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Instructions for Part A to Part B Billing for Medicare Denied Inpatient Hospital Claims.

Lisa Shuman | September 2013

The Centers for Medicare & Medicaid Services (CMS) recently released temporary instructions for billing Medicare Part B services provided during a hospital inpatient stay that were denied payment.  Effective October 1, CMS will allow payment of certain Part B services when an inpatient admission is found to be not reasonable and necessary if the delivered services would have been reasonable and necessary had the beneficiary been treated as an outpatient.  However, CMS will not cover hospital services during an inpatient stay that specifically require an outpatient status such as outpatient visits, emergency department visits, and observations services that are provided to hospital outpatients and not inpatients.  Hospitals must maintain documentation to support the Part B services billed during the inpatient stay.

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CMS will also allow payment for Part B inpatient services if the hospital determines under Medicare’s utilization review requirements that a discharged patient should have received hospital outpatient rather than inpatient services.  In this situation, the hospital is responsible for refunding any coinsurance or deductible collected.  To bill for the services, the hospital must first submit a Part A claim that includes the Occurrence Span Code “M1” and the inpatient admission Dates of Service, which indicates the provider is liable for the cost of Part A services.  The hospital can then submit an inpatient claim for payment under Part B on a Type of Bill (TOB) 12X.

Further, hospitals may only bill for a “limited set” of Part B inpatient services for beneficiaries who are treated as hospital inpatient and are either not entitled to Part A, or are entitled to Part A but have exhausted their Part A benefits. 

The “limited set” of Part B inpatient services is specified in the “Medicare Benefit Policy Manual” (Chapter 6, Section 10), which is available at:

The Medicare Learning Network (MLN) Matters article on instructions for billing Part B claims is available at:

The Centers for Medicare & Medicaid Services.  “Temporary Instructions for Implementation of Final Rule 1599-F for Part A to Part B Billing of Denied Hospital Inpatient Claims.”  MLN Matters article SE1333.  19 Sep. 2013.

About the Author

Ms. Shuman assists health care organizations to develop, implement and evaluate their compliance programs and HIPAA privacy programs. Ms. Shuman specializes in our firm’s HIPAA Privacy services, including leading privacy investigations, breach risk assessments, breach notification letters, breach reporting to the Office for Civil Rights and corrective actions plans. She specializes in serving as Interim Privacy Officer for large health care systems, managed care organizations, comprehensive cancer center and health care business associate.