CMS Initiates Project for Hospitals to Rebill Certain RAC Denied Claims
The federal government continues to focus on reducing improper Medicare and Medicaid payments. In line with these efforts, the Centers for Medicare & Medicaid Services (CMS) announced three new demonstration projects on November 15, 2011:
- Recovery audit prepayment review
- Prior authorization for certain medical equipment
- Part A to Part B rebilling
A CMS fact sheet outlines the three projects.
The Part A to Part B rebilling project aims to address how hospitals may rebill Medicare Part A inpatient claims deemed medically unnecessary as part of a Recovery Audit Contractor (RAC) audit.
Rob Schile, a health care principal with LarsonAllen, believes the project is a good first step, but notes that most hospitals will not yet benefit from it.
“While many questions remain about hospital reimbursement for medically unnecessary Part A claims, the project appears to be a start to resolving this issue. Unfortunately, this is only a demonstration program with limited participation, which means most hospitals will have to continue using the expensive and time-consuming appeals process to receive the payments they’re entitled to,” he says.
Ongoing challenges with rebilling
Rebilling for Part A claims under Part B has been an issue since the start of the RAC audits. The CMS has so far determined that hospitals can only rebill for inpatient services that a RAC audit deemed medically unnecessary as Part B ancillary services. For hospitals to do this, the claim must meet all of the processing rules, including those related to timeliness. Due to the timeframe of the RAC audits, most of these claims do not meet the criterion for timeliness, thus leaving the hospitals without reimbursement for services determined to be medically necessary.
The only recourse hospitals have had for payment has been through the RAC appeals process. Some hospitals have been successful on appeal, such as the case of O’Connor Hospital v. National Government Services. However, the appeals process is costly and administratively complex, so many hospitals would welcome a simplified alternative solution.
A new demonstration project
The Part A to Part B rebilling project aims to create an avenue for hospitals to seek reimbursement for RAC inpatient denied claims as a result of medical necessity. The CMS will hold two Open Door Forums to provide more information about the demonstration program on November 30, 2011, and December 8, 2011, from 2 to 3:30 p.m. EST. During the call, the CMS will discuss the program’s requirements and the enrollment process.
The program will be limited to 380 participants nationwide, with a representative sample of hospitals of varying sizes:
- Small hospitals (fewer than 100 beds)
- Moderate hospitals (100–299 beds)
- Large hospitals (300 or more beds)
The CMS has not yet explained how it will select the “representative sample” nor how many hospitals will be from each classification. Hospitals that volunteer to be part of the program will be accepted on a first-come, first-serve basis.
Key dates and materials
Enrollment starts at 2 p.m. EST on December 12, 2011, and the program commences on January 1, 2012.
Details about the Open Door Forum are available online and materials for the forum can be downloaded from the CMS website.
Program participation and eligibility
Hospitals paid under the Medicare Inpatient Prospective Payment System and defined by the Social Security Act 1886(d) are eligible to participate.
Hospitals receiving periodic interim payments (PIP), psychiatric hospitals paid under Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS), inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), cancer hospitals, critical access hospitals (CAHs), and children’s hospitals are excluded from participation.
The CMS indicates that inpatient claims denied during the audit process after January 1, 2012, due to services provided in an incorrect setting can be resubmitted as a new claim for the outpatient services provided. The demonstration program will reimburse approved claims at a rate of 90 percent of the allowable Part B payment rate. CMS does not indicate why reimbursement would be at 90 percent rather than 100 percent, but may discuss this during the forum.
How we can help
CMS reimbursement regulations and demonstration projects are complex, and can be difficult for hospitals to navigate. We can help your organization develop effective strategies to ensure success in this complex regulatory environment.
Rob Schile, Health Care Principal
rschile@larsonallen.com or 612-376-4592
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