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Inpatient Admission Update: Rebilling, Two Midnights and Admission Certifications

Stephanie M. Barr
Marshall Dennehey Warner Coleman & Goggin, P.C. - Philadelphia Office

September 27, 2013

Previously published on September 27, 2013

Beginning in October we will see big changes in the world of reimbursement, especially regarding inpatient services under Medicare Part A. The Fiscal Year 2014 Inpatient Prospective Payment System (IPPS) Final Rule (CMS 1599-F) has a significant impact on billing for inpatient admissions and it goes into effect October 1, 2013.[1]

First, in the 2014 IPPS Final Rule, CMS adopts previously proposed rules regarding billing an inpatient admission under Part B following a denial of that admission under Part A for lack of medical necessity. The Final Rule provides that if a Medicare contractor denies an inpatient admission under Part A for lack of medical necessity or if a hospital determines through utilization review after a beneficiary is discharged that the inpatient stay was not medically reasonable and necessary, a hospital may rebill under Part B for all services that would have been considered medically reasonable and necessary had the beneficiary been treated as an outpatient and the claim submitted for payment under Part B.

CMS confirmed that rebilling under Part B must be done within 12 months of the date of services. CMS reemphasized in the Final Rule that hospitals can avoid being disadvantaged by the 12-month timely filing limit if they bill correctly by following Medicare's guidelines for medical review and hospital inpatient admissions in the Final Rule. CMS also adopted the proposal that if a hospital rebills under Part B, the hospital cannot concurrently appeal the denial of payment under Part A.

CMS will also continue to allow hospitals to rebill denied Part A admissions under Part B within 180 days following the revised determination denying the stay under Part A (e.g., revised determination following audit) or if the denial was appealed within 180 days of the appeal determination. This rebilling timeframe may be followed as long as:

  1. The Part A claim denial was one to which the Proposed Ruling originally applied; or
  2. The Part A inpatient claim has a date of admission before October 1 and is denied after September 30 on the grounds that although the medical care was reasonable and necessary, the inpatient admission was not.[2]

Second, in the 2014 IPPS Final Rule, CMS adopts proposed admission and medical review criteria for inpatient services. CMS indicates that the criteria are meant to assist hospitals in determining patient status for billing purposes so that rebilling would be unnecessary. Under the rule, an inpatient admission will be presumptively appropriate if the physician expects that the beneficiary will stay for more than one Medicare utilization day or an encounter crossing "two midnights" and if the physician admits the beneficiary based upon that expectation. An inpatient that does not cross the "two midnights" will be presumptively inappropriate. Inpatient admissions with lengths of stay greater than two midnights will also be presumed appropriate "absent evidence of systematic gaming, abuse or delays in the provision of care." Any time spent by a beneficiary as an outpatient leading up to a formal admission will not be deemed inpatient time, however, a physician or Medicare review contractor may use this time as evidence to support the expectation that a stay for two midnights is medically reasonable and necessary.

Finally, CMS clarified that as a condition for payment under Medicare Part A, a physician (or other qualified practitioner licensed by the state) with admitting privileges and with knowledge about the patient's hospital course, medical plan of care and current conditions must formally order the inpatient admission and certify the medical necessity of the inpatient admission. On September 5, 2013, CMS issued further guidance regarding these requirements.[3] The guidance provided that the physician's order specifying inpatient admission is an essential part of the physician certification for payment of the inpatient services.

For an inpatient admission to be considered for payment, documentation must include a certification, signed by the physician. The certification must include the:

  1. Order signed by the physician;
  2. Certification by the physician that the services are provided in accordance with 42 C.F.R. §412.3; and
  3. Reason(s) for the hospitalization for inpatient medical treatment or medically required inpatient diagnostic study, or a description for special or unusual services in cost outlier cases.

The certification documentation must be completed and made a part of the patient's record prior to discharge.

[1] Final Rule:  http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY-2014-IPPS-Final-Rule-Home-Page-Items/FY-2014-IPPS-Final-Rule-CMS-1599-F-Regulations.html?DLPage=1&DLSort=0&DLSortDir=ascending; Press Release on Final Rule: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Press-Releases-Items/2013-08-02.html

[2] Proposed Ruling 1455-R was to remain in effect only until a Final Rule on Part B inpatient billing was issued. Despite this, the Final Rule permits hospitals to follow the timeframe in the Proposed Rule after the effective date of the Final Rule on October 1.

[3] See Id; also for guidance, see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order-09-05-13.pdf


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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