Source: https://www.federalregister.gov/articles/2013/03/18/2013-06163/medicare-program-part-b-inpatient-billing-in-hospitals
Timestamp: 2015-02-28 23:05:51
Document Index: 410592304

Matched Legal Cases: ['§ 482', '§ 485', '§ 220', '§ 230', '§ 414', '§ 482', '§ 485', '§ 419', '§ 419', '§ 419', '§ 410', '§ 414', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 419', '§ 424', '§ 424', '§ 414', '§ 424', 'art 414', '§ 414', '§ 414', '§ 482', '§ 485', '§ 419', '§ 419', '§ 419', '§ 410', '§ 424', 'ART 419', 'art 419', '§ 419', '§ 419', '§ 419', '§ 419']

Federal Register | Medicare Program; Part B Inpatient Billing in Hospitals
-16646 (15 pages)
Shorter URL: https://federalregister.gov/a/2013-06163 Related Topics
Table 3—Accounting Statement Table: Classification of Estimated Medicare and Beneficiares'-Out-of-Pocket Expenditures for Hospital Services *
In the Calendar Year (CY) 2013 Hospital Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) proposed rule (July 30, 2012, 77 FR 45155 through 45157) and final rule with comment period (November 15, 2012, 77 FR 68426 through 68433), we expressed our ongoing concern about recent increases in the length of time that Medicare beneficiaries spend as hospital outpatients receiving observation services. (In this proposed rule, “hospital” means hospital as defined at section 1861(e) of the Social Security Act (the Act), but includes critical access hospitals (CAHs) unless otherwise specified. Although the term “hospital” does not generally include CAHs, section 1861(e) of the Act provides that the term “hospital” includes CAHs if the context otherwise requires. In this case, we believe it is appropriate to propose to apply the same policies regarding payment for inpatient services under Part B in CAHs as apply in hospitals).
We propose that when a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was deemed not to be reasonable and necessary, or when a hospital determines under § 482.30(d) or § 485.641 after a beneficiary is discharged that his or her inpatient admission was not reasonable and necessary, the hospital may be paid for all the Part B services (except for services that specifically require an outpatient status) that would have been reasonable and necessary had the beneficiary been treated as a hospital outpatient rather than admitted as an inpatient, if the beneficiary is enrolled in Medicare Part B. We propose to continue applying the timely filing restriction to the billing of all Part B inpatient services, under which claims for Part B services must be filed within 1 year from the date of service. In this proposed rule, we also describe the beneficiary liability and other impacts of our proposals.
II. Proposed Payment of Medicare Part B Inpatient Services Back to Top
Medicare's policy to pay only a limited set of medical and other health services as inpatient services under Part B when payment cannot be made under Part A has been in place for many years. As early as 1968, the Medicare manuals provided for payment under Part B of only a limited list of ancillary medical and other health services furnished to inpatients of participating hospitals (see Section 3110 of the Medicare Intermediary Manual and Section 2255C of the Medicare Carriers Manual, replaced by Section 10, Chapter 6 of the Medicare Benefit Policy Manual (MBPM) (Pub. 100-02)), and under current policy, we continue to provide that the payable Part B inpatient services include only a limited set of ancillary services (66 FR 44698 through 44699; 66 FR 59891 through 59893, and 59915). Hospitals are required to submit a Part B inpatient claim (Type of Bill (TOB) 12x, or 85x for CAHs) within the usual timely filing requirements in order to be paid for these Part B inpatient services (75 FR 73449 and 73627).
Outpatient physical therapy, outpatient speech-language pathology services, and outpatient occupational therapy (see the Medicare Benefit Policy Manual, Chapter 15, “Covered Medical and Other Health Services,” § 220 and § 230).
In the CY 2013 OPPS/ASC proposed rule (77 FR 45156), we discussed that we have heard from various stakeholders that hospitals appear to be responding to the financial risk of admitting Medicare beneficiaries for inpatient stays that may later be determined not reasonable and necessary and denied upon contractor review by electing to treat beneficiaries as outpatients receiving observation services, often for longer periods of time, rather than admitting them as inpatients. In recent years, the number of cases of Medicare beneficiaries receiving observation services for more than 48 hours, while still small, has increased from approximately 3 percent in 2006 to approximately 8 percent in 2011. This trend is concerning because of its effect on Medicare beneficiaries. There could be significant financial implications for Medicare beneficiaries of being treated as outpatients rather than being admitted as inpatients, and we have published educational materials for beneficiaries to inform them of their respective liabilities.
