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“Because of a very heavy and ever-expanding caseload of appeals arriving in our office, we do not anticipate scheduling this case for hearing and decision until the last quarter of FY 2014. Many of the cases that we are receiving will not be heard and decided until the first and second quarters of FY 2015.”

That’s what one administrative law judge (ALJ) from the Department of Health and Human Services’ Office of Hearing and Appeals wrote in a recent letter to one Mid-Atlantic health system.

That letter goes on to inform this health system’s leaders of their rights and their choices. Essentially, the health system can do one of two things:

  • Wait until the end of 2014 to see whether the ALJ overturns the auditor’s denial of the inpatient hospital claim.


  • Withdraw the Part A inpatient hospital appeal now, and file for Part B payment.

When informed about this letter, Andrew B. Wachler, principal of Wachler & Associates, indicated that he was “troubled by several aspects of the letter and its implications.” During RACmonitor’s June 3 broadcast of “Monitor Monday,” Wachler outlined several of those troubling aspects, saying, “There’s more than a veiled threat or implication that if you don’t act on your Part B claims timely—that is, to withdraw the Part A appeal and bill for Part B—then you will lose that right.”

Wachler believes that it violates due process to take the provider’s money in May 2013 and not be able to provide a hearing until possibly the second quarter of 2015. His opinion is that the Centers for Medicare & Medicaid Services (CMS) should either “stop the audits until the hospitals can get a timely hearing or stop the withholding because it cannot provide a timely hearing.”

The ALJ’s letter also indicates that no claims’ adjudicator has the authority to order Part B coverage in the event of the Part A claim denial. “Only you can pursue a Part B claim and only if you avail yourself of the provisions of Ruling 1455-P prior to the final promulgation of the Proposed Rule 1455-P,” it says.

The ALJ is referring to the proposed rule recently issued by CMS related to Medicare Part B inpatient billing in hospitals (March 18, Federal Register). If this proposed rule becomes final in its current form, Part B claims would be denied if they are filed more than 12 months after the inpatient date of service (DOS)—a possibility that has hospital leaders worried.

“Accordingly, if a RAC waits 12 months to deny a claim or should 12 months elapse from the date of service while a hospital is in the appeals process, the hospital will be left empty-handed,” a blog post on the Wachler & Associates website reads.

However, on three different occasions, Wachler spoke with CMS representatives who assured him that when the proposal is finalized, the regulations would not prohibit billing of Part B for those claims in the appeals process.

On March 18, CMS also released an administrative ruling that is serving as policy for the Part B inpatient services issue until the proposed rule is finalized. Under the interim ruling, hospitals with appeals pending may withdraw them to seek payment for all Part B inpatient services. They will have 180 days to bill Medicare for inpatient Part B services following the date of receipt of the appeal’s dismissal notice or an appeal decision upholding the reasonable and necessary denial on the Part A claim.

In the HHS letter, the ALJ reminds the health system that they should “remember that the right to pursue such relief (of withdrawing the Part A appeal and billing Part B) shall expire when CMS finalizes the proposed rule.” In a nutshell, Wachler interprets this as meaning “if you want your Part B money, withdraw now before this final rule takes effect.”

However, Wachler disagrees, saying that hospitals should not be forced to choose between the two options “because they are afraid that if they lose Part A they will get nothing—particularly when ALJs have no ability to order Part B.”

The comment period for the proposed rule closed on May 17, and the administrative ruling took effect on the day that CMS issued it—May 13, 2013. What this means is that hospitals will just h have to wait and see what CMS decides to do.

About the Author

Janis Oppelt is editor for MedLearn Publishing, a division of Panacea Healthcare Solutions, Inc., St. Paul, MN.

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Janis Oppelt

Janis Oppelt was the former editorial director for MedLearn Publishing.

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