Glenn Grigsby

H.R. 3962 is retroactive to services rendered on or after June 1, 2010, and delays the physician reimbursement cuts through November 30, 2010. The 21 percent proposed payment cut was determined using a sustainable growth rate (SGR) factor intended to keep Medicare costs in line with inflation. Because the physician payments have yet to be reduced by the SGR, the proposed 21 percent cut is estimated to rise to 23 percent in December and nearly 30 percent in January 2011. H.R. 3962 temporarily avoids the cuts and instead includes an increase to the single conversion factor of 2.2 percent.

Medicare is automatically reprocessing claims paid at the reduced rates. The U.S. Department of Health & Human Services’ (HHS) Office of Inspector General announced June 25 providers may waive collecting the increased patient liability for deductibles and co-payments resulting from claim reprocessing. Normally, such co-payment waivers are prohibited, but they are permitted in this instance if they meet other criteria and are applied uniformly.

While physicians have temporarily avoided payment cuts, hospitals pay the price. Section 102 of the new statute clarifies provisions of the three-day window applicable to acute prospective payment system hospitals and the one-day window applicable to others, except critical access hospitals. The new law makes Medicare’s policy consistent with how most hospitals have been billing the program since 1991. Under this policy, a hospital includes, in its charges for the inpatient stay, charges for all diagnostic services and nondiagnostic services “related” to the inpatient stay that are provided during the three-day payment window.

The definition of “related” has been an area of confusion for both providers and Medicare contractors. Under the recently clarified definition, providers could compare the diagnosis code of the inpatient admission and outpatient therapeutic service, billing separately for the outpatient service if the codes were different. Under H.R. 3962’s definition, effective for services provided on or after June 25, 2010, hospitals should bill as part of the inpatient stay all nondiagnostic services provided during the applicable payment window, unless they can demonstrate the services are unrelated to the admission. In addition, providers may no longer reopen previously bundled claims to take advantage of the recently clarified definition in effect prior to H.R. 3962’s enactment.

CMS expects to issue instructions in the near future on how to bill for nondiagnostic services provided during the three-day window. Until then, providers should evaluate current billing practices and review the June 25 CMS press release.

Consult your BKD advisor for more details on these new Medicare regulations and how they might affect you.