May 20—HFMA strongly supports efforts by the Centers for Medicare & Medicaid Services (CMS) to identify improper payments within CMS-administered programs, but believes the recovery audit contractor (RAC) program “is counterproductive to the principles of a reformed payment system,” according to a comment letter HFMA sent to CMS administrator Marilyn Tavenner on Friday.

Additionally, HFMA expressed concern that a proposed rule related to Medicare Part B inpatient hospital billing confirms that CMS will not allow rebilling for medically necessary services such as diabetes self-management training, physical therapy, speech-language pathology, occupational therapy, emergency department visits, and observation services that were part of an inpatient Part A claim denied by a RAC or other retrospective payment review.

The proposed rule also seeks to limit providers’ ability to rebill medically necessary inpatient Part B services that were included on Part A claims denied by the RACs to the one year timely claims filing limit. The proposed rule contends that these claims are new claims and not merely adjusted claims.

In the comment letter, HFMA recommends that CMS revise its existing policies to allow hospitals to adjust claims denied by the RAC, rebill all medically necessary services that are part of a Part A inpatient claim that is denied by the RAC or other retrospective audit, and receive payment for all medically necessary services, including observation.

According to HFMA, the RAC program violates three principles of a reformed payment system: quality, fairness/sustainability, and simplification. “The RAC program places an unnecessary administrative burden on overstretched hospitals,” HFMA stated. “Further, the administrative complexity of the program consumes both financial and human resources that could otherwise be allocated to quality improvement activities.

“If the RAC program is to continue, CMS needs to address the fundamentally flawed incentives in the program’s design,” HFMA wrote. “It costs RAC auditors little to request and review medical records from providers and to subsequently deny legitimate claims in hopes of receiving a commission payment. Indicative of the problem, almost 66 percent of medical record requests did not contain an overpayment and, when a RAC denies payment, providers prevail in 72 percent of appeals.”

Additionally, HFMA disagrees with CMS’s assertion that medically necessary Part B inpatient claims rebilled subsequent to the denial of a Part A inpatient claim by a RAC or other retrospective audit are new claims. 

“At a minimum, HFMA strongly recommends following the timeframe developed in CMS-1455-R, which allows a provider 180 days from the date of receipt of the final or binding appeal decision or 180 days from the date of receipt of the Part A initial determination or revised determination if there is no appeal pending to adjust claims,” HFMA wrote. “The ruling already demonstrates that CMS has the authority to grant exemptions to timely filing limits. Ending the exemption as proposed is arbitrary at best. However, HFMA’s preferred approach would define claims in these instances as a rebill ... instead of a ‘new claim’ as CMS has proposed.”

Publication Date: Monday, May 20, 2013