CMS Offers Hospitals New Medicare Appeals Option

Another CMS settlement offer coming in April will apply to claims from $9,000 to $100,000.

Feb. 6—A new settlement offer to resolve outstanding Medicare claims that have been denied on appeal is available for a limited time from the Centers for Medicare & Medicaid Services (CMS). The offer guarantees 62 cents on the dollar for claimed payment and payable on a faster timetable than previously available.

Hospitals and other providers seeking to resolve pending Medicare appeals first must meet tight eligibility standards, according to a CMS summary.

In November, CMS introduced the Low Volume Appeals Settlement Option (LVASO), which took effect Feb. 5. The initiative aimed at clear a huge backlog of Medicare Part A and Part B only claims. To qualify, hospitals, physicians, and other narrowly defined providers must have fewer than 500 already-denied appeals claims pending either before the Office of Medicare Hearings and Appeals (OMHA, the third stage of the Medicare appeals process) or the Medical Appeals Council (the fourth appeals level) as of Nov. 3, 2017, with no appeals seeking more than $9,000 in individual claim amounts.

In 2014, the American Hospital Association (AHA) and three hospitals filed a lawsuit against CMS to force it to reduce the Medicare appeals backlog at the Administrative Law Judge (ALJ) level, alleging that CMS was violating the Medicare Act that set a 90-day limit for appeal resolution.

While CMS agreed the delays were excessive, it pointed out that ALJ workloads had dramatically increased and would require more funding to cut the backlog. A U.S. district court judge in Washington, D.C., ordered CMS to clear the backlog by 2021. CMS appealed, protesting the timetable would be impossible to achieve. The U.S. Court of Appeals for Washington issued a decision agreeing with CMS, but remanded the case back to the district court.

Assessing the Option

Matthew Fischer, a former CMS attorney now in private practice in Delray Beach, Fla., said qualifying hospitals will get 62 percent return on their claims quickly, “as opposed to waiting, perhaps for years, for an appeals decision that could potentially give even less.”

Sandra Wolfskill, director of healthcare finance policy for revenue cycle and MAP for HFMA, said the latest CMS settlement followed previous settlements.

“This one targets a very specific population,” Wolfskill said in an interview. “So we’re probably talking about primarily low volume ambulatory lines of business, emergency room, outpatient visits, durable medical equipment, physician services and supplies.”

“The payment offer is not unreasonable, but you are giving Medicare an additional discount,” she said. “You have to ask ‘Am I going to be better off taking the settlement and stop spending resources on these appeals or do I want to continue the appeal process with the belief that I will prevail at a higher return?’”

Healthcare finance executives should know that beyond the Nov. 3, 2017 deadline for denied claims, there are two filing timelines based on the hospital NPI number, Wolfskill noted. Healthcare organizations with even-numbered NPIs must file from Feb. 5 to March 9, while appellants with NPIs ending in even numbers must file between March 12 and April 11.

“The offer won’t go on indefinitely,” she said. “Providers must file their expression of interest in the correct time frame to get into the program.

The settlement offer is 62 percent of the net Medicare allowed amount, not 62 percent of the billed claims, noted Wolfskill.

Jennifer Nelson Carney, a healthcare attorney with Bricker & Eckler specializing in Medicare payment appeals, said knowing the slow pace of the current appeal process and the size of the appeals backlog, hospitals “may decide that getting 62 percent of the value of those claims is a good deal. There is no guarantee at the [ALJ] level. So it’s a question of whether they can afford to wait for something that is not a given, or take the 62 percent and get paid sooner.”

Other Options

Carney said a few years ago there was a perception that hospitals were very successful in prevailing in these appeals.

“But we’re hearing more frequently that’s not the case. If the winning percentage is going down and you don’t know how long you must wait—we have clients with pending appeals from 2014—if I knew I could get three-fifths of it now I might take it,” Carney said in an interview.

She pointed out that CMS also is directing OMHA to expand its alternative dispute resolution, the Settlement Conference Facilitation (SCF) program. SCF offers hospitals and other eligible providers with more than 500 denied eligible Part A and Part B appeals over $9,000 (none larger than $100,000) to resolve claims. It is separate from the Low Volume Appeals Option. This option becomes available April 18. Details will be posted on the CMS website.

Hospital finance executives still are assessing whether they will qualify for the settlement offer.

Michelle Carrothers, vice president of strategic reimbursement for Peoria, Ill.-based OSF Healthcare, said her 13-hospital system looked into the Low Volume settlement and concluded it lacked sufficient claims to participate.

Ray Bradley, the director of reimbursement for 20-hospital Bon Secours Health System headquartered in Marriottsville, Md., said that system recently cleared its appeals and is unlikely to participate in the new CMS settlement option.

“Otherwise we would absolutely be interested,” Bradley said in an interview. “These cases get hung up so long in the appeals process that clearing them is something we’d definitely consider.”

Mark Polston, a healthcare attorney with the Washington office of King & Spalding, said it’s unclear whether large urban hospitals and health systems would have fewer than 500 appeals per NPI.

“Many hospitals have more than one NPI, so that could be a limiting factor. I think it’s a good thing for CMS to do and it definitely offers a reimbursement opportunity for my clients and could potentially be a good thing for them,” Polston said in an interview.

Polston a former CMS litigation chief, said receiving 62 percent of the dollar amount owed without any haggling has advantages.

“That’s up to $2.7 million and avoids further administrative costs of appeals,” Polston said. “In addition, CMS will refund any interest providers have paid at the ALJ level and providers get rid of a large volume of appeals they’ve been pursuing for years.”

Polston said if CMS wants to reduce further its claims backlog, it could authorize those negotiating settlements to settle for more than the 62 percent offer, which he called “a take it or leave it proposition.”

More information on the Low Volume Appeals Settlement Option is available at the CMS website. CMS will host a Feb. 13 call on the logistics of the settlement process.

Mark Taylor is a freelance writer based in Chicago.