Part B Inpatient Billing in Hospitals

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Introduction -

On March 13, 2013, the Centers for Medicare & Medicaid Services (CMS) concurrently issued CMS Ruling Number CMS-1455-R (the Administrator’s Ruling) and a proposed rule, “Part B Inpatient Billing in Hospitals” (the Proposed Rule). The Administrator’s Ruling and Proposed Rule address the submission of Medicare Part B inpatient claims where a Medicare Part A claim for a hospital inpatient admission is denied by a Medicare review contractor, on the grounds that the inpatient admission was not “reasonable and necessary.” The Proposed Rule also would apply to situations where a hospital determined, through a self-audit, that an inpatient admission was not “reasonable and necessary.” The Administrator’s Ruling, effective as of the issuance date, establishes an interim policy to handle payment for Medicare Part B inpatient claims until CMS finalizes the Proposed Rule. The Proposed Rule would set forth a permanent regulatory scheme to permit hospitals to rebill Medicare for a wider range of Part B services than is currently permitted following denial of a Part A claim.

The impact and utility of the Proposed Rule is substantially diminished by the timeframe in which providers are allowed to resubmit Part B claims – one year after the date of service. In many cases, providers do not receive denials of Part A claims within one year of the date of service. Consequently, the one year deadline would restrict some providers wanting to resubmit Part B claims from taking advantage of the more permissive Part B resubmission framework contemplated by the Proposed Rule. Pursuant to the Proposed Rule, hospitals would be able to either: (1) appeal the denied Part A claim; or (2) resubmit Part B claims. Because a hospital’s resubmission of Part B claims would bar a Part A appeal, the Proposed Rule may deter hospitals, eager for a successful Part A appeal, from resubmitting Part B claims. Finally, pending legislation would mandate a reduction in the number of Medicare audit contractor reviews conducted on a facility annually, potentially leading to even greater delays between the date of service and an audit contractor’s decision that a Part A claim is not “reasonable and necessary.” The potential consequence of the aforementioned pending legislation creates even further doubt regarding the practicality of the Proposed Rule.

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