1455R Part B Medical Necessity – Getting it Right is More Important than Ever

March 21st, 2013 / By Barbara Aubry, RN

In case you haven’t heard, CMS released 1455R on March 13, 2013. This interim notice of ruling is targeted at the current CMS regulations regarding Part B billing of medically unnecessary admissions identified on RAC/MAC or CERT audits. Basically, a large percent of denials that are appealed to ALJ (Administrative Law Judge) and the Medicare Appeals Council are being upheld for inappropriate admissions. However, the ALJs are supporting payment for medically necessary Part B outpatient services provided during those inpatient stays. The problem is, many of the appeals that finally reach the ALJs are older than the CMS current timely filing rules. So, the ALJ decisions are bumping into the CMS’ current rules – something had to change.  According to CMS, “Until the final regulations entitled ‘Medicare Program; Part B Inpatient Billing in Hospitals’ are promulgated, CMS, through this Ruling acquiesces to the approach taken in the aforementioned ALJ and Appeals Council decision on the issue of subsequent Part B billing following the denial of a Part A hospital inpatient claim on the basis that the admission was not unreasonable and necessary.”  Click here to read more.

My Take

This is a gift to hospitals! Get moving—you need to act quickly because the final Rule CMS is working on will include a timely filing provision which will likely be a challenge to meet.  Consider retracting any appeals you think you won’t win and re-bill as Part B outpatient services. Get your UR nurses moving and review every stay (even post-discharge) that is questionably medically appropriate. Use your PEPPER or CERT report to identify your problem areas in case you are not sure. When a case is confirmed, do not bother billing as an inpatient; instead bill the Part B outpatient services.  But make sure you check the medical necessity of those services against any applicable NCD (National Coverage Determination) or LCD (Local Coverage Determination) that applies to the service and your geographic location.  The downside of this new interim ruling is the reversal of the current understanding that Part B (re)submission is timely if the original Part A claim was filed on a timely basis. This will be changed according to the proposed final Rule and require inpatient Part B claims to be filed within one year of the date of service as a timely filing requirement. If this requirement is upheld, consider it before you automatically file an appeal you are not certain to win.  CMS is looking for comments on the patient liability issues of the proposed Rule, so be sure to weigh in. There is a possibility that non-covered, self-administered medications could cost patient’s more than their original Part A deductible.

Barbara Aubry is a Regulatory Analyst with 3M Health Information Systems.