The Centers for Medicare & Medicaid Services (CMS) has amended previous instructions regarding inpatient denials identified by a recovery audit contractor to include type of bill (TOB) 13x for any services provided on the inpatient bill that could be billed as outpatient. The previous instructions were published in the February 2007 Medicare A Bulletin (page 13).

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, Section 306) directs the Secretary of the U.S. Department of Health & Human Services (HHS) to demonstrate the use of recovery audit contractors (RACs) under the Medicare Integrity program in:

In some cases the RAC will request and review medical records, and will make a determination based on CMS guidelines of medical necessity.

This instruction is only in relation to claims in which medical records were reviewed for hospital inpatient cases TOB 11x. These cases were audited by the RAC and were determined that the services provided while the patient was admitted did not support admission into an inpatient stay. CMS is providing instructions to providers on how to re-bill for ancillary services (TOB 12x) provided to the beneficiary and for any services provided on the inpatient bill that could be billed as outpatient (TOB 13x) when timely filing is a factor.

Some of the claims reviewed by the RAC have passed the timely filing requirements. In order for the provider to re-bill the claim for ancillary charges only, specific justification remarks shall be listed on the claim and shall only be used for this specific reason.

Remarks must include the document control number (DCN) of the denied inpatient claim that coincides with the re-billed ancillary claim. If these remarks are not on the claim it will reject for timely filing.

Justify: Recovery Audit Contractor (RAC) Involvement. Inpatient-take back. Re-bill of ancillary charges. Refer to (Input DCN number of denied inpatient claim).

Once the appropriate remarks are reviewed by the FI, the ancillary claim will be overridden for processing.

Once processed, the provider shall refund any excess funds collected from the beneficiary. This could include the inpatient deductible or a coinsurance amount. Providers shall not collect any additional coinsurance from the beneficiary.

Providers should not re-bill for the ancillary services if the provider is appealing the RAC determination. Providers should wait until they have completed the appeal process before submitting the re-bill for the ancillary services. If the provider is not appealing the RAC determination, the provider should re-bill for the ancillary services once the inpatient claim has been adjusted.