Dust Settling on Medicare Settlement

Tuesday afternoon, CMS held what it described as its “first” provider conference call regarding its offer to settle inpatient status claims for 68% of the allowable payment. As frequently happens with these calls, there were only a few new concrete details or clarifications that came out, but they are worth noting:

  1. Per CMS, a claim will be eligible if it was denied “at any point in the appeal process” based on the allegation that an outpatient setting would have been appropriate. The specifically cited example was a case in which the initial denial was for the inpatient admission, but a subsequent contractor conceded the service was inpatient-only but alleged the procedure was not necessary at all. Not only did CMS confirm that this claim would be considered eligible based on the initial denial, but CMS also made clear that the inverse is true, as well. So, according to CMS, a claim initially underpaid based on a DRG downcode, for example, that was then denied in full after an inpatient status review, is also eligible.
  2. CMS repeated its “all-or-nothing” statement – a hospital must choose to settle all or no eligible claims, not settle some and continue appealing others. CMS added the proviso that it will be adding eligible claims the provider doesn’t report. While this failsafe is reassuring in theory, the practical reality is that CMS and its contractors will likely see an overwhelming number of claims on spreadsheets, so it will be in the provider’s interest to make sure every claim that might be eligible is on the list.
  3. Perhaps most importantly since one of the virtues of settlement is a quicker resolution, CMS indicated that it expects that MACs will be able to review a provider’s eligible claim spreadsheet and provide a response within 30 days of the spreadsheet’s submission, and the provider then has 14 days to accept or respond to CMS’ eligibility determination. At that point, payment for the confirmed eligible claims is due within 60 days.

Theoretically, then, a provider could have money in the bank within 90 days of sending its list. It is worth remembering, however, that this entire settlement issue arose because CMS and its related entities were so woefully underprepared for the deluge of appeals in the RAC era. An ALJ decision required by law to be issued within 90 days now takes years. All appeals for claims submitted for settlement are stayed throughout the determination process. So, if CMS again has underestimated the response, providers could again be left waiting while the paperwork shuffles through. The silver lining to that cloud is that a stay is exactly what it sounds like: If the hospital later withdraws outstanding claims from the settlement process, they resume their appeals where they left off on the day the spreadsheet hit CMS’ inbox.

Again, as always, a lot of unanswered questions remain, thanks to more than a few “We’ll get back to you” pledges from CMS. We’ll certainly keep you posted.