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Medicare Claim Appeals Settlement Offered

Medicare Claim Appeals Settlement Offered


Sept. 3—In the face of an increasingly strained Medicare claim appeals process, Medicare is offering to settle many of the thousands of hospitals’ pending appeals.The Centers for Medicare & Medicaid Services (CMS) announced recently that it would offer 68 percent of the net payable sum that most hospitals had appealed or planned to appeal of patient status claim denials by Medicare contract auditors.

The settlement offer aimed to “quickly reduce the volume of patient status claim denials pending in the appeals process,” according to a CMS announcement.

The settlement offer was extended to any acute care hospital or critical access hospital (CAH), while CMS deemed ineligible psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children’s hospitals.

The settlement offer applies to inpatient-status claim denials by Medicare contractors on the basis that services may have been reasonable and necessary but treatment on an inpatient basis was not. Such cases must have had admissions before Oct. 1, 2013. Hospitals that opt to settle must settle all such pending appeals. Settlement requests are due by Oct. 31, although extensions are available.

The settlement may exclude hospitals with pending False Claims Act litigation or investigations.

“CMS appears to be making an effort to remedy the backlogs it has created through the RAC program,” said Chad Mulvany, director of healthcare finance policy, strategy and development for HFMA. “However, solving the backlog without addressing the root problem is only a Band-Aid solution.”

CMS needs to both work with the provider community to better define short stays and hold their contractors—not just RACs—accountable for their errors, such as when they deny medically necessary services, Mulvany said. Most importantly, this offer does nothing to resolve the higher costs beneficiaries face when a RAC subsequently denies a stay that would have otherwise qualified the patient for medically necessary skilled nursing facility care.

Mulvany said each qualifying organization will need to evaluate the offer and see if it makes sense based on the mix of cases that qualify for settlement and the organization’s historical success rate appealing cases where the inpatient setting was challenged.

CMS plans to spell out further details of the offer in a Sept. 9 national provider call.

Many Cases Affected

The backlog of as many as 800,000 claims, according to published reports, has resulted in hospitals facing waits of up to 18 months to resolve their cases.

The American Hospital Association and three hospitals filed a federal lawsuit May 22 to compel the U.S. Department of Health and Human Services (HHS) to meet statutory deadlines for timely review of Medicare claims denials.

The lawsuit followed the revelation at the end of 2013 that a rapidly growing appeals backlog of almost 460,000 claims had led the CMS to suspend appeals of denied payments for hospitals. Administrative law judges for the U.S. Department of Health and Human Services—the third level of Medicare appeals of findings by recovery audit contractors—announced they would not accept new appeals for at least two years due to the backlog.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.

Publication Date: Wednesday, September 03, 2014

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