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New Inpatient Admission Requirements, Part B Inpatient Rebilling Policy Finalized

On August 2, 2013, the Centers for Medicare & Medicaid Services (“CMS”) issued its highly anticipated 2014 inpatient prospective payment system (“IPPS”) Final Rule (the “Final Rule”). Within this Final Rule, CMS finalized (1) its new requirements for Medicare Part A coverage of inpatient hospital admissions; and (2) its Part B inpatient rebilling policies.

Medicare Part A Coverage of Inpatient Hospital Admissions

Under the Final Rule, CMS adopts its proposal to presume that “inpatient hospital claims with lengths of stay greater than 2 midnights after the formal admission following the order will be presumed generally appropriate for Part A payment and will not be the focus of medical review efforts absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-midnight presumption.” See Final Rule at 1842.

This is a policy shift on the part of CMS. Under its previous policy, physicians admitting beneficiaries to inpatient status were instructed to use a 24-hour period as a benchmark (i.e., admitting physicians were instructed that they “should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis”). See Medicare Benefit Policy Manual (CMS Internet-Only Publication 100-02), Chapter 1, Section 10. However, there was no presumption of coverage tied to meeting this 24 hour benchmark.

Note that although a length of stay crossing 2 midnights could mean a 24 hour and 2 minute hospital stay, a length of stay crossing 2 midnights also could mean a 71 hour and 58 minute hospital stay.

The Final Rule also adopts CMS’ proposal to require a physician’s order to inpatient status before payment will be made for an inpatient claim. See Final Rule at 1789 et seq.

Part B Inpatient Rebilling

Under the Final Rule, CMS adopts its proposal to allow rebilling under Part B (following a denial of a Part A inpatient hospital claim) for many services (with certain notable exceptions, such as observation services). See Final Rule at 1653 et seq. The Final Rule retains many aspects of the Proposed Rule, including the following:

• Eventually rebilling will be limited to claims that are within 1 year of the date of service at issue; However, CMS is permitting hospitals to rebill under the timeframes set forth in Ruling 1455-R for claims eligible under the Ruling, as well as for services provided before October 1, 2013 that are denied after September 30, 2013;

• Certain services will be excluded from the opportunity to rebill, i.e. ED visits and observation services; However the Final Rule deviates from CMS’ proposal in that it will allow hospitals to rebill physical therapy, occupational therapy and speech therapy services; and
• Administrative law judge jurisdiction remains limited to whether the Part A claim at issue was medically necessary.

The American Hospital Association (“AHA”) has expressed its disappointment with the Final Rule as it relates to Part B inpatient rebilling and indicated its intent to proceed with its pending lawsuit against CMS related to this issue.

A more comprehensive summary will be forthcoming by way of HLP client alert. Please contact Jessica L. Gustafson, Esq. or Abby Pendleton, Esq. at (248) 996-8510 with any questions.

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