Fact Sheets


For Immediate Release: Tuesday, November 15, 2011
Contact: CMS Media Relations


In 2010, the President announced three goals for cutting improper payments by 2012: reducing overall payment errors by $50 billion, cutting the Original Medicare error rate in half, and recovering $2 billion in improper payments to recipients of federal dollars.  As a part of the Centers for Medicare & Medicaid Services (CMS) commitment to achieving those goals, the agency is conducting a three year Part A to Part B Rebilling Demonstration.  This demonstration will allow participating providers to receive 90 percent of the Part B payment for Part A inpatient short stay claims that are denied on the basis that the inpatient admission was not reasonable and necessary.

Today, if providers submit hospital inpatient short stay claims under Medicare Part A for services that would have been considered reasonable and necessary in an outpatient setting under Medicare Part B, their claim will be denied in full.  While the patient may have needed the service, the claim is denied because it was not provided in the appropriate care setting.  Providers face a costly and time-consuming appeals process to receive any compensation for the care they have provided to Medicare patients. 


The Rebilling demonstration will reduce the need for that appeals process, and allows CMS to compensate providers for providing needed care to Medicare patients.  At the same time, it continues to encourage providers to deliver services to patients in the most appropriate care setting.  It will also effectively lower the improper payment rate, as payments that would be allowable under Part B if the patient was originally treated as an outpatient rather than admitted as an inpatient will no longer be considered in error.  CMS believes this demonstration addresses ongoing provider and association concerns, and it provides several beneficiary protections against changes in financial liability or benefits.


Under the demonstration, when an inpatient claim is denied because of the wrong place of service, providers in the demonstration will resubmit a claim for covered services to Medicare.  Medicare will pay 90 percent of the payable Part B claim amount.  Providers within this demonstration will agree to waive appeal rights to those claims resubmitted for Part B payment.  CMS will educate participating hospitals on how to properly bill for Part A (inpatient) and Part B (outpatient) services, as well as monitor participating providers and the impact of the demonstration on the Medicare Trust Fund. 


This demonstration will be conducted for 3 years, from January 1, 2012 through December 31, 2014.  Up to 380 hospitals can choose to participate in the demonstration, and will be accepted on a first-come, first-served basis up to the maximum number for small, medium and large facilities. 



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