Part B Inpatient Billing When Inpatient Admission Denied

on Wednesday, 27 March 2013. All News Items | Billing

On March 13, 2013, CMS released a ruling (Ruling 1455-R) with a HUGE impact for hospitals. This ruling is in light of the numerous recent appeal decisions by Administrative Law Judges (ALJs) and the Medicare Appeals Council to allow payment for Part B services when an inpatient admission is determined to not be medically necessary. This interim ruling is effective immediately and remains in effect until the corresponding proposed CMS rule entitled, "Medicare Program; Part B Billing in Hospitals" is finalized. Note that there are differences in the requirements of the ruling versus the proposed rule. This article discusses the currently effective Ruling only.

The Ruling allows hospitals to bill and receive payment for all reasonable and necessary Part B services provided to a hospital inpatient when a Medicare review contractor denies the Part A inpatient admission as not reasonable and necessary.

On Friday, March 22, 2013, CMS released Transmittal 1203 (CR 8185) which details the claims requirements for Part B rebilling. Although this transmittal is effective March 13, 2013, the implementation date is not until July 1, 2013. Therefore, hospitals cannot bill under the instructions of CR 8185 until July 2013. Further instructions from Medicare regarding billing in the interim are expected to be released soon. As indicated in our Extra newsletter yesterday, if you have a denied claim that has not been appealed and is approaching the end of the appeal timeframe, you should appeal the claim now in order to reserve your right to request a dismissal and bill under Part B once the billing instructions are released.

The key points from the Ruling are: 

  • The ruling applies to
    1. Inpatient denials on or after the date of this ruling (March 13, 2013),
    2. Prior inpatient denials still within the appeal timeframe or
    3. Prior inpatient denials with an appeal pending.
  • The ruling does not apply to
  • Prior inpatient denials if the timeframe to appeal has expired, or
  • Inpatient admissions determined by the hospital to not be medically necessary, such as during UR or other internal review.
  • Hospital may submit a Part B inpatient claim for all reasonable and necessary Part B services that would have been payable if the patient had been treated as an outpatient –
    1. It is not limited to “Part B only” services described in Medicare Benefit Policy Manual, Chapter 6, Section 10. Prior to this ruling, a hospital could only bill selected services on a 12x type of bill when an inpatient admission was not allowed. These services are referred to as “Part B only” services, are listed in the policy manual referenced above, and include mostly laboratory tests and imaging studies. They did not include therapeutic services such as drug administrations, surgery, or therapeutic coronary or peripheral interventions. Under the Ruling, these types of services will be allowed to be billed on the Part B inpatient claim if the Part A stay was denied as not medically necessary by a Medicare contractor.
    2. Outpatient services that require an outpatient status, such as outpatient visits, ER services, and observation services may not be submitted on the Part B inpatient claim. These types of services may occur immediately prior to the inpatient admission and can be billed on an outpatient claim (see next bullet point regarding the 3-day window). Only Part B services occurring during the inpatient admission (i.e. after an inpatient admission order) would be included on the Part B Inpatient claim.
  • Reasonable and necessary outpatient services provided during the 3-day payment window prior to inpatient admission may be billed separately on an outpatient claim if the inpatient admission is denied as not medically necessary. This ruling allows billing of this outpatient claim beyond the usual timely filing restrictions in accordance with the time frames listed below.
  • The hospital may not have simultaneous requests for both Part A and Part B payment:
    1. The hospital must withdraw any Part A appeals in order to submit Part B claims for the same services.
    2. The hospital may not initiate a Part A appeal after submitting a Part B claim for the same services.
  • The Part B billing may occur past normal timely filing limitations as long as it is:
    1. Within 180 days from the date of receipt of an appeal dismissal notice or,
    2. Within 180 days from the date of receipt of a final denial decision or,
    3. Within 180 days from the from the date of receipt of the initial or revised determination on the Part A inpatient claim (that is, the date of the remittance advice).

(Note the date of receipt of an initial or revised determination, or an appeal decision or dismissal notice is presumed to be 5 days after the date of such notice or decision, unless there is evidence to the contrary.)

  • For the Part B claims billed under this Ruling, the beneficiary's patient status remains inpatient as of the time of inpatient admission and is not changed to outpatient.
  • The Part A to Part B Rebilling Demonstration is being terminated. CMS will inform participating hospitals that the Part A to Part B Rebilling Demonstration is being terminated and will provide the necessary instructions.
  • The ruling clarifies Medicare appeals adjudicators’ scope of review. Administrative Law Judges (ALJs) may no longer award payment for Part B services when the Part A claim is denied. According to the Office of Medicare Hearings and Appeals (OMHA), “The Ruling explains that adjudicators may only consider the originally billed Part A inpatient admission denial. Adjudicators may not consider potential coverage under Part B because hospitals are solely responsible for determining whether to bill for services under Part A or Part B, and submitting the appropriate claims.”
  • Beneficiaries will be responsible for their usual Part B financial obligations under the ruling. Part A copayments or the difference must be refunded to the patient if the Part A amount is greater than the Part B amount.

For more information, see the CMS Ruling and the MLN Matters Article MM8185 concerning Part B Inpatient Billing in Hospitals.

Article by Debbie Rubio

Debbie Rubio, BS, MT (ASCP), is the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc. Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system. In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers. You may contact Debbie at This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it. .





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