As we discuss later in this proposed rule, the statute provides different cost sharing responsibilities for beneficiaries for Part A and Part B services. In addition, section 1861(i) of the Act requires a 3-day hospital inpatient stay (towards which any time spent receiving outpatient observation services prior to the calendar day of admission does not count) in order for a beneficiary to qualify for coverage of subsequent post-hospital care in a SNF. Therefore, treating beneficiaries as outpatients rather than inpatients or expanding the number of payable Part B inpatient services could impact the financial liability of some beneficiaries.
The Ruling also provides that the A/B Rebilling Demonstration will be discontinued. We will communicate to hospitals and contractors the details regarding termination of the demonstration and implementation of Part B billing under the Ruling in future transmittals. As described in the Ruling, the Ruling is effective on its date of issuance. It applies to Part A hospital inpatient claims that were denied by a Medicare review contractor because the inpatient admission was determined not reasonable and necessary, as long as the denial was made: (1) While the Ruling is in effect; (2) prior to the effective date of the Ruling, but for which the timeframe to file an appeal has not expired; or (3) prior to the effective date of the Ruling, but for which an appeal is pending. The Ruling does not apply to Part A hospital inpatient claim denials for which the timeframe to appeal expired, and it does not apply to inpatient admissions determined by the hospital to be not reasonable and necessary (for example, through utilization review or other self-audit). The policy announced in the Ruling supersedes any other statements of policy on the issue of Part B inpatient billing following the denial by a Medicare review contractor of a Part A inpatient hospital claim because the inpatient admission was not reasonable and necessary (although hospital outpatient services would have been reasonable and necessary), and it remains in effect until the effective date of the regulations that finalize this proposed rule. This proposed rule proposes revisions to our Part B payment policy that would apply prospectively from the effective date of the final regulations and would differ in some respects from the provisions of the Ruling, the purpose of which is to effectuate the Medicare Appeals Council and ALJ decisions.
We propose payment of services that are paid under the OPPS (except those requiring an outpatient status) under proposed new § 414.5(a)(1), “If a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was not reasonable and necessary, or if a hospital determines under § 482.30(d) or § 485.641 after a beneficiary is discharged that the beneficiary's inpatient admission was not reasonable and necessary, the hospital may be paid for the following Part B inpatient services that would have been reasonable and necessary if the beneficiary had been treated as a hospital outpatient rather than admitted as an inpatient, provided the beneficiary is enrolled in Medicare Part B: (1) Services described in § 419.21(a) that do not require an outpatient status.” We would exclude payment of services under the OPPS such as observation services and clinic visits that, by definition, require an outpatient status.
Except as provided in § 419.2(b)(11), prosthetic devices, prosthetics, prosthetic supplies, and orthotic devices.
Except as provided in § 419.2(b)(10), durable medical equipment supplied by the hospital for the patient to take home.
Effective January 1, 2011, annual wellness visit providing personalized prevention plan services as defined in § 410.15 of this chapter.
In our review of the current regulations governing payment of Part B inpatient services, we noted an oversight in 42 CFR 419.22 that outpatient DSMT services which are described in section 1861(qq) of the Act and 42 CFR 414.63 and are paid under the Medicare Physician Fee Schedule (MPFS), were never excluded from OPPS payment along with all other physician services. Since the statute defines these services as outpatient services, § 414.63(e)(2) stipulates that outpatient DSMT services can be paid only if the beneficiary “[i]s not receiving services as an inpatient in a hospital, SNF, hospice, or nursing home.” Therefore, under our proposal these services would not be payable Part B inpatient services. However, pursuant to our review of the regulations, we propose a technical correction to clarify that outpatient DSMT services are excluded from OPPS payment. This correction would appear in § 419.22(u).
In addition, we noted a typographical error in paragraph (j), which should cross reference § 419.2(b)(11) rather than § 419.22(b)(11). We propose a technical correction to delete the erroneous “§ 419.22(b)(11)” and replace with “§ 419.2(b)(11)”. Also we noted that § 419.22(h) excludes “outpatient” therapy services from coverage under the OPPS. Section 1833(t)(1)(B)(iv) of the Act specifically states that “the term `covered OPD services'* * *(iv) does not include any therapy services described in subsection (a)(8)” and section 1833(a)(8) describes outpatient therapy services furnished by a hospital to a hospital outpatient or a hospital inpatient who is entitled to benefits under Part A but has either exhausted or is not so entitled to such benefits. In order to more clearly follow the statutory language defining covered OPD services, we propose to replace the words “outpatient therapy” with “therapy” in § 419.22(h) so that it reads, “Therapy services described in section 1833(a)(8) of the Act.”
