In 2012, the American Hospital Association (AHA), along with several hospitals across the country, filed a lawsuit in federal court to put a stop to the Centers for Medicare & Medicaid Services’ (CMS) Payment Denial Policy.

This policy prohibited a hospital from receiving Part B reimbursement for services, except for a limited number of ancillary items, when an inpatient Part A claim was denied as not reasonable and/or necessary. On April 19, the AHA filed a second amended complaint, which was altered to address the current and future Part B payment policy under a recently released CMS ruling (CMS-1455-R) and proposed rule

The amended complaint sets out to challenge the time limitations for rebilling Part B claims after a denial of a Part A claim as not reasonable and/or necessary. First, the AHA asserts that the one-year filing requirement under the proposed rule essentially bars the vast majority of hospitals from rebilling under Part B, because in most cases the RACs do not end up denying Part A claims until the timeliness-of-filing requirement has already expired (i.e., the one-year deadline from the date of service at issue already has passed by the time the RAC denies the Part A claim).

In this regard, the AHA contends that when a hospital is denied Part A reimbursement for not meeting medical necessity, the subsequent Part B claim submitted by the hospital should not be viewed as a “new” claim, but rather as a “supplement” to the original Part A claim. In other words, the “supplemented” information submitted to receive Part B reimbursement should be considered timely as long as the original Part A claim is submitted within one year from the date of service at issue.

Another challenge to the one-year filing limitation under the rulings rests on the notion that, for years, hospitals were told by CMS that they were not allowed to re-bill for Part B services after a Part A claim denial. Today, as stated in the recent rulings, CMS acknowledges that it should have been paying hospitals under Part B this whole time. However, the hospitals that relied on the agency’s assertions under the Payment Denial Policy (and therefore accepted the Part A denials without subsequently seeking reimbursement under Part B) are not able to claim what CMS now has acknowledged is rightfully theirs. This is because those appeals are no longer live – or, in the cases in which the hospital did not appeal the Part A denial, they are one year removed from the date of service.

Finally, in addition to the timeliness-of-filing arguments, the AHA is challenging the refusal on the part of CMS to reimburse hospitals those services that require an “outpatient status” when re-billing under Part B.

About the Author

Kevin Miserez is an associate at Wachler & Associates, P.C.  Mr. Miserez dedicates a substantial portion of his practice to representing healthcare providers and suppliers in the defense of RAC, Medicare, Medicaid and third party payer audits.

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