Q&A: Billing on TOB 121

Q: If we're not using condition code W2 but we're billing on the type of bill (TOB) 121 after we received a denial, are we paid less than if the W2 would have been used?

A: Yes, you are being paid less than you would if you followed the process for billing with condition code W2. In addition to billing inpatient Part B for a denial or self-denial, the hospital may also be billing inpatient Part B if the patient exhausted their Part A benefits, has no entitlement to Part A benefits, or receives preventative services only covered under Part B. If the reason for billing inpatient Part B is that the case lacked medical necessity, reflected in a denial or self-denial, there is a broader set of items and services payable, including almost everything payable on an outpatient Part B claim. On the other hand, if one of the other circumstances applies for billing inpatient Part B, then only a limited set of services is payable. Typically, in these other circumstances, only ancillary (e.g., diagnostics) or preventative services are payable, and most minor procedures or surgeries are not payable.

In order for the claims system to determine which services are payable, either the limited set or the more expansive set for medical necessity denials, the edits are programmed around the condition code W2. Without it, the system assumes the reason for the inpatient Part B claim is one of the circumstances where limited payment is available and will reject services in a set of unallowable revenue codes. With condition code W2, the system will process the claim under the edits that allow nearly all the services payable on an outpatient Part B claim.

This Q&A was answered by Kimberly Anderwood Hoy Baker, JD, regulatory specialist for HCPro.  

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