The Centers for Medicare and Medicaid Services has relented on a policy that barred hospitals from getting paid on claims denied by auditors such as RACs if the rejection was based on where the care was rendered.
The CMS issued the interim rule about four months after the American Hospital Association and four hospital systems sued CMS over the issue.
RACs, MACs and other bodies with authority to audit Medicare claims had the jurisdiction to reject them if they determined care was rendered in the wrong setting (e.g., inpatient rather than outpatient). However, the providers contended they still were entitled to reasonable reimbursement for the care they provided.
Under the proposed rule, the provider would be able to rebill under Part B's inpatient provisions for Part A claims that had been denied, reported AHA News Now.
"CMS has conceded that its current policy of refusing to reimburse hospitals for reasonable and necessary care when the only dispute is which setting, not whether care should have been delivered, is contrary to the law," AHA Chief Executive Officer Rich Umbdenstock said in a statement. "That is a central issue in our lawsuit."
Payment clawbacks for short medical stays that deemed medically unnecessary by the RACs is the most common form of claim denial, with about 75 percent of all hospitals that have been audited experiencing them, according to the AHA's RACTrac survey.
"The hospital may submit a Part B inpatient claim for payment for the Part B services that would have been payable to the hospital had the beneficiary originally been treated as an outpatient rather than admitted as an inpatient, except when those services specifically require an outpatient status, for example, outpatient visits, emergency department visits, and observation services," according to the CMS interim rule.
However, Umbdenstock noted that providers would only be able to rebill CMS for claims within a one-year timeframe from when services were first rendered.
"Since the RAC typically reviews claims that are more than a year old, the practical effect would be that hospitals would again not be fairly reimbursed for the care they provide Medicare patients," he said.