Corporate Compliance

Watch for potential RAC trickle-down effect

Medicare Insider, October 21, 2008

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I taught a Medicare course in Chicago last week. One of the course participants from California (which was one of the three initial RAC demonstration states) raised an interesting question. She noted that, in California, the RAC had identified a number of inpatient claims where, according to the RAC, the patient did not qualify for an inpatient level of care. She explained that she was concerned about the potential “trickle down effect” on SNFs if the inpatient stay that preceded a SNF admission was retroactively denied. This is a concern because Medicare coverage of a SNF stay is limited to cases in which the beneficiary had an inpatient stay immediately preceding the SNF admission.

Specifically, the course participant asked, if an inpatient stay preceding a SNF admission is retroactively denied, “Does the SNF get denied, as well, for the stay?” She also asked, “Is the beneficiary liable for payment?”

I presented these questions to Ron Orth, who is President of Clinical Reimbursement Solutions, LLC ( Ron is a long-term care reimbursement expert. Here is Ron’s response:

In short, yes, if the inpatient hospital stay is found to not be medically necessary then the resident would not have qualified to use their SNF benefits as they would not have met the technical criteria of a 3-day qualifying hospital stay.

The FI could recoup payment for any SNF stay if they make the connection between the denied hospital stay and the fact the individual was also covered under the Part A SNF benefit.

The Limitation on Liability rules would not apply since the resident did not meet the technical criteria to be covered and a SNF ABN was not required: - Technical Exclusions
(Rev. 1, 10-01-03)
With the exception of such qualifying technical exclusions as are provided under H§§1861(i), 1861(s)(2)(D), 1861(w)(1)H, and H1888(e)(2)(A)(i)H; viz., an individual being furnished post-hospital extended care services while a resident in a skilled nursing facility, if Medicare is expected to deny payment for an item or service which is a Medicare benefit because it does not meet a technical benefit requirement (e.g., SNF stay not preceded by the required prior three-day hospital stay), a SNFABN should not be given. (See H§90H, “Form CMS-20007 NEMBs.”)

The NEMB form mentioned above is an optional form and is not required. I think the issue that will come up is that under Medicare SNF COP, a SNF is to notify the beneficiary when they may be responsible for non-covered services, this is separate from the LOL regulations.

This was an excellent question and, I am sure, one that will need to be addressed if in fact we do see an increase in hospital denials affecting the SNF stay.

As the permanent RAC program begins to roll out this month, this could be a significant issue for SNFs, including hospital-affiliated SNFs and SNFs owned by integrated health systems.

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