Just as the leaves will start to change this autumn, so will Medicare’s payment policies. The Inpatient Prospective Payment System (IPPS) Final Rule was published on Aug. 19, providing information specific to the annual updates. Along with these updates, this development brings the much-anticipated decision on Medicare Part A-to-Part B rebilling, as well as clarifications to inpatient admission guidelines.
Historically, Medicare has reimbursed for hospital inpatient services provided under Medicare Part A, and hospital outpatient services under Medicare Part B. However, in specific situations arising after discharge, Medicare has permitted Part B payments for services provided to an inpatient. These have been made in accordance with Chapter 6 of the Medicare Benefit Policy Manual, being applicable only to a limited set of services, and have been subject to timely filing limitations.
In 2012, the Centers for Medicare & Medicaid Services (CMS) initiated the Part A/B Rebilling Demonstration project, applicable to approximately 380 hospitals, to evaluate the potential impact of a change to policy. For hospitals in the demonstration, inpatient admissions denied as not reasonable and/or necessary by a contractor (or self-identified as such) could be billed outside of the normal timely filing limit as Part B Inpatient claims, with providers to receive 90 percent of the total payment applicable under Part B. Essentially, it was as if the claim was submitted as an outpatient claim. As a condition of participation, providers waived their appeal rights for all claims impacted by the demonstration.
While providing a level of reimbursement for care provided, these policies present challenges for organizations to manage. CMS has continued to see an increase in observation cases of more than 48 hours, and many short inpatient admissions denied as not reasonable and/or necessary are resulting in appeals by the providers. Furthermore, upon appeal, the administrative law judges recently have been ordering payment for services as if they were rendered in an outpatient observation level of care, without regard to timely filing limits. This has been troublesome for CMS to manage.
In response to this issue, CMS released an interim ruling earlier this year, effective March 13. This ruling discontinued the Part A/B Rebilling Demonstration and further authorized Part B inpatient payment beyond the limited services defined in the Medicare Benefit Policy Manual for inpatient admissions denied as not being reasonable and/or necessary. The existing policy remains in place for other situations.
Specifically, a hospital may submit a Part B inpatient claim for services as if they were provided on an outpatient basis, except for those services requiring an outpatient status (observation, outpatient and emergency visits), as the claim status does not change. Under this ruling, claims are not denied if filed later than one calendar year from the date of service (DOS), as long as the original Part A inpatient claim was filed in timely fashion. As such, hospitals have 180 days from the date of the determination, the date of the appeal determination, or the date of dismissal receipt (in the case of a withdrawn appeal) to submit the Part B inpatient claim. However, under no circumstances may a hospital submit a Part B claim while maintaining a Part A claim for the same services; these will be denied as duplicates.
Additionally, in cases previously subject to the three-day payment window, outpatient services formerly combined under that provision can be billed separately as outpatient services provided under Part B for full reimbursement, as they cannot be included on the Part B inpatient claim.
The ruling additionally emphasizes that hospitals are ultimately responsible for determining whether claim is appropriate for Part A or Part B, and it limits Medicare contractors’ scope of review to the submitted claim (not in ordering alternative payment methods).
Simultaneous to the release of this ruling, CMS issued a proposed policy revision related to Part B inpatient billing in hospitals (CMS-1455-P). Under this proposal, CMS states that a hospital may submit a Part B inpatient claim for services as if they were provided on an outpatient basis (except, again, those services specifically requiring an outpatient status).
As proposed, Part B inpatient claims must be submitted within the normal timely filing limit of one year. However, the submission of a Part B inpatient claim can be triggered based on a RAC denial or the hospital’s determination that an inpatient admission was not reasonable and/or necessary, marking an expansion from the current ruling. As with the recent CMS ruling, the proposal authorizes reasonable and necessary outpatient services that were subject to the three-day payment window to be billed subsequently as Part B outpatient services.
The IPPS final rule brings with it winds of change, featuring modifications to the Part A-to-Part B rebilling requirements. The table below highlights key elements of the CMS ruling and the final rule.
|CMS Ruling CMS-1455-R||Proposed Rule CMS-1455-P||IPPS Final Rule|
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As noted, the final rule permits the hospital to make a determination post-discharge that an admission was not reasonable and/or necessary. It also removes therapy (physical, occupational and speech language) services from the exceptions, permitting the inclusion of these services on a Part B inpatient claim. Although commenters did challenge CMS in relation to the timely filing limits, on the basis that the RAC may audit claims within the prior three years, the agency has not made any further exceptions to the one-year time limit, reinforcing the longstanding timely filing regulations.
Another substantial decision providing clarification to inpatient admission guidelines was issued along with the release of the IPPS final rule. To facilitate an inpatient admission, CMS emphasizes the need for a formal physician’s or a qualifying practitioner’s order for admission as an inpatient, along with the physician’s prediction that the beneficiary will require care lasting a minimum of two midnights (or care that involves a procedure appearing on the Medicare Outpatient Prospective Payment System Inpatient-Only list).
As such, an admission would be presumed to be appropriate for payment under Part A. In the instance that a two-midnight stay is not predicted, outpatient status may be more appropriate.
CMS expects that the clarification of admission guidelines will drastically reduce the use of extended observation – and, along with the Part A-to-Part B rebilling policy changes, that it will reduce the incidence of improper payments historically issued under Part A based on patient status issues. While the changes are anticipated to impact account statuses significantly, review contractors will be instructed to focus efforts on inpatient stays lasting fewer than two midnights.
Part A-to-Part B rebilling has presented ongoing operational challenges to both facilities and CMS. As services paid under Part B are paid under the OPPS or other existing Part B payment methodology (such as fee schedules) on the basis of HCPCS codes, when cases meet criteria for rebilling under Part B, they must be recoded to reflect the HCPCS codes for the billed services. Retrospective changes to claims and rebilling initiatives can be cumbersome for facilities; therefore, defined processes to accomplish these modifications and thorough education will be necessary to ensure compliance with these evolving policies this fall.
© 2013 CCH, Incorporated
About the Author
Christina Panos is currently a Sales Engineer/ Customer Success Manager for Coding, Regulatory and Reimbursement software solutions. She has over twenty years of Revenue Cycle experience. Prior to joining Wolters Kluwer, Christina served as a Director of Patient Financial Services for West Penn Allegheny Health System (WPAHS) where she most recently had direct oversight of the multi-hospital System CDMs and charge capture initiatives.
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