CMS Clarifies Policy on "Reach-Thru" Denials

eduTrax News Service - June 29, 2009.

CMS issued an update dated June 26, 2009, as reported on the AHA website. The update is listed on the CMS site, but is only in the "Overview" section of CMS' RAC website. Click title to read more...

A question often asked during CMS' Outreach Sessions in various states concerns what is often called "reach-thru," referring to what happens when Part A claims filed by hospitals are subsequently denied by a RAC for lack of medical necessity, due to either a lack of (physician written) documentation or an alternative determination about the medical necessity of the service(s) provided, or the appropriateness of the setting in which they were provided (inpatient vs. outpatient). If a hospital's claim for an inpatient stay is denied for medical necessity, many if not all "down-stream" claims are in danger of being denied as well, such as subsequent SNF stays, ambulance services, and even physician E&M services.

The update from CMS clearly states that while "all provider claims types are available for RAC review, at this time," a RAC will not automatically deny claims that are associated with a full inpatient denial. The statement goes on to state that these claims may be reviewed and adjusted.

AHA reports the update as follows:

CMS Update - June 26, 2009: CMS is often asked about the phase-in strategy for RAC reviews. CMS has implemented a phase in strategy by review type. CMS' phase in strategy can be found in the downloads section on the recent updates page. CMS has not put a phase in strategy in place by provider type. All provider types are available for RAC review once provider outreach has occurred in the state. Any reviews completed by the RAC must have been first approved by CMS and posted to the RAC websites. The RAC websites can be found in the RAC contact information document in the downloads section below. CMS expects the first approved new issues to be posted in July 2009.

CMS is often asked about other claim types that may be affected by a full inpatient denial and if the RACs will deny other claim types associated with the inpatient stay, such as physician evaluation and management services. At this time the RAC will not automatically deny claims that are associated with a full inpatient denial. However, these claims may be reviewed individually and there may be a need to fully/partially adjust the claim based on the documentation submitted.

Source: AHA website