Knowledge Base Article

CMS released MLN Matters Article MM11181 titled “Billing for Part B Hospital Inpatient Services” on March 22, 2019. This is not a new rule at all, but has been around since 2013. In the 2014 Inpatient Prospective Payment System (IPPS) Final Rule CMS-1599-R, effective October 1, 2013, CMS first allowed the billing of certain Part B services when an inpatient hospital admission is determined to not be reasonable and necessary for payment under Medicare Part A. Prior to this rule change, the billing of Part B inpatient services on a 12x type of bill (TOB) was limited to those occasions when the Medicare beneficiary did not have Part A coverage or the Part A benefits were exhausted.

The new policy specifically stated, “Medicare will allow payment under Part B of all hospital services that were furnished and would have been reasonable and necessary if the patient had been treated as a hospital outpatient, rather than admitted to the hospital as an inpatient.” The determination that the patient did not meet inpatient criteria could have been from 1) a denial by Medicare or 2) the result of a hospital “self-audit” after the patient was discharged. There are rules for the hospital self-audit.

• It must follow Medicare Conditions of Participation UR guidelines (42 CFR 428.30);
• It must be made by a physician member of the UR committee if the attending physician concurs, or by 2 physician members of the UR committee if the attending does not concur;
• The attending physician must be consulted; and
• The patient must be notified of the decision in writing within 2 days.

CMS also expanded what could be billed on a 12x TOB under Part B for these “reasonable and necessary inpatient admission denials” to include surgeries, drugs and therapeutic services such as coronary and peripheral interventions. Services requiring an outpatient status such as observation services and ED visits, and routine inpatient services cannot be billed under Part B inpatient billing. Note that the routine inpatient services include drug administrations, blood transfusions, and nebulizer treatments provided by floor nurses and should not be reported on a Part B inpatient claim. CMS provides a list of revenue codes that should not be submitted on a “reasonable and necessary inpatient denial” 12x TOB in section 240.1 of chapter 4 of the Medicare Claims Processing Manual. When a revenue code can be sometimes covered and sometimes not covered, providers should use Medicare guidance and the HCPCS code to determine if the service is covered.

If the “reasonable and necessary inpatient denials” Part B rebilling rule is six years old, what was the purpose of this latest MLN article? Again, CMS did not really change any rules, but added verbiage to the Claims Processing Manual clarifying the need for a Part A claim prior to submitting the Part B claim. In order to submit a Part B 12x claim after a hospital self-audit, the hospital must:

• Submit a Part A claim indicating that the provider is liable under section 1879 of the Act for the cost of the Part A services. This is a no-pay inpatient claim, type of bill 110. If the hospital has already submitted a regular inpatient claim (111 TOB), it must adjust the Part A claim to make the provider liable.
• The Part B 12x type of bill may be submitted for these “reasonable and necessary inpatient denials” only after the Part A claim is denied or a no-pay claim is submitted.

Also, the Part B inpatient claim is subject to the timely filing requirements described in the Medicare Claims Processing Manual, Chapter 1, Section 70.

This new MLN Matters Article (MM11181) also makes some modifications to the list of revenue codes that are not allowed on a 12x TOB for “other circumstances.” These circumstances would be for Medicare patients who are not entitled to benefits under Part A, have exhausted their Part A benefits, or receive services not covered under Part A. Part B inpatient claims for these circumstances restrict the types of services that can be billed much more than the “reasonable and necessary inpatient denials” Part B rebilling.

For more information about Part B Inpatient billing, see sections 240.1 and 240.2 of Chapter 4 of the Medicare Claims Processing Manual and sections 10.1 and 10.2 of Chapter6 of the Medicare Benefits Policy Manual. And remember for Part B rebillling, it is always A before B.