Today, November 30, 2011, the Centers for Medicare and Medicaid Services (“CMS”) held a Special Open Door Forum to announce the Part A to Part B Rebilling Demonstration Project (“Rebilling Demonstration”). As described in greater detail below, in exchange for waiving certain appeal rights, Medicare hospitals that participate in the Rebilling Demonstration will be allowed to rebill Medicare Part A inpatient short stay claims for ninety percent (90%) of the amount payable under Medicare Part B if the claims were originally denied due to lack of medical necessity. During the call, CMS provided much needed detail about the Rebilling Demonstration, including information involving (1) the process by which qualifying hospitals can participate in the Rebilling Demonstration; (2) the extent to which appeal rights will be waived by participating hospitals; and (3) the impact on beneficiary co-insurance and deductibles.
Background/Overview
Currently, inpatient short stay (i.e., inpatient stay of two or fewer days) claims billed under Medicare Part A may be denied if the inpatient admission is deemed not to be medically necessary. In these cases, CMS denies the claim in full and only permits the hospital to rebill the inpatient claim for limited “Part B Only” services, even if the services would have been deemed reasonable and necessary in an outpatient setting under Medicare Part B. Under the Rebilling Demonstration a limited number of Medicare participating hospitals, in exchange for waiving appeal rights for those short stay claims, will be permitted to rebill inpatient short stay claims denied under Part A on the basis that the inpatient admission was not reasonable and necessary for ninety percent (90%) of the allowable Part B payment amount.
Rebilling Demonstration
The Rebilling Demonstration will run from January 1, 2012 – December 31, 2014 and is open to 380 total participants on a first-come, first-served basis. In order to participate in the Rebilling Demonstration, the hospital must be paid under Medicare’s Inpatient Prospective Payment System (“IPPS”) and must not receive periodic interim payments.
The CMS Rebilling Demonstration is limited to inpatient stays of two (2) days or less, and only applies to claims that are: 1) denied by Medicare Administrative Contractors (“MACs”) or Recovery Audit Contractors (“RACs”) on or after January 1, 2012; or 2) self-identified as errors on or after January 1, 2012. Inpatient claims denied by a MAC or RAC can be resubmitted by participating hospitals as Part B claims to receive 90% of the allowable Part B payment. Similarly, inpatient claims with self-identified errors may be canceled by the participating hospital and resubmitted as an outpatient claim for 90% of the allowable Part B payment. In each case, during the resubmission process, the participating hospital will be required to use a code/modifier indicating that the claim is being rebilled under the Rebilling Demonstration. Codes will be individually assigned to participating hospitals by CMS, and CMS intends to issue clarification as to whether the timely filing limits will apply.
In exchange for participation in the Rebilling Demonstration, participating hospitals must “hold harmless” beneficiaries with respect to any other changes in liability or benefits. Participating hospitals will be prohibited from billing beneficiaries for cost-sharing increases associated with moving the claim from Part A to Part B. In addition, beneficiaries must receive refunds from participating hospitals if the beneficiary is owed money after the claim is rebilled to Part B.
During the Open Door Forum, CMS confirmed that participating hospitals will still be able to engage in the RAC discussion period if they experience a RAC denial of a Rebilling Demonstration-covered claim; however, participating hospitals will not have any other appeal rights for the inpatient claims covered by the Rebilling Demonstration. This means that participating hospitals must waive appeal rights for any inpatient claim that is two days or less. Additionally, in an effort to alleviate concerns of RAC targeting participating hospitals, RACs will not be informed which hospitals are participating in the Rebilling Demonstration.
Applications for the Rebilling Demonstration are available on the CMS website at https://www.cms.gov/CERT/downloads/EnrollmentApp_v6_112911.pdf. Applications will not be accepted before 2 PM EST on December 12, 2011 and will be processed on a first-come, first-served basis. Only 380 total hospitals will be accepted into the Rebilling Demonstration as follows:
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80 Participants from hospitals with more than 300 beds. Applications for these hospitals should be sent to LargeRebillingFacility@cms.hhs.gov;
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120 Participants from hospitals with 100-299 beds. Applications for these hospitals should be sent to ModRebillingFacility@cms.hhs.gov; and
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180 Participants from hospitals with fewer than 100 beds. Applications for these hospitals should be sent to SmallRebillingFacility@cms.hhs.gov.
Wait-listed hospitals will only be able to join the Rebilling Demonstration if a previously accepted facility opts out of the program prior to the January 1, 2012 start date.
During the Open Door Forum, CMS initially made a blanket statement that no observation billing will be permitted in the Rebilling Demonstration. However, a scenario was raised that if a patient was ordered by a physician to be placed in observation, and then the patient was subsequently admitted as an inpatient, what happens to that previously ordered observation time if the inpatient claim is denied? CMS was unable to respond to the question and indicated that it will consider the scenario and post the answer to the Rebilling Demonstration FAQ page.
CMS also indicated that it will issue additional clarification to address the impact of the Rebilling Demonstration on a beneficiary’s exhaustion of inpatient days.
If you have any questions or would like additional information about this issue, please contact Stephan C. Masoncup at (317) 338-2432
or smasoncup@hallrender.com, Elizabeth A. Elias at(317) 977-1468 or eelias@hallrender.com or your regular Hall Render attorney.