We further noted that the headings of § 419.21 and § 419.22 describe the “hospital outpatient” services that are subject to (in § 419.21) or excluded from payment under (in § 419.22) the OPPS. To more appropriately describe the services that are payable under these regulations under the OPPS, we propose to amend the titles of these sections by removing the term “outpatient.” The title of § 419.21 would then read, “Hospital services subject to the outpatient prospective payment system.” The title of § 419.22 would then read, “Hospital services excluded from payment under the hospital outpatient prospective payment system.”
Hospitals may only submit claims for Part B outpatient services that are reasonable and necessary in accordance with Medicare coverage and payment rules. In accordance with section 1833(e) of the Act, hospitals must furnish information as may be necessary in order to determine the amounts due for the services billed on a Part B outpatient claim for services rendered in the 3-day payment window prior to the inpatient admission.
We are soliciting public comments from these hospitals regarding the types of Part B inpatient services they anticipate billing Medicare under our proposal for payment of additional Part B services. If under our proposed policies, the Part B inpatient services payable to these hospitals would largely be limited to the ancillary services they currently bill Medicare, these hospitals would continue billing Part B inpatient services under the current exception. However, if we receive public comments indicating that hospitals subject to the exception in 42 CFR 419.22(r) would be eligible and seek payment for additional Part B inpatient services under this proposed rule, we would consider finalizing a policy to require these hospitals to bill the OPPS since unlike under existing policy, their eligible payments would likely outweigh the cost of implementing billing systems specific to the OPPS. To reflect such a policy, we would delete 42 CFR 419.22(r) and redesignate § 419.22(s) and § 419.22(t) as § 419.22(r) and § 419.22(s), respectively.
Following a denial of a Part A inpatient admission as not reasonable and necessary and a determination that the beneficiary was not financially liable in accordance with section 1879 of the Act, the hospital is required to refund any amounts paid by the beneficiary (such as deductible and copayment amounts) for the services billed under Part A. (See, 42 CFR 411.402.) The beneficiary would have no out-of-pocket cost in this scenario. However, under the Part B inpatient billing policy proposed in this rule, if the hospital subsequently submits a timely Part B claim after the Part A claim is denied, the financial protections afforded under section 1879 of the Act to limit liability for the denied Part A claim cannot also be applied to limit liability for the covered services filed on the Part B claim. The beneficiary (who may previously have had no out-of-pocket costs for the denied Part A claim) is responsible for applicable deductible and copayment amounts for Medicare covered services, and for the cost of items or services never covered (or always excluded from coverage) under Part B of the program. (The beneficiary's responsibility for payment of deductible, cost-sharing, and items excluded from coverage under Part B is discussed further in section II.F. of this proposed rule.) If, however, a hospital does not bill under Part B in a timely manner, in accordance with section 1866(a)(1)(A)(i) of the Act, the hospital may not charge the beneficiary for any costs related to the Part B items and services furnished, if the beneficiary would otherwise be entitled to have Part B payment made on his/her behalf. Finally, in instances where the beneficiary is not enrolled in Medicare Part B, we encourage hospitals and beneficiaries to recognize the importance of billing supplemental insurers and pursuing an appeal of the Part A inpatient claim denial, as appropriate.
We do not believe that the existing beneficiary liability notices used in the Medicare fee-for-service program (the HINN and Advance Beneficiary Notice of Noncoverage (ABN)) are applicable or relevant for the Part B inpatient billing process described in this proposed rule to alert beneficiaries to the possible change in deductible and cost-sharing if a Part A inpatient claim is denied and a Part B claim is subsequently submitted. These notices must be given prior to the provision of an item or service that is expected to be denied, and cannot be issued retroactively (that is, after the receipt of the post-payment Part A inpatient claim denial). We would conduct an educational campaign and issue materials that address various aspects of this rulemaking, including raising beneficiary awareness that certain denied Part A inpatient hospital services may be covered under Part B of the program. We welcome public comment on recommendations for notification to beneficiaries in these situations, consistent with our current notice policies. (For additional information on beneficiary notices, see the CMS Web site at http://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html).
Sections 1814(a)(1), 1835(a), and 1842(b)(3)(B) of the Act establish time limits for filing Medicare Part A and B claims. Section 424.44 of the regulations implements those sections of the Act and requires that all claims for services furnished on or after January 1, 2010 be filed within 1 calendar year after the date of service unless an exception applies. In the November 29, 2010 final rule with comment period (75 FR 73627) titled, “Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011” modifying § 424.44, commenters requested that we create an exception to the time limits for filing claims so that hospitals are permitted to file inpatient Part B only claims for any inpatient cases that are retrospectively reviewed by a Medicare Recovery Audit Contractor (RAC) or other review entity and determined not to be medically necessary in an inpatient setting. Commenters requested that an exception be created at § 424.44(b) to allow for the billing of Part B inpatient and Part B outpatient claims when there is no coverage under Part A for a hospital stay. For the reasons discussed in the November 29, 2010 final rule, we declined to create such an exception and we continue to believe that was the correct decision.
