CMS of­fers deal in lieu of ap­peal

Modern Healthcare - - NEWS - By Bob Her­man

The CMS has made a tempt­ing of­fer to hos­pi­tals as a way to clear its heav­ily back­logged Medi­care ap­peals process, and many may take it to save time and money. But the deal does noth­ing to change a process that has be­come so badly bogged down that sev­eral hos­pi­tals and their trade group are su­ing the gov­ern­ment over the lag.

On Aug. 29, the CMS said it would pay hos­pi­tals 68% of in­pa­tient-sta­tus claims lin­ger­ing at var­i­ous stages within the Of­fice of Medi­care Hear­ings and Ap­peals. That of­fice cur­rently has a twoyear pileup of unan­swered ap­peals. Only acute-care and crit­i­cal-ac­cess hos­pi­tals are el­i­gi­ble for the pay­ment.

In re­turn, providers must with­draw their ap­peals. And it’s an all-or-noth­ing of­fer: Hos­pi­tals can’t choose to set­tle some claims and pur­sue ap­peals on the rest. Once hos­pi­tals turn in their doc­u­men­ta­tion and re­ceive ap­proval, the CMS says it will cut them a check within 60 days.

Hos­pi­tals ap­peal claims when they dis­agree with a de­ter­mi­na­tion from one of Medi­care’s four re­cov­ery au­di­tor con­trac­tors. The RACs, which are paid a fee from Medi­care to find im­proper pay­ments, pre­dom­i­nantly re­view hos­pi­tals for short in­pa­tient stays that sup­pos­edly should have been billed at lower out­pa­tient rates.

The set­tle­ment looks to be costly for the gov­ern­ment in the short term. As of March 31, the to­tal value of hos­pi­tals’ ap­pealed claims ex­ceeded $1.8 bil­lion, ac­cord­ing to the Amer­i­can Hos­pi­tal As­so­ci­a­tion. Data from the as­so­ci­a­tion and HHS vary on their es­ti­mates of how many hos­pi­tal ap­peals in­volve dis­putes over whether a pa­tient was ap­pro­pri­ately ad­mit­ted. But the set­tle­ment of­fer is likely to pay hun­dreds of mil­lions of dol­lars to providers if a sig­nif­i­cant num­ber of them take the deal.

For many hos­pi­tals, it could be too good to pass up. Mil­lions of re­im­burse­ment dol­lars are tied up in ap­peals for in­di­vid­ual hos­pi­tals and sys­tems, and ac­cept­ing par­tial pay­ment would al­le­vi­ate some fi­nan­cial un­cer­tainty. Or­ga­ni­za­tions and state hos­pi­tal as­so­ci­a­tions con­tacted for this ar­ti­cle said they were aware of the CMS deal but were

“The back­log of ap­peals is un­sus­tain­able. You can­not con­tinue the RAC pro­gram with­out com­ing to some res­o­lu­tion on the ap­peals process.” EMILY EVANS, REG­U­LA­TORY AN­A­LYST OB­SID­IAN RE­SEARCH GROUP

not yet sure what they would do.

“If it comes at a pretty good pay­ment (for an in­di­vid­ual hos­pi­tal or sys­tem), it makes a lot of sense,” said Chris Cross­white, a health­care lawyer with the firm Duane Mor­ris.

For ex­am­ple, Baxter Re­gional Med­i­cal Cen­ter, a 209-bed hos­pi­tal in Moun­tain Home, Ark., had $4.6 mil­lion tied up in the Medi­care ap­peals process as of De­cem­ber 2013. Tak­ing the set­tle­ment would yield $3.1 mil­lion from Medi­care. Covenant Health, a nine­hos­pi­tal sys­tem based in Knoxville, Tenn., is wait­ing on more than $7.6 mil­lion in con­tested claims. Covenant would re­ceive almost $5.2 mil­lion with the deal. Rut­land (Vt.) Re­gional Med­i­cal Cen­ter, a 139-bed fa­cil­ity, has almost $600,000 pend­ing in Medi­care’s ap­peals court.

All three of those providers, along with the AHA, are also plain­tiffs in a suit against HHS over the is­sue. They sued HHS in May, de­mand­ing the gov­ern­ment abide by the 90-day statu­tory dead­line to de­cide hos­pi­tals’ Medi­care ap­peals. Hos­pi­tals typ­i­cally wait 16 months for an ap­peal hear­ing, ac­cord­ing to statis­tics from 2013, and they wait even longer for a decision.

Rick Pol­lack, an ex­ec­u­tive vice pres­i­dent at the AHA, said he doesn’t be­lieve the of­fer would ex­ist if it weren’t for the lit­i­ga­tion. The CMS has been asked to re­spond to the AHA’s law­suit by Sept. 11. The AHA has con­sulted with its le­gal team and de­ter­mined it will keep its law­suit de­spite the CMS pro­posal.

Pol­lack ac­knowl­edged the deal could pro­vide re­lief for many hos­pi­tals and health sys­tems, but said the pro- posal was nar­rowly tai­lored over­all and didn’t ad­dress the larger is­sue of ag­gres­sive RAC reviews and an in­ef­fi­cient ap­peals process.

Other in­dus­try ob­servers agreed. “The back­log of ap­peals is un­sus­tain­able,” said Emily Evans, a reg­u­la­tory an­a­lyst with Ob­sid­ian Re­search Group who fol­lows RACs. “You can­not con­tinue the RAC pro­gram with­out com­ing to some res­o­lu­tion on the ap­peals process.”

Another un­ad­dressed is­sue is how the of­fer will af­fect RACs. The CMS did not say if the con­trac­tors would have to re­turn their con­tin­gency fees, which could leave the pub­lic on the hook for those pay­ments.

Hos­pi­tals have un­til Oct. 31 to sub­mit set­tle­ment doc­u­ments. The CMS will host a tele­con­fer­ence Sept. 9 to dis­cuss the of­fer in more de­tail.

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