Corporate Compliance

Note from the Instructor: Frequently Asked Questions Posted for the 68% Solution

Medicare Insider, September 16, 2014

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.  
Note from the Instructor: Frequently Asked Questions Posted for the 68% Solution
Last week, CMS hosted an MLN Connects™ National Provider Call regarding the administrative agreement it is offering to acute care hospitals and critical access hospitals (CAHs) to resolve patient status denials and their related appeals with admission dates prior to October 1, 2013. A Frequently Asked Question document was also posted to the CMS Inpatient Hospital Reviews website that provided some clarity to the solution that is being put on the table.
As appeals continue to pile up and hospitals wait for another determination that may lead to payment for their services from months to years ago, the government has offered them what may be called by some a ‘screaming deal’.  According to CMS, any hospital willing to withdraw all of their valid pending appeals for patient status denials will receive 68% of what the net allowable amount would have been for the claims in question. This includes only denials for admissions prior to October 1, 2013, currently in the appeals process-either pending an appeal decision or the provider has not yet exhausted their appeal rights with the MAC, Qualified Independent Contractor (QIC), ALJ, or Department of Appeals Board (DAB). The net allowable amount for each claim includes any add-on payments (i.e. Disproportionate Share Hospital, Indirect Medical Education) the hospital would have received if payment in full was made and after deduction of the patient’s deductible or coinsurance amounts, where applicable.  
CMS is encouraging acute care hospitals paid under the prospective payment system, those receiving periodic interim payments, Maryland waiver hospitals, as well as CAHs paid under a cost-based methodology to seriously consider this offer as a way to “alleviate the administrative burden of current appeals on both the hospital and Medicare system”.  Unfortunately, inpatient psychiatric facilities (IPF) and inpatient rehabilitation facilities (IRF) are not part of this settlement option and CMS did not indicate if these providers would be considered at a later date.  
In Round 1, hospitals will submit their signed Administrative Agreement and proposed spreadsheet of eligible claims/appeals for CMS review. CMS will review and validate the list and then notify the hospital if there are any discrepancies between their list and their contractor’s eligible claims list.  
In Round 2, hospitals will be able to review the discrepancies from the first round validation process. At this point, hospitals will have two choices-resubmit a revised spreadsheet and Administrative Agreement for CMS validation or scrap the entire settlement process and continue with the appeals process instead. If the provider decides to proceed with validation and CMS has signed the agreement, payment will be made through the MAC in one or two lump sum payments within 60 days. The hospital will receive a .pdf file from CMS containing a list of all claims involved in that lump sum payment for their internal accounting purposes.
Here are a few details to keep in mind regarding this settlement process.  
  • CMS has stated that a hospital’s decision to voluntarily settle under this agreement does not indicate “fault or liability” against the providers or CMS for this one time deal.
  • The Recovery Auditor who may have been involved in the revised determination will continue to be paid their contingency fees according to their current contracts without any reduction in their payment.
  • If any of the appeals being settled are part of a larger Zone Program Integrity Contractor or OIG potential fraud investigation, the reviews by those agencies will continue despite a hospital taking this deal.
  • A hospital will not have to submit formal withdrawals for the appeals to the MAC, QIC, ALJ or DAB since the final settlement agreement serves as the request for withdrawal of all eligible claims.
  • The claims will remain as denied in the Medicare system and no claim-level adjustments will take place.
  • Cost reports will remain intact and will not be adjusted for any reason based on this settlement process.
  • The hospital must carefully review the refund requirements or collection process for deductible and coinsurance amounts based on when the Round 1 Administrative Agreement is signed by the provider. In some instances the patient will pay these amounts and in others the amounts will be waived.  
Hospitals will have until October 31, 2014, to submit the required documents for Round 1. An extension can be requested from CMS if the deadline cannot be met. Hospitals who may be considering taking the government up on their offer should act quickly to determine if any of the current appeals should be withdrawn now before the initial Administrative Agreement is signed. This would allow the hospital to bill for expanded Part B services (i.e. TOB 121). In some cases, the hospital may be paid more for the claims than the current 68% offer. For details on the services that are billable under Part B, review the Medicare Benefit Policy Manual, Chapter 6 § 10.1, the Medicare Claims Processing Manual, Chapter 4 § 240, and MLN Matters article SE1333.
This is an ‘all or nothing’ proposition so hospitals need to cautiously approach the table by weighing the costs of continuing to appeal all of the claims in aggregate vs. continuing to wait and hope for payment for patient status denials that may now be several years old. Although this settlement is being touted as a 68% solution to the appeals backlog, the other side of the coin shows that this is a 32% reduction in the overall payment a hospital would have received.
For anyone who missed the call, a recording and transcript will be posted to the CMS website on September 17.

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