Accordingly, we propose a new § 414.5(b) that would require that claims for billed Part B inpatient services be rejected as untimely when those Part B claims are filed later than 1 calendar year after the date of service. Our proposal treats these Part B claims as new claims subject to the timely filing requirements, instead of as adjustment claims. This is consistent with longstanding Medicare policy because an adjustment claim supplements information on a claim that was previously submitted without changing the fundamental nature of that original claim. In these Part B claim situations, however, the fundamental nature of the originally filed claim is changed completely (from a Part A claim to a Part B claim).
Therefore, in order to remove any ambiguity, if this rule is finalized as proposed, billed Part B inpatient claims would be rejected as untimely when those Part B claims are filed later than 1-calendar year after the date of service. Moreover, because it is the responsibility of providers to correctly submit claims to Medicare by coding services appropriately, it is important to note that the exception located at § 424.44(b)(1), which extends the time for filing a claim if failure to meet the deadline was caused by error or misrepresentation of an employee, contractor or agent of HHS (commonly referred to as the “administrative error” exception), would not apply in situations where a provider bills the originally submitted Part A claim incorrectly. Finally, we remind providers that in accordance with 42 CFR 405.926(n), determinations that a provider failed to submit a claim timely are not appealable.
We are also clarifying in this proposed rule the scope of review with respect to appeals of Part A inpatient admission denials in the context of the Part B billing policy. As explained in CMS Ruling 1455-R, a large number of recent appeal decisions for Part A inpatient admission claim denials by Medicare review contractors have affirmed the Part A inpatient admission denial, but ordered that payment be issued as if services were provided at the outpatient or “observation” level of care under Part B of the Medicare program. These decisions ordered payment under Part B (or consideration of payment for services furnished that the contractor determined to be covered and payable under Part B) even though a Part B claim had not been submitted for payment. Hospitals are solely responsible for submitting claims for items and services provided to beneficiaries and determining whether submission of a Part A or Part B claim is appropriate. Once a hospital submits a claim, the Medicare contractor can make an initial determination and determine any payable amount (42 CFR 405.904(a)(2)). Under existing Medicare policy, if such a determination is appealed, an appeals adjudicator's scope of review is limited to the claim(s) that are before them on appeal, and such adjudicators may not order payment for items or services that have not yet been billed or have not yet received an initial determination. (See 42 CFR 405.920, 405.940, 405.948, 405.954, 405.960, 405.968, 405.974, 405.1000, 405.1032, 405.1100, and 405.1128.) For example, if a hospital submits an appeal of a determination that a Part A inpatient admission was not reasonable and necessary, the only issue before the adjudicator is the propriety of the Part A claim, not an issue involving any potential Part B claim the hospital has not yet filed. In making a decision on that Part A claim, an appeals adjudicator may not develop information, or make a finding, with respect to a Part B claim that does not exist.
IV. Response to Comment Back to Top
We have examined the impacts of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, 96), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Contract with America Advancement Act of 1996 (Pub. L. 104-121) (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated as an “economically” significant rule under section 3(f)(1) of Executive Order 12866 and a major rule under the Contract with America Advancement Act of 1996 (Pub. L. 104 121). Accordingly, the proposed rule has been reviewed by the Office of Management and Budget. We have prepared a regulatory impact analysis that, to the best of our ability, presents the costs and benefits of this proposed rule. In this proposed rule, we are soliciting public comments on the regulatory impact analysis provided. The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we estimate that most hospitals are small entities as that term is used in the RFA. For purposes of the RFA, most hospitals are considered small businesses according to the Small Business Administration's size standards with total revenues of $34.5 million or less in any single year. We estimate that this proposed rule may have a significant impact on approximately 2,053 hospitals with voluntary ownership. For details, see the Small Business Administration's “Table of Small Business Size Standards” at http://www.sba.gov/content/table-small-business-size-standards.
