The Centers for Medicare and Medicaid Services has announced a major change in how it will reimburse hospitals for treatment of certain Medicare patients.

In the past, Medicare has paid, under Part B, only for a limited set of ancillary services provided to patients admitted to the hospital if a claims review contractor later rules that admission was not medically reasonable and necessary and denies the Part A inpatient claim. Medicare Recovery Audit Contractors routinely overturn previously paid inpatient claims on that basis. The American Hospital Association and four delivery systems in late 2012 sued the government, alleging the practice violates the Medicare Act.

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