Regulatory Advisory

CMS Administrative Ruling, Proposed Rule Favor Hospitals in Updated Part B Inpatient Rebilling Policy

In a win for hospitals, the Centers for Medicare & Medicaid Services (CMS) issued the attached administrative ruling and a proposed rule updating the Part B inpatient rebilling policy. The administrative ruling acknowledges a number of recent decisions by the Medicare Appeals Council and administrative law judges and states that, effective March 13, when a Part A claim for a hospital inpatient admission is denied by a Medicare review contractor because the inpatient admission was not reasonable and necessary, the hospital may submit a Part B inpatient claim for services. The ruling applies as long as the denial was made: (1) while the ruling is in effect; (2) prior to March 13, and the timeframe to file an appeal has not expired; or (3) prior to March 13, and an appeal is pending. The ruling does not apply to Part A hospital inpatient claim denials if the timeframe to appeal expired prior to March 13, and it does not apply to inpatient admissions deemed by the hospital to be “not reasonable and necessary” (for example, through utilization review or other self-audit). Additional details regarding the time period for billing, scope of review, patient status and operational considerations are discussed in the ruling. The ruling will remain CMS policy until CMS has finalized its proposed rule, also released yesterday.

Under the proposed rule, a hospital would not be able to change a beneficiary’s status, but would be able to bill for all reasonable and necessary services on a Part B inpatient claim, as opposed to the current policy under which a hospital may bill for a limited list of Part B inpatient ancillary services. However, unlike the administrative ruling, the proposed rule will apply existing timely filing rules, which will significantly reduce the number of claims a provider can rebill – particularly for Medicare RAC denials that have dates of service three years prior. Pre-admission services that are provided up to three calendar days prior to admission would be billable under Part B as outpatient services if the Part A claim is denied. The proposed rule would apply to all types of hospitals and critical access hospitals, including psychiatric hospitals, inpatient rehabilitation facilities, and long-term care hospitals.

The ruling and accompanying proposed rule follow a lawsuit filed in November by the American Hospital Association and four hospitals. The lawsuit asked the court to overrule CMS’s non-payment policy and fully reimburse hospitals for care provided but denied by recovery audit contractors. CHA is currently reviewing the details of the administrative ruling and proposed rule and welcomes member input. Comments on the proposed rule are due May 17.