The estimates for each column of Table 1 assume that the policy in the preceding column is already in place. Specifically, the estimated cost for the Ruling is relative to a baseline that includes the effect of the appeal decisions. Similarly, the estimated costs under this proposed rule are in relation to a baseline that includes both the appeal decisions and the Ruling in place. We assumed short-stay inpatient utilization would increase by 1 percent as a result of the appeal decisions because hospitals would be able to rebill after an appeal. (There are currently no controls in place to monitor hospitals for changes in their inpatient growth trend and/or error rate.) In addition, we assumed short-stay inpatient utilization would increase by an additional 3 percent under the Ruling, since hospitals could rebill under Part B without the expense of an appeal. Due to the timely filing restrictions and lower Part B payment rate for rebilling, we assumed there would be no increase in any inpatient utilization resulting from the proposed regulatory change to restrict inpatient Part B billing to the timely filing requirement of 12 months from the date of service, relative to circumstances prior to the appeal decisions. The 12-month timely filing restriction imposed by the proposed regulation would greatly limit the capacity in which a hospital could rebill and thereby substantially reduces the number of Part B inpatient claims rebilled by hospitals, largely offsetting the higher costs arising from the appeal decisions and the Ruling. The amounts are shown in millions for CYs 2013 through 2017.
Table 1—Estimated Impact on Medicare Program Expenditures for Hospital Services Back to Top
Part B inpatient billing with
12-month timely
Table 2—Estimated Impact on Beneficiaries' Out-of-Pocket Expenses for Part A and Part B Services Back to Top
We proposed that all hospitals and CAHs would be eligible to bill additional Part B inpatient services when a Part A claim is denied because the admission was not reasonable and necessary but hospital outpatient services would have been reasonable and necessary. In section II.D. of this proposed rule, we proposed to require that hospitals currently not billing the OPPS for Part B inpatient services (those with no outpatient departments, or that have outpatient departments but submit no claims to Medicare Part B) would now bill the OPPS for these services. We considered allowing these hospitals to continue to bill Part B inpatient services for payment under their pre-OPPS payment methodology consistent with existing policy. We did not propose this policy because we believe their likely payments under the proposed Part B inpatient policy would outweigh their costs of implementing billing systems specific to the OPPS.
Table 3—Accounting Statement Table: Classification of Estimated Medicare and Beneficiares'-Out-of-Pocket Expenditures for Hospital Services * Back to Top
* These amounts are based on the conversion to constant year dollars of the 12-month timely filing restriction policy figures in Tables 1 and 2 of this proposed rule.
−$877
−$896
CYs 2013-2017
Federal Government to Hospitals
Beneficiaries to Hospitals
1.The authority for part 414 continues to read as follows: Authority:
2.Subpart A is amended by adding § 414.5 to read as follows: § 414.5 Hospital inpatient services paid under Medicare Part B when a Part A hospital inpatient claim is denied because the inpatient admission was not reasonable and necessary, but hospital outpatient services would have been reasonable and necessary in treating the beneficiary.
(a) If a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was not reasonable and necessary, or if a hospital determines under § 482.30(d) of this chapter § 485.641 of this chapter after a beneficiary is discharged that the beneficiary's inpatient admission was not reasonable and necessary, the hospital may be paid for any of the following Part B services that would have been reasonable and necessary if the beneficiary had been treated as a hospital outpatient rather than admitted as an inpatient, provided the beneficiary is enrolled in Medicare Part B:
(1) Services described in § 419.21(a) of this chapter that do not require an outpatient status.
(3) Except as provided in § 419.2(b)(11) of this chapter, prosthetic devices, prosthetics, prosthetic supplies, and orthotic devices.
(4) Except as provided in § 419.2(b)(10) of this chapter, durable medical equipment supplied by the hospital for the patient to take home.
(7) Effective January 1, 2011, annual wellness visit providing personalized prevention plan services as defined in § 410.15 of this chapter.
(b) The claims for the Part B services filed under the circumstances described in this section must be filed in accordance with the time limits for filing claims specified in § 424.44(a) of this chapter.
PART 419—PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES Back to Top
3.The authority citation for part 419 continues to read as follows: Authority:
4.Section 419.21 is amended by revising the section heading to read as follows: § 419.21 Hospital services subject to the outpatient prospective payment system.
5.Section 419.22 is amended as follows: A. Revising the section heading.
B. In paragraph (h), by removing the phrase “Outpatient therapy” and adding in its place the term “Therapy”. C. In paragraph (j), removing the cross-reference “§ 419.22(b)(11)” and adding in its place “§ 419.2(b)(11)”.
§ 419.22 Hospital services excluded from payment under the hospital outpatient prospective payment system.
1. CMS Pamphlets: “Are You a Hospital Inpatient or Outpatient? If You Have Medicare—Ask!”, CMS Product No. 11435, Revised, February 2011; “HowMedicare Covers Self-Administered Drugs Given in Hospital Outpatient Settings,” CMS Product No. 11333, Revised, February 2011.