Policy & Regulation News

CMS Updates Part A Claims Reimbursement, Auditing Policies

Revisions to the two-midnight rule auditing process should ensure providers have time to implement claims reimbursement and denials management.

By Jacqueline LaPointe

- To give providers enough time to properly engage claims reimbursement and denials management procedures, CMS has announced that medical reviews on Medicare Part A claims under the two-midnight rule will be limited to a six-month look-back period from the date of admission.

CMS revises two-midnight rule auditing procedures to help providers with claims reimbursement management

The announcement (via AHA News Now) stated that the temporary suspension of the Beneficiary and Family Centered Care Quality Improvement Organization’s (BFCC-QIO) claim audits is still in effect. However, when the audits resume, the auditors will be limited to six months of medical review and all other claims outside of that timeframe will be reimbursed under Part A.

CMS revised the claims auditing process under the two-midnight rule to ensure that providers will have enough time to manage any claims denials affected by the temporary suspension of reviews by BFCC-QIO.

“Generally, when a Medicare Part A claim is denied by the BFCC-QIO, the provider has the opportunity to rebill under Medicare Part B within one calendar year after the date of service,” stated CMS.

“The imposition of a six-month look-back period for claims impacted by the temporary suspension of the BFCC reviews is being implemented to help ensure that providers receiving denials for Part A claims have sufficient time to rebill under Medicare Part B.”

The federal agency also announced that Medicare fee-for-service claims that are outside the six-month look-back period will be removed from the provider sampler re-review and will be paid under Part A, even if the claim was formally denied.

According to the updated FAQ page, a claim is considered formally denied if the provider was sent an initial results letter from the BFCC-QIO, the BFCC-QIO completed a provider-specific education session on the claims in question, the BFCC-QIO sent the provider a final results letter, and the denial was sent to a Medicare Auditing Contractor for further review.

For claims that fall within the six-month look-back period, BFCC-QIO will review claims that were not formally denied once the suspension on audits is lifted.

Claims that were formally denied and are within the look-back period, BFCC-QIO will also conduct a re-review to determine if the initial audit decision was consistent with the two-midnight policy.

In October 2015, CMS transferred initial patient status reviews to Quality Improvement Organizations from Medicare Administrative Contractors. The group was tasked with evaluating the appropriateness of Medicare Part A claims for short-stay inpatient hospital admissions.

However, the federal agency paused all audits made by Quality Improvement Organizations in May in effort to standardize the medical review process and encourage consistent application of the reviews.

On June 6, CMS also required the BFCC-QIOs to re-review all short-term hospital stay patient status claims that were denied under the medical review process since the organizations took over the reviews in October 2015.

CMS intends to lift the suspension once BFCC-QIOs have been reeducated on the medical review process, but the agency has not set a date for resuming audits.

“The temporary suspension remains effective, and the BFCC-QIO short stay claim reviews will resume after the BFCC-QIOs have completed retraining on the inpatient admission policy, completed the re-review of previously formally denied claims, performed any needed provider outreach and education, and CMS validates the accuracy of the BFCC-QIOs’ performance of these activities,” CMS reported.

“Many of these improvement steps have begun and are nearly complete.”

Quality Improvement Organizations are not the only CMS entity being scrutinized for their auditing processes. In June, a report from the American Hospital Association (AHA) found that the CMS-run Recovery Audit Program did not appropriately flag improper Medicare payments.

The report revealed that six out of ten claims reviewed by the Recovery Audit Program in 2016 did not have an overpayment despite being flagged as an improper payment.

Since the program regularly misidentified overpayments, more providers appealed claims denials from Recovery Auditor Contractors to ensure that they were reimbursed the correct amount. The report showed that hospitals appealed almost half of all claim denials.

AHA developed the RACTrac report to inform CMS and healthcare stakeholders on the impact of the program on providers, stated the industry group.

“RACTrac findings reveal many valuable insights for both the hospitals that reported the data and the AHA and state hospital associations who can use the information to educate the field and inform CMS and Congress of changes needed to the program,” reported the industry group.

While integrity programs were designed to identify potential improper payments, CMS has been working to ensure that the initiatives appropriately and consistently apply the guidelines.

Dig Deeper:

8 Tips for Avoiding Denials, Improving Claims Reimbursement

4 Revenue Cycle Management, Claims Reimbursement Strategies