Hospital Billing 2014: CMS Instructions on When Part B Inpatient Billing Applies

Part B inpatient billing is not always top of mind for hospital coders, however the Federal Register outlining IPPS polices for 2014 has addressed this topic. Here are some dos and don’ts of Part B Billing.

When Does Part B Billing Apply in a Hospital Setting?

Part B billing applies in a hospital setting when an inpatient admission is judged as “not medically necessary” after the patient has been discharged. If the inpatient admission is determined as not appropriate, while the patient is still in the hospital, then Condition Code 44 is used and the billing changes to Part B outpatient. Again you cannot bill for observation because a physician has to order observation and this would take place right at the end of the hospital stay.

Watch your steps: In two occasions a determination can be made for the inappropriateness of an inpatient admission after the fact: Firstly when Federal or RAC audit determines inappropriateness and secondly when the hospital, through a self-audit process, determines inappropriateness.

For more information on coding under Condition 44 circumstances, refer to this article featured in Inpatient Facility Coding and Compliance Alert.

Timely Filing – Your First Barrier

For Part B billing, it must be done within the timely filing guidelines for the inpatient admission. i.e, one year from the initial claim. However, a RAC audit may be conducted after one/two/three years after the inpatient services. If the RAC determination holds up and the inpatient admission is determined not medically necessary, then there’s no option in Part B inpatient billing if you are not inside the timely filing guidelines. Therefore, the main time this billing procedure will be used is when the hospital determines the inpatient admission as medically necessary, through self-audit.

Part A Should be Billed First

Not sure how to generate claims for the Part B billing? The Centers for Medicare and Medicaid Services (CMS) instructs you to file a Part A claim on a ‘No Pay/Provider Liable’ basis. Once the Part A claim denials reach your system, you can go ahead with the Part B inpatient claim.

                                                                                              

Don’t Bill Part B if Services are Inherently Outpatient

CMS instructs you to file Part B inpatient claims for services that are not inherently outpatient. As such, you cannot bill observation of services through this process.