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AHA, hospitals call for changes in Medicare Part B rebilling proposal

May 17, 2013

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While the Centers for Medicare & Medicaid Services’ (CMS) proposed rule on Medicare Part B rebilling is an acknowledgement that its previous policy of denying full payment for Part B claims was “unlawful,” the proposal contains a number of restrictions that would compromise hospitals’ ability to rebill for medically necessary patient services, the AHA told the agency today.

“The proposed rebilling rule will require significant modifications
in order to provide hospitals with a fair and equitable process for securing payment for the reasonable and necessary services provided to patients when there is a dispute about the setting in which care should have been delivered,” AHA Executive Vice President Rick Pollack wrote CMS Administrator Marilyn Tavenner in response to the agency’s March 13 proposed rule.

The AHA and other hospitals told CMS that the final rule should permit rebilling of any denied claim that originally was timely filed, rather than restrict rebilling to services provided in the prior 12 months; ensure full
reimbursement of all reasonable and necessary services provided rather than arbitrarily exclude services that require “outpatient status;” and restore full and fair appeal rights for hospitals that choose to exercise their right to appeal denied claims rather than arbitrarily narrow the scope of that review. To view the letter, click on: http://tinyurl.com/a7spy9f.

In their comments to CMS, a number of hospital and health system leaders expressed concern about the limited scope of the proposed rule.

“Restricting hospitals’ rebilling option to only services pro­vided within the last 12 months and excluding services ‘requiring an outpatient status’ would substantially diminish the benefit of the proposed rule to the hospital industry,” Janet Montgomery, corporate responsibility officer for St. Louis-based Ascension Health, wrote CMS. “This approach would also deny hospitals payment for services that CMS acknowledges are reasonable and necessary and otherwise covered under Part B.”

Ascension Health is the nation’s largest nonprofit delivery system operating more than 1,500 health facilities and 113 hospitals in 23 states and the District of Columbia.

City Hospital – a 171-bed hospital in Martinsburg, WV – noted in its comments to CMS that more than 70% of claims reviewed by the recovery audit contractor (RAC) to date are more than one year old. In addition, more than 80% of claims that were initially denied by the RAC and appealed by the hospital have been in the appeal stage for more than one year.

“Thus the one-year period for submitting a timely rebill could easily expire before the RAC review is complete or before it has even begun,” wrote Christopher D. Knight, vice president of finance at City Hospital.

“The proposed rule’s timely filing requirement leaves few, if any, of our hospital’s denied claims eligible for rebilling.”

To manage the RAC audit process alone, City Hospital has hired three additional staff positions and will spend about $250,000 this year.

“None of this cost is incurred to improve patient care but is incurred to respond to administrative burdens of audit programs,” Knight wrote.

Florida Hospital Waterman, a 269-bed acute care facility in Taveres that is part of the Florida Hospital System, urged CMS to remove the restriction on the Administrative Law Judges’ (ALJ) scope of review.

The hospital has been successful in fully overturning and fully restoring Part A payment more than 70% of the time and getting a partially favorable result in 10% of denials at the ALJ level.

“As a result of the proposed rule’s restriction of the authority of ALJs, our hospital would unnecessarily be denied effective due process to ensure we receive fair and appropriate reimbursement for the services we provided to our patients,” Bradley C. Skilton, the hospital’s regional director of patient finance, wrote CMS. The AHA’s comments on the rebilling proposed rule are part of a broader AHA effort to address the field’s concerns about overly aggressive Medicare auditors.

The AHA and five hospital systems last month amended their lawsuit in response to CMS’ March administrator’s ruling and the agency’s continued refusal to pay for certain claims denied by Medicare RACs. The AHA and the hospitals sued the agency last November over its policy of denying Medicare claims for necessary services because hospitals provided the treatment in an inpatient rather than outpatient setting.

On the legislative front, the AHA is urging Congress to support the “Medicare Audit Improvement Act,” H.R. 1250.

Introduced on March 19 by Reps. Sam Graves, R-MO, and Adam Schiff, D-CA, the bill would restructure the way RACs can review providers (see Hill Head Count on the right).

It would establish annual limits on documentation requests from RACs, impose financial penalties on RACs if they have high error rates, make RAC performance evaluations publicly available and allow denied inpatient claims to be billed as outpatient claims if necessary, among other measures.



By Pete Davis