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CMS Announces Part A to Part B Rebilling Demonstration Program

Yesterday, the Centers for Medicare & Medicaid Services (“CMS”) announced the Part A to Part B Rebilling Demonstration Program (“Demonstration Program”). The Demonstration Program will allow a select number of hospitals to receive 90 percent reimbursement of the Part B payment for Part A inpatient short stay claims that are denied on the basis that an inpatient claim was not medically necessary and reasonable because the services were not provided in the appropriate care setting.

Wachler & Associates, P.C. has been instrumental in the effort to obtain Part B reimbursement for hospitals with Part A claims denied as not medically necessary and reasonable. Along with the American Hospital Association (“AHA”) and other industry leaders, Wachler & Associates has met with CMS three times since 2009 to realize Part B reimbursement for hospitals. From the CMS announcement on November 15, it appears that the persistence has resulted in a Demonstration Program that achieves some, but not all, of the industry’s goals.

The Demonstration Program will be conducted for 3 years, beginning on January 1, 2012 and ending on December 31, 2014. Up to 380 hospitals will be chosen to participate in the Demonstration Program and will be accepted on a first-come, first-served basis. In addition, there will be a maximum amount for small, medium and large facilities.

The announcement by CMS of the Demonstration Program was followed by a fact sheet that outlines the program. However, some of the language in the fact sheet creates more questions than answers about the Demonstration Program. It appears from the fact sheet that participating hospitals will receive 90 percent of Part B reimbursement for Part A claims that are denied. It is clear that the participants will be required to waive appeal rights to those Part A claims resubmitted for Part B payment. One of the many questions is when a participating hospital will be required to waive the appeals rights. For example, will a hospital in the Demonstration Program be required to waive appeal rights immediately upon a Part A denial without any right to appeal that claim? Or, after a denial, will the hospital be required to choose whether it wants to appeal or resubmit for Part B payment? Or, may a hospital in the Demonstration Program appeal and at any time during the appeals process waive future appeal rights in order to resubmit for Part B payment? These uncertainties have serious implications for hospitals and may affect a hospital’s decision to participate in the program.

Those hospitals that do not participate in the Demonstration Program must decide whether to pursue the appeals process. According to the Demonstration Program, if a hospital is not a part of the program, it will be required to proceed through the appeals process to receive Part B payment. Wachler & Associates has extensive experience with defending providers during appeals and emphasizes the importance of legal counsel during the appeals process, particularly at the Administrative Law Judge (ALJ) hearing where we have had success obtaining orders for Part B payment.

Wachler & Associates will continue to monitor the developments of the Demonstration Program. Please contact Andrew Wachler if you have any questions regarding the Demonstration Program, including submitting applications for the program, or questions regarding the RAC appeals process.