Some hospitals are using self-audits to avoid the stricter rebilling timeframe required in CMS’s recent rule changes.  


The Centers for Medicare and Medicaid Services (CMS) Part A to Part B rebilling rules allow hospital revenue cycle departments to recover payment for certain denied claims. However, the ability to rebill is presenting new challenges, including a tighter deadline to rebill claims and some revenue cycle departments experiencing limited advice on reconciling patient accounts after a rebilled claim is accepted, explains Mark Polston, a partner in the healthcare practice of King & Spaulding in Washington D.C., and former chief litigation counsel at CMS. 


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What recent changes have been made to the CMS rules on rebilling Medicare Part A inpatient claims as Medicare Part B outpatient claims? 

Polston: Often, when a Part A claim is denied for lack of medical necessity, the denial is based on the notion that the care was provided in the incorrect setting (inpatient versus outpatient) rather than on the basis that the services themselves were not medically necessary. In such cases, revenue cycle leaders could rebill for those medically necessary services under Part B except in limited circumstances, such as ancillary items like supplies. Procedures, such as surgeries, could not be billed for.

In March 2013, the agency adopted an interim rebilling policy change for Part A claims denied for lack of medical necessity. Hospitals could rebill Part B for services that were provided after the point of formal admission as long as those services would be medically necessary if provided on an outpatient basis. For example, if a patient was admitted and subsequently a procedure, such as cardiac catheter, or a surgery were performed, revenue cycle leaders could bill for those procedures on an “inpatient Part B” claim if the Part A claim was denied on the basis that the inpatient stay was not medically necessary.

As of Oct. 1, CMS adopted the rebilling policy permanently. However, the final rule gives revenue cycle leaders much less time to rebill Part A claims. Under the March interim policy, which applies to Part A claims with dates of admission before Oct. 1, 2013, that are denied for lack of medical necessity, revenue cycle leaders can submit rebilled Part B claims up to 180 days after the Part A denial, or if the hospital appeals the denial, up to 180 days after they receive notice that their appeal is final.

The new policy, which is effective for claims with dates of admission after Oct. 1, 2013, requires that revenue cycle departments rebill Part A denied claims under Part B within one year of the date of service. In many cases, hospitals won’t receive notice of the denial until well after a year has passed from the date of service, which means revenue cycle departments won’t be able to take advantage of rebilling. Furthermore, there is no option to appeal the Part A denial and then pursue Part B payment in the event you lose the appeal. CMS is aware of the impact of its policy, and many people opposed the policy during rulemaking, but the agency adopted it anyway.

How can hospitals avoid missing rebilling opportunities because of the limited timeframe?

Polston: Hospitals can avoid this conundrum, at least in some cases, by conducting self-audits, which, under the new rule, allow hospitals the opportunity to change their minds after the beneficiary has been discharged and determine their services should be billed on an outpatient basis under Part B rather than Part A. If this is done within one year of the date of service, then Part B claims can be submitted. There are many requirements to rebilling pursuant to a self-audit, including the beneficiary notice, but I have seen some hospitals beginning to turn to this procedure. 

Are there any other recent CMS rules that affect rebilling?

Polston: At the same time it finalized the A to B rebilling policy, CMS also finalized the new inpatient coverage standard— the two-midnight rule—and imposed new physician certification and inpatient order requirements as a condition of Medicare payment. These rules are very controversial, and they raise many operational questions. For example, if a hospital becomes aware that a physician order or certification is technically defective and cannot be fixed because the patient has been discharged, what rules apply as to whether the hospital can rebill for those services under Part B? Does it require all of the cumbersome self-audit procedures?

Now that some hospitals have been rebilling Part A claims as Part B claims for approximately six months, what challenges are their revenue cycle leaders encountering as they work through the process? 

Polston: Some hospitals are finding that MACs [Medicare administrative contractors] aren’t giving revenue cycle staff adequate remittance advice when a rebilled claim is accepted. Payments are being received without adequate information to link the MAC payment to the beneficiary at the patient account level. Without adequate remittance advice, it is difficult for revenue cycle staff to reconcile these claims and patient accounts based on the new Part B criteria. For example, when a claim switches from Part A to Part B, revenue cycle staff use remittance advice to determine whether the hospital owes Medicare patients deductible or copayment refunds or whether patients owe the hospital money based on the new Part B claim.

To resolve this problem, revenue cycle leaders should first contact the MAC to obtain the additional remittance advice. Some of my clients have not been successful and have had to go to the next step, which is to contact CMS. The agency should open a line of communication between revenue cycle leaders and MACs to resolve this problem.

Another challenge encountered by some revenue cycle leaders is that CMS’s new Part B billing policy actually requires providers to submit two Part B bills—an outpatient Part B bill for services that are provided in the three-day payment window before the patient is formally admitted and an inpatient Part B claim for services provided after the point of admission. It sounds easy in principle, but it can be difficult in practice. For example, some revenue cycle operations find it difficult to determine exactly what procedures or services should be billed on which claims. This requirement seems like an unnecessary splitting of the Part B claim and the better approach would be to allow submission on one bill type.

Can revenue cycle staff offset patient payments made toward the Part A claim against any patient financial responsibility owed on the Part B claim? 

Polston: CMS states that if a beneficiary is charged a deductible for a Part A hospital stay, and that stay has been denied, the hospital must refund the deductible to the beneficiary. However, CMS has not provided express guidance on whether providers could use Part A deductibles already paid by patients to cover new patient financial responsibilities for the rebilled Part B claim. The ability to offset patient responsibility due on a Part B claim with payments already made on the denied Part A claim would offer greater efficiency to revenue cycle departments, as well as Medigap insurers, but CMS has dragged its feet in expressly stating that this is acceptable. As long as there is no confusion to the beneficiary, it seems irrational not to allow it.

What is your advice to revenue cycle leaders who are facing the challenge of applying these new rebilling rules?

Polston: Spend the time to familiarize yourself and your staff with the new CMS guidance on Medicare rebilling. It requires a time investment, but understanding how these rules work will pay off in the long run. At the end of the day, you will be left with unanswered questions, so apply the guidance in as reasonable as a fashion as possible. However, continue to press and demand answers from CMS through all channels of communications, such as emails to the agency personnel who are implementing the A to B rebilling policy.

Mark Polston is the former chief litigation counsel for CMS and a partner in the healthcare practice of King & Spalding, Washington D.C. 

Discussion Starters

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  • What challenges have you experienced with rebilling Medicare Part A claims under Part B? What solutions helped you overcome those challenges?
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Publication Date: Thursday, November 14, 2013