Knowledge Base Article

This seems to be the year for some big changes from Medicare. As providers are wondering what will happen with the major revisions to OPPS, Medicare finalized two policies relating to patient status in the final IPPS rule that are equally dramatic. The two interrelated policies are designed to reduce the frequency of inappropriate extended observation care and provide appropriate payment for necessary inpatient services. Next week, we will address the revisions concerning the admission and medical review criteria for hospital inpatient admissions. This week we examine the Part B Inpatient Billing requirements.

In the 2014 IPPS final rule, CMS finalized the requirements of the proposed rule for Part B inpatient billing when an inpatient admission is determined to not be medically necessary. When this rule becomes effective on October 1, 2013, it replaces the current Part A to B rebilling regulations under the Ruling that was published on March 13, 2013. The major significant differences of the Final Rule from the Ruling concern the allowance of Part B inpatient billing as the result of a hospital self-audit and the application of timely filing.

Here is a summary of the requirements of the Final Rule. For complete information, please refer to the IPPS final rule which is scheduled to be published in the Federal Registry on August 19th. Until that time a display copy can be viewed at 2014 IPPS Final Rule display copy.

If a hospital inpatient admission is determined to not be medically necessary after a patient’s discharge, the hospital may decide to submit a Part B inpatient claim for all services provided to the patient during the admission.

Who makes the determination the admission is not medically necessary?

• This decision could be made by CMS or a Medicare contractor as a denial, upon medical review of the inpatient claim. In this case, the hospital may decide to appeal the Part A denial or submit a Part B inpatient claim (a 12x type of bill).
• The decision could be made by the hospital as part of a utilization review “self-audit” in accordance with the Medicare Conditions of Participation UR guidelines. If the hospital determines an inpatient admission is not medically necessary after the patient’s discharge, the hospital may bill for Part B inpatient services.

What type of hospitals can submit Part B inpatient claims?

• All hospitals billing Part A services are eligible to bill Part B inpatient services, including short-term acute care hospitals paid under IPPS, hospitals paid under OPPS, LTCHs, IPFs, IRFs, CAHs, children’s hospitals, cancer hospitals, and Maryland waiver hospitals.

What services can be included on the Part B inpatient claim?

• All hospital services that were furnished to an inpatient (after the order for inpatient admission) and would have been reasonable and necessary if the patient had been treated as an outpatient, except for those services specifically requiring an outpatient status. The excluded outpatient services are diabetes self-management training services (DSMT), outpatient visits including ED visits, and observation services. Outpatient services provided prior to the admission order may be billed on a Part B outpatient claim (see below for more information).
• In the proposed rule, rehabilitative therapy services (physical therapy, occupational therapy, and speech language pathology services) were proposed to be excluded as strictly “outpatient” services. This proposal was not finalized; providers may continue to include therapy services on Part B inpatient claims. However, these therapy services will be subject to the Part B therapy caps, the therapy caps exception process, the manual medical review process, and all other requirements for payment and coverage of therapy services under Part B such as functional status reporting requirements.

When can outpatient services furnished during the 3-day (1-day for non-IPPS hospitals) payment window be billed separately?

• When there is no Part A coverage for the inpatient stay, services provided to the patient prior to admission may be separately billed to Part B as outpatient services (13x type of bill). This includes any outpatient visits or observation services provided prior to the admission order.

When can Part B inpatient claims be submitted?

• The “expanded” Part B inpatient services can only be billed when payment cannot be made under Part A because the inpatient admission was not reasonable and necessary. This new policy does not apply to other circumstances when there is no Part A payment, such as when a beneficiary exhausts or is not entitled to Part A benefits.
• A Part B inpatient claim cannot be submitted if there is a current Part A claim. Any corresponding Part A claims must be canceled by the provider or denied by Medicare and any pending appeals must be withdrawn by the provider. A Part A “no pay/provider liable” claim must be submitted first if the decision to bill Part B inpatient claim is made as part of a hospital “self-audit”. Once the Part A claim denial is posted in the claims history, the Part B claim(s) can be submitted.
• The final rule applies timely filing requirements for services with dates of admission on and after October 1, 2013. Both Part B inpatient and outpatient claims must be filed within one calendar year after the date of service.
• Medicare allowed an extension of the Ruling time frames - hospitals may follow the Part B billing timeframes established in the Ruling after the effective date of the final rule, provided (1) the Part A claim denial was one to which the Ruling originally applied; or (2) the Part A inpatient claims has a date of admission before October 1, 2013, and is denied after September 30, 2013 on the grounds that although the medical care was reasonable and necessary, the inpatient admission was not.

What information must be included on the Part B claims?

• The hospital must furnish information as may be necessary in order to determine the amounts due for the services billed on the Part B outpatient or inpatient claims.
• This means re-coding to itemize the outpatient services provided with HCPCS codes as required and diagnosis coding for the time period of the claim. Providers will need to consider appropriate coding to support the medical necessity of the Part B services furnished.

What if the hospital determines the inpatient admission is not medically necessary prior to the patient’s discharge?

• This new policy does not change the existing regulations concerning changing a patient’s status from inpatient to outpatient following the condition code 44 requirements.

Does the patient’s status change if a Part B inpatient claim is submitted and how does this affect utilization days and the skilled nursing facility (SNF) 3-day qualifying stay?

• The patient’s status remains inpatient because there is no provision to change a patient’s status after he or she is discharged from the hospital.
• Medicare will not deduct the days associated with the inpatient hospital stays billed under Part B from a beneficiary’s 150 utilization days when no Part A payment is made for that inpatient hospital stay.
• The 3-day inpatient hospital stay which qualifies a beneficiary for “post-hospital” SNF benefits does not have to be covered by Medicare, as long as it is does not represent a “substantial departure from normal medical practice”. This means that most denied hospital inpatient stays will meet the requirements to qualify the patient for SNF coverage because the care was medically necessary, although the admission was not. An exception would be if the admission was solely for the purpose of qualifying the beneficiary for the SNF stay and therefore was a substantial departure from normal medical practice.

What is the patient’s liability and must hospitals bill the patient for their liability?

• If a Part A admission is denied as not reasonable and necessary and the patient is not liable under section 1879 of the Act, the hospital must refund Part A deductible and co-payment amounts paid by the patient and other insurers.
• The patient (Medicare beneficiary) is responsible for applicable deductible and co-payment amounts for covered Part B services and the cost of services excluded from coverage such as self-administered drugs.
• If the beneficiary is not enrolled in Part B, hospitals should bill Part B to ensure the claim enters the coordination of benefits cross-over process in the event the beneficiary has coverage under a supplemental or secondary insurance plan.
• The issue of whether hospitals are required to bill the beneficiaries for their Part B liabilities is governed by the beneficiary inducement and anti-kickback laws and falls under the jurisdiction of the OIG.

May appeals adjudicators require payment under Part B if a Part A denial is upheld?

• No, appeals adjudicators may only consider the claim that is before them and may not order payment for items or services that have not yet been billed.

I realize this is a lot of information to absorb. You may want to print this article to use as a resource for future questions. MMP plans to present a webinar prior to October 1st to address both the Part B inpatient billing and the new admission criteria. Be on the lookout in the Wednesday@One for> announcements about this upcoming webinar.

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.