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1 AMERICAN MEDICAL ASSOCIATION HOUSE OF DELEGATES

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4 Resolution: 217
5 (A-09)
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7Introduced by: Pennsylvania Delegation
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9Subject: Hospital Systems’ Practices of Reclassification of Place of Service, Opting
10 Not to Bill Medicare for Hospital and Aggressive Denial of Hospital Days in
11 Reaction to Recovery Audits
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13Referred to: Reference Committee B
14 (Monica C. Wehby, MD, Chair)
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17Whereas, Some hospital systems, possibly out of concern over adverse outcomes from
18Recovery Audits Contractors (RAC), are reacting by aggressively denying hospital days, and in
19some cases possibly illegally not even submitting bills to Medicare for patients that are
20hospitalized, but may opt to bill some of the services as outpatient services; and
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22Whereas, RACs link Part A and Part B place of service, (such as outpatient, inpatient, or
23observation status) and hospital systems sometimes shift between inpatient and observation
24status up to the time of a patient's discharge, and have even retroactively opted not to bill
25inpatient services in order to avoid adverse outcomes from RACs; and
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27Whereas, Physicians’ billing services, both attendings and consultants, may not be informed of
28such status changes, therefore putting physicians at risk for denial of claims for legitimate
29services that they have provided either because of lack of matching of their Part B place of
30service with that claimed by hospital systems, or even the inability to link with any Part A service
31when hospital systems opt not to bill Medicare; and
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33Whereas, This creates confusion and unnecessary hassle, and cost to physicians, and may
34result in non-payment for legitimate services provided, and potential adverse actions by RACs;
35and
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37Whereas, Hospital systems' aggressive denial of hospital days, and/or possibly illegally opting
38not to bill for inpatient Medicare services in order to avoid adverse outcomes from RACs, places
39patients in harms way both by possible unanticipated co-payments for services when patients
40are reclassified from inpatient to observation status, and also when they possibly illegally
41reclassify from inpatient to outpatient status in order to avoid adverse outcomes from RACs; and
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43Whereas, Hospital systems' aggressive denial of hospital days, and/or possibly illegally opting
44not to bill for inpatient Medicare services also exposes patients and their families to financial
45liability for skilled nursing home services, due to Medicare’s three-day hospital admission
46requirement; therefore be it
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48RESOLVED, That our American Medical Association work with Centers for Medicare & Medicaid
49Services (CMS) to remove the requirement of linkage of Part A and Part B place of service, both
50for physicians' reimbursements and also as a requirement of Recovery Audits Contractors, and
51report back at the 2009 Interim Meeting (Directive to Take Action); and be it further

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 3 Resolution: 217 (A-09)
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1RESOLVED, That our AMA study and work with CMS to establish policy and/or regulations
2preventing hospital systems from the practice of possibly illegally attempting to avoid adverse
3outcomes from RACs by opting to not bill for inpatient Medicare services, and report back at the
42009 Interim Meeting (Directive to Take Action); and be it further
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6RESOLVED, That our AMA work with CMS to protect patients from adverse outcomes such as
7unanticipated co-pays resulting from hospital systems' reclassification of patients from inpatient
8to observation or outpatient status, and also to protect patients and their families from
9unanticipated skilled nursing home charges that may result from hospital systems' aggressive
10denial of inpatient hospital days in order to avoid adverse outcomes from RACs. (Directive to
11Take Action)
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13Fiscal Note: Implement accordingly at estimated staff cost of $3,056.
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15Received: 05/06/09