Late News: Fight continues

The American Hospital Association is not backing down from its lawsuit against the CMS that claims healthcare providers have lost hundreds of millions of dollars in reimbursements through a billing policy that unfairly penalizes providers who submit incorrect Medicare claims.

The CMS unveiled new rules that went into effect last week designed to address problems in thousands of Medicare bills that are pending on appeal, but critics said the fix may actually exacerbate the problem in the long run.

The conflict concerns hospitals that try to re-bill Medicare for lower-paying physician care in cases where claims for more-lucrative hospital care were denied for the same service.

The old CMS rules said hospitals could not re-bill the government after a claim was denied for setting-of-care reasons, but administrative law judges in HHS' appeals courts say the policy seems to violate other aspects of the Medicare manual that would allow payment for legitimate services.

The AHA sued the CMS last year, holding up the judges' decisions as evidence that the payment-denial policy was flawed.

On March 13, acting CMS Administrator Marilyn Tavenner issued a sweeping new rule that allows hospitals to be paid for most services at the lower physician rate in the event of setting-of-care denials.

But the rule was intended to be a temporary solution. The agency also published a notice of proposed rulemaking for a long-term fix that would not allow hospitals to re-bill Medicare Part B physician services for setting-of-care denials that are more than a year old.

“If the (recovery audit contractor) waits a year to deny your claim, you are out for any Part B services. If you appeal, and one year lapses from the date of service, you cannot get any Part B services, and the judges can't order them,” said healthcare attorney Andrew Wachler of Wachler & Associates. “The proposed rule is really a significant step backward from the current situation for hospitals.”

A statement from the AHA reflected the same concerns, saying that the litigation remained necessary even though the CMS seemed to have conceded a central argument in the lawsuit that the former non-payment policy “is contrary to the law.”

Meanwhile, the March 13 rule also announced the cancellation of the ongoing Part A to Part B rebilling demonstration program, in which about 400 hospitals were allowed to re-bill for about 90% of the Part B payments in cases where Part A hospitalization claims were denied.