Our Comment Posted to CMS on CMS-1455-P

A Closer Look at the Medicare Part B Inpatient Rebilling Proposed Rule (CMS-1455-P) and Its Impact on Hospitals, Where Medicare Beneficiaries Are Actually Treated

Appeal Academy respectfully suggests that CMS revisit the limitation in the March 13 ruling stating that hospitals cannot rebill under Part B for claims where a CMS contractor has denied Part A payment and the time to appeal or refile has expired. As suggested by the American Hospital Association in their comment to this rule, dated April 17, 2013, such limitation is indeed both unlawful and fundamentally unfair.

Hospitals that submit claims for and are subsequently paid for inpatient services under Medicare Part A, then subsequently are denied by a Medicare review contractor for “medically unnecessary” service (meaning inpatient status is, in the contractor’s opinion, not met), should be permitted to rebill for full Part B payment in all cases where the original Part A claim was filed originally in a timely fashion.

We offer the following comments and requests for consideration.

The inability to file proper payments. The Center for Medicare and Medicaid Services (CMS) has confusing, obfuscate and sometimes patently contradictory rules for when and how a hospital can bill for inpatient and outpatient care. The definition of an inpatient is under significant debate, and has been so for years, despite being a critical (and one might imagine, simple) factor for determining payment. Many Administrative Law Judge (ALJ) and HHS Departmental Appeals Board Medicare Appeals Council (DAB) decisions have made this clear, and those judges have not accepted CMS’ narrow and shifting interpretations of the definitions, prior to the March 13 ruling. Despite the growing number of decisions by impartial third parties, CMS continues to pursue this interpretation that can only be justified by financial considerations, coupled with arbitrary logic, and a disregard for judicial opinions.

Even CMS Manuals offer differing interpretations/definitions, which are used by CMS and it’s contractors whenever the need arises to support a denial – despite the fact that written rules exist instructing a contractor to do exactly the opposite. Why would such rules only apply to one specific type of review contractor and not all review contractors?

Hospitals are required to bill CMS correctly and provide the most economical, medically-necessary services, but the very same agency that creates said rules, by promulgation, and often outside legal guidelines for doing so, cannot answer simple questions, when asked. One must only listen to an Open Door Forum, hosted by CMS, to hear them read their regulations verbatim, take questions from providers, provide very few if any answers to those questions, and thereby list another date in their annual report to Congress, proclaiming their dedication to continually “educating” providers, nationwide.

The Proposed Rule promotes improper auditing processes to maximize recovery auditor revenue. Perhaps in response to pressure from recovery auditors, dissatisfied with the limits placed on them and the lower-than-expected returns they are experiencing, CMS will allow a process to be put in place such that auditors can simply file medical necessity denials at a time that precludes a hospital from ever being able to rebill the claim as Part B, thereby securing the full contingency fee for the auditor. This process virtually ensures that the auditors can file denial after denial, daring the hospitals to file appeals, where Part B payment can only be attained by either taking the appeal all the way into Federal Court, or by abdicating their right to appeal and due process, all of which could take years to adjudicate, thereby risking the additional interest that would accrue. The auditor can also easily maximize the time an appeal is in process by delaying all their own filings, which carry no consequences for them if (when) they fail to comply with any timely filing rules placed on the auditor, if any indeed exist or are ever enforced by CMS.

The Proposed Rule hurts Hospitals, which hurts beneficiaries, regardless of the health of the Medicare Trust Fund. Under the proposed rule, many hospitals will suffer from arguably improper audits, conducted in a manner as outlined above, which will put many of those hospitals’ solvency at risk. This will not only close hospitals, but will put the lives of Medicare beneficiaries at risk, which is inarguably more valuable than any amount of copayments, which may or may not be greater than before the ruling.

A comment filed earlier by the American Coalition for Healthcare Claims Integrity (ACHCI), a collection of entities only vested in increasing audits and concomitant contingency fees, claims that analysis of CMS claims data shows that beneficiaries don’t really pay more for outpatient care versus inpatient care. Nevertheless, they argue that allowing hospitals to rebill for Part B will cause “…improper payments to skyrocket while at the same time driving up costs for Medicare beneficiaries.”

We propose that this thinking is only born of the same logic that claims, as CMS did on a recent Open Door Forum Conference Call (May 14, 2013), that “the only difference between inpatient and outpatient is a physician’s order for inpatient admission.”

It simply does not follow. Or as they say in Texas, “that dog don’t hunt.” If that confession is indeed true, then either inpatient services are grossly overpaid, or outpatient services are grossly underpaid.

CMS should not be generating programs based upon the documented CERT error rate.

In August 2012, CMS reported a CERT error rate of 8.6%, or $28.8 Billion of improper payments in the Medicare Fee-For-Service program. We find that rate and the report that it comes from, suspect.

We respectfully request that CMS require the CERT data to be made publically available, such that the error rate so determined can be verified by independent third parties, qualified to review statistical reports. In reviewing the published data, such as it is, Appeal Academy noticed several areas of the report that cannot be explained by the published data. For example, to calculate an error rate of 87%, and an overall dollar amount of over $416 Million for improperly paid claims for a single DRG, the CERT data only reports that a grand total of two (2) claims were reviewed by the CERT contractor. The DRG sampled may involve over 50,000 claims, nationwide, in 2011. (There were 64,000 in 2004, the latest data we found.)


With current Medicare spending in excess of $560 billion dollars per year, the integrity of the nation’s most vital entitlement programs is important. And this proposed rule, as written, does indeed threaten Medicare beneficiaries, as it threatens the providers they depend upon for life enhancing and sometimes life-saving care.

Proper Medicare expenditures are certainly a lofty and (mostly) attainable goal. But this limitation on Part B rebilling, as written into the proposed rule, will not have the intended consequences, even if those intended are only financial ones.

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