March 18, 2013
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CMS Issues Proposed Rule for Part B Inpatient Billing
The Centers for Medicare and Medicaid Services (“CMS”) issued CMS Ruling 1455-R on March 13, 2013 and a proposed rule on March 18, 2013 which substantially affect how hospitals are reimbursed for Part B services when a Medicare contractor denies payment for such services under Part A based on a finding that the inpatient admission was not reasonable and necessary. These rulemakings are in response to recent controversy in how these claims are paid.
In recent years, Medicare audit contractors (“Contractors”), including Recovery Audit Contractors (“RAC”), have scrutinized inpatient hospital claims and contested the decision of the admitting physician that inpatient services are reasonable and necessary. The Contractors allege that services would have been more appropriately provided in the outpatient setting and demand refund of the full amount paid under Medicare Part A. Despite the fact that the Contractor’s analysis finds that these services could and should have been billed as Part B outpatient services, CMS has historically taken the position that because proper Part B claims for these services were not timely filed, the hospitals are not entitled to offset. This position has been repeatedly reversed by the Medicare Appeals Counsel of the Departmental Appeals Board (“DAB”) and is currently being challenged in a lawsuit brought by the American Hospital Association.
CMS Ruling 1455-R
Medicare Contractors are instructed to waive timely filing requirements and accept these Part B claims even where they are not submitted within one (1) year of the date of service. This Ruling applies to Part A hospital claims that are denied by a Medicare Contractor 1) while the Ruling is in effect; 2) prior to the effective date of the Ruling, but for which the time to appeal has not expired; or 3) prior to the effective date of the Ruling, but for which an appeal is pending. The Ruling will end on the effective date of a final rule regarding these services.
However, the proposed rule would not apply to all Part A claims that are subsequently denied by Medicare Contractors as not reasonable and necessary. Medicare Contractors may currently review claims up to five (5) years from the date of service. However, the proposed rule will only permit payment of the corrected Part B claim by a hospital if it is submitted within one (1) year of the date of service. Part B claims presented more than one (1) year from the date of service will continue to be denied for timely filing, which is not appealable.
Additionally, the proposed rule does not permit adjustment by the reviewer who makes the Part A denial determination. The hospital must separately submit the claim for Part B services. This is primarily relevant because a Part B claim cannot be submitted where an appeal to the Part A determination is filed by the provider or the patient. As such, the hospital must either waive its appeal rights related to the Part A reasonable and necessary determination in order to timely file the Part B claim or appeal the Part A determination and waive the right to reimbursement for any Part B services.
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