CMS Pub. 100-02, ch. 6, § 10.1

Denials

(Rev. 182, Issued: 03-21-14, Effective: 10-01-13, Implementation: 04-21-14)

If a Medicare Part A claim for inpatient hospital services is denied because the inpatient

admission was not reasonable and necessary, or if a hospital determines under 42 CFR

§482.30(d) or §485.641 after a beneficiary is discharged that the beneficiary’s inpatient

admission was not reasonable and necessary, and if waiver of liability payment is not

made, the hospital may be paid for the following Part B inpatient services that would

have been reasonable and necessary if the beneficiary had been treated as a hospital

outpatient rather than admitted as an inpatient, provided the beneficiary is enrolled in

Medicare Part B:

1) Part B services paid under the outpatient prospective payment system (OPPS),

excluding observation services and hospital outpatient visits that require an

outpatient status. Hospitals that are excluded from payment under the OPPS are

instead paid under their alternative payment methodology (e.g., reasonable cost, all

inclusive rate, or Maryland waiver) for the services that are otherwise payable

under the OPPS.

2) The following services excluded from OPPS payment, that are instead paid under

the respective Part B fee schedules or prospectively determined rates for which

payment is made for these services when provided to hospital outpatients:

a. Physical therapy services, speech-language pathology services, and

occupational therapy services (see chapter 15, §§220 and 230 of this

manual, “Covered Medical and Other Health Services,”).

b. Ambulance services.

c. Prosthetic devices, prosthetic supplies, and orthotic devices paid under the

DMEPOS fee schedule (excludes implantable prosthetic devices (other

than dental) which replace all or part of an internal body organ (including

colostomy bags and supplies directly related to colostomy care) and

replacement of such devices).

d. Durable medical equipment supplied by the hospital for the patient to take

home, except durable medical equipment that is implantable.

e. Certain clinical diagnostic laboratory services.

f. Screening and diagnostic mammography services.

g. Annual wellness visit providing personalized prevention plan services.

Hospitals may also be paid under Part B for services included in the payment window

prior to the point of inpatient admission for outpatient services treated as inpatient

services (see Pub. 100-04, Medicare Claims Processing Manual, Chapter 4, §10.12,

“Payment Window for Outpatient Services Treated as Inpatient Services”), including

services requiring an outpatient status. The hospital can only bill for services that it

provided directly or under arrangement in accordance with Part B payment rules.

Outpatient therapeutic services furnished at an entity that is wholly owned or wholly

operated by the hospital and is not part of the hospital (such as a physician’s office), may

not be billed by the hospital to Part B. Reference labs may be billed only if the referring

laboratory does not bill for the laboratory test (see Pub. 100-04, Medicare Claims

Processing Manual, Chapter 16, §40.1, “Laboratories Billing for Referred Tests”).

The services billed to Part B must be reasonable and necessary and must meet all

applicable Part B coverage and payment conditions. Claims for Part B services submitted

following a reasonable and necessary Part A claim denial or hospital utilization review

determination must be filed no later than the close of the period ending 12 months or 1

calendar year after the date of service (see Pub. 100-04, Medicare Claims Processing

Manual, Chapter 1, §70 “Time Limitations for Filing Part A and Part B Claims”). See

Pub. 100-04, Medicare Claims Processing Manual, chapter 4, §240 for required bill

types.