However, when Part A reimbursements are denied or rescinded, AHA says, CMS refuses to allow hospitals to re-bill the care under Part B.
"They have put in their policy manual that you are not allowed to re-bill. Period," Umbdenstock says. "They determined that it was medically necessary, but shouldn't have been billed under Part A. We're saying 'if it is medically necessary we should be able to bill under Part B' and they are saying 'no you can't bill.'"
The suit states that "CMS has made no effort to articulate a statutory justification—or any justification—for this policy. Nor could it. Put simply, when a hospital furnishes reasonable and medically necessary items and services, if payment cannot be made under Part A, it must be made under Part B."
AHA says that in the first quarter of 2012, hospitals reported that they were forced to pay $236 million for medically necessary inpatient items and services that RACs later determined should have been provided in an outpatient setting.
Estimated Costs: 'Hundreds of Millions'
AHA General Counsel Melinda Hatton, reached by phone Thursday, said that it's hard to determine exactly how much the CMS denial policy is costing hospitals. "We expect it is in the hundreds of millions but we just don't know the exact number," she said.
"Some hospitals chose not to appeal claims that should and could have been paid under Part B. There is not a good way for us to know the exact number other than that it is large and it is growing."
Joining AHA in the suit are: Missouri Baptist Sullivan Hospital, in Sullivan, MO; Munson Medical Center, in Traverse City, MI; Lancaster General Hospital, in Lancaster, PA; and Trinity Health Corp., in Livornia, MI.