Updated Part B Rebilling Rule and Initial Reaction

A new CMS Ruling was published March 13, 2013 that revises the current policy on Part B billing following the denial of a Part A inpatient hospital claim that was found to be not reasonable and necessary. Under current policy, if a hospital incorrectly bills Medicare for Part A hospitalization services, rather than less-expensive Part B physician care, the wrong setting of care billing error would cause the hospital to forfeit all reimbursement for services. Hospitals claim that Medicare’s recovery audit contractors (RAC), who are paid a percentage of the money they recover from hospitals, have targeted these lucrative setting-of-care decisions and that hospitals have been collectively denied hundreds of millions of dollars by Medicare because of disputes over the differences between inpatient and outpatient care. The new ruling directs Medicare judges to allow hospitals to claim Part B inpatient costs in cases where the setting of care was initially wrong and to also separately bill Medicare for some Part B outpatient services that would otherwise have been “bundled” into the Part A bill because they occurred within three days of the hospitalization. The ruling is expected to affect thousands of hospital claims currently pending in the appeals process and to cut $4.8 billion in Medicare payments to hospitals over the next five years.

The rule was accompanied by a separate notice of proposed rulemaking on the same topic that critics say would actually make it tougher for hospitals to get paid in wrong-setting-of-care cases in the long run because it imposes a one-year time limit for Part B claims, which would apply even if a RAC took longer than a year to appeal a claim.

Despite CMS’s overture, the American Hospital Association issued a statement that it will not drop ongoing litigation against CMS, noting that the “proposed rule threatens to undermine the progress made on this important issue. Under the proposal, hospitals will be able to rebill CMS only within the narrow time frame of one year from when patient services were provided. Since the recovery audit contractor 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.”

Pandemic Bill Signed by President

On March 13, 2013, the President signed H.R. 307, the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (Public Law No: 113-5). The legislation will facilitate the development of chemical, biological, radioactive and nuclear (CBRN) medical countermeasures and enhance the response to public health emergencies and disasters, including those caused by CBRN attack; and amends the Public Health Service Act (PHSA) to authorize funding for various Department of Health and Human Services (HHS) agencies to support the readiness of the public health system for such emergencies.

House Labor-HHS Subcommittee Hearing

Last Wednesday, on March 13, 2013, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing to discuss fiscal year 2014 appropriations under their jurisdiction. Health-related public witnesses presented testimony related to funding for a variety of critical health programs, focusing primarily on activities with the National Institutes of Health, Centers for Disease Control and Prevention, and the Health Resources and Services Administration.

Supreme Court to Hear Generic Drug Suit This Week

This week, the Supreme Court will hear oral arguments about whether to close off one possible avenue of legal relief for consumers who are injured by generic drugs. In 2011, the court ruled in PLIVA v. Mensing, that a generic drugmaker could not be held liable for failing to adequately warn consumers of side effects in its labeling because federal law requires generic drugs to carry the same label as the brand name. The current case pending before the Supreme Court -- Mutual Pharmaceutical Co. v. Bartlett – examines whether generic drug companies should stop selling the product and be held liable if they do not. This is not the only generic drug case the court expects to hear this month. The second case centers on what the Federal Trade Commission has labeled “pay for delay” patent settlements between brand-name and generic drugs.

Upcoming Health Hearings

Health Subcommittee (Chairman Pitts, R-PA) of House Energy and Commerce Committee will hold a hearing titled “Saving Seniors and Our Most Vulnerable Citizens From an Entitlement Crisis,” 4:00 p.m., 2322 Rayburn Bldg., March 18

Subcommittee on Communications and Technology (Chairman Walden, R-OR) of House Energy and Commerce Committee will hold a hearing titled “Health Information Technologies: Harnessing Wireless Innovation,” 10:30 a.m., 2123 Rayburn Bldg., March 19

House Appropriations, Subcommittee on Labor, Health and Human Services, Education and Related Agencies will hold a hearing on Labor, HHS, Education Management Challenges, 10 a.m., 2358-C Rayburn Bldg., March 19

Senate Finance Committee (Chairman Baucus, D-MT) will hold a hearing titled “Reforming the Delivery System: The Center on Medicare and Medicaid Innovation,” 10:00 a.m., 215 Dirksen Bldg., March 20

Labor, Health and Human Services, Education, and Related Agencies Subcommittee (Chairman Kingston, R-GA) of House Appropriations Committee will hold a hearing on children’s mental health, 10:00 a.m., 2358-C Rayburn Bldg., March 20

Health Subcommittee (Chairman Pitts, R-PA) of House Energy and Commerce Committee will hold a hearing titled “Health Information Technologies: How Innovation Benefits Patients,” 10:00 a.m., 2123 Rayburn Bldg., March 20

Subcommittee on Oversight and Investigations (Chairman Murphy, R-PA) of House Energy and Commerce Committee will hold a hearing titled “Health Information Technologies: Administration Perspectives on Innovation and Regulation,” 9:00 a.m., 2322 Rayburn Bldg., March 21

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