approve the trip are the people who pay for it.

Billing the hospital in HealthRide

A trip like this belongs on the hospital’s account, not on a claim. HealthRide prices each finished trip from the rates you set for that payer, so the hospital’s round trips go on the hospital’s invoice with their dates and times, and the facility can view and pay it in its own portal. See how invoicing works.