The SCF process started as a pilot alternative dispute resolution process designed to encourage appellants and HHS to discuss potentially agreeable resolutions to claims appeals at the Administrative Law Judge (ALJ) hearing level of the Medicare claims appeals process. Similar to mediation, the SCF was designed for the parties to reach a settlement and not make determinations on the underlying merits of the claims at issue. Due in part to the success of the SCF, HHS is expanding its scope. There was no argument about the substance of claims in the negotiation, but appellants can submit additional evidence and may submit a position paper.

Unlike the LVA, HHS will not pay claims at a fixed percentage of the Medicare allowable amount. Providers and suppliers should not expect 100 percent of the approved amount to be paid by HHS. The SCF is, as referred to by HHS, a "payment negotiation" where the result will be unique to the circumstances of each appeal. With that said, HHS acknowledged in its FAQs that it should not "expect to pay a negligible amount on the claims at issue if the goal is to resolve the appeals at issue."

Appellants must meet the Eligibility Criteria to take part in the SCF, which include the following:

• The appellant must be a Medicare provider or supplier that has been assigned a National Provider Identifier (NPI);
• The appellant cannot have filed for bankruptcy and/or expect to file for bankruptcy in the future;
• The provider or supplier must not have or have had False Claims Act litigation or investigations pending against them, or other program integrity concerns, including pending civil, criminal, or administrative investigations.

In addition to the appellant Eligibility Criteria, the claims appeals for eligible appellants must meet, among other things, the following requirements:

• The appeals must involve request(s) for ALJ hearing or Medicare Appeals Council (Council) review filed on or before November 3, 2017;
  • With a total of 25 or more SCF eligible appeals pending at OMHA and the Council combined; or
  • Fewer than 25 SCF eligible appeals pending at OMHA and the Council combined, and at least one appeal has more than $9,000 in billed charges;¹
• The request(s) for ALJ hearing and/or Council review must arise from a Medicare Part A or Part B Qualified Independent Contractor (QIC) reconsideration decision;
• All jurisdictional requirements for OMHA or Council review must be met for the eligible appeals;
• All pending OMHA and Council appeals associated with a single NPI and corresponding Provider Transaction Access Number (PTAN) must be included in SCF;
• Appeals must not be scheduled for an ALJ hearing or an ALJ hearing must not have been conducted;
• The amount of each individual claim must be $100,000 or less (for the purposes of an extrapolated statistical sample, the overpayment amount extrapolated from the universe of claims must be $100,000 or less);
• Appeals must not be involved in OMHA's Statistical Sampling Initiative; and
• Appeals must not involve payment disputes (e.g., the appellant was paid as billed, in full, by the contractor, but the appellant believes the fee schedule or contractor price amount is insufficient payment); appeals arising from down coding of claims are eligible for SCF.

For a full list of the claims appeals Eligibility Criteria, refer to HHS's website. Additionally, HHS published a helpful resource from its open door call on the SCF that describes the program and corresponding process, available here, as well as a detailed set of FAQs, available here.

HHS offers an "SCF Express" option as part of the expanded SCF process. Once an appellant is accepted into the SCF Express program, HHS will provide a settlement offer based on preliminary data available to HHS. The SCF Express does not require any settlement conferences or further negotiation, and HHS will not conduct a medical review of the claims appealed. The appellant must respond to the settlement offer within seven calendar days of the date on the Express Settlement Notice by signing the settlement agreement or declining the SCF Express option. If the appellant elects not to accept the SCF Express option, the appellant will continue through the settlement conference process as normal. If a settlement agreement is not reached during the SCF process, the appealed claims return to their prior place in the OMHA docket.

Implications for Providers and Suppliers

The expansion of the SCF is only the most recent change to the Medicare claims appeals process. Previously, HHS announced the LVA option and published a Final Rule revamping the appeals process that included significant changes, such as making select decisions by the Council precedential and allowing senior attorneys to act as "Attorney Adjudicators" when handling certain appeals. Because some estimates project it would take ten years or more to resolve the already-filed appeals at the ALJ hearing level, providers and suppliers should stay tuned for whether these efforts, including the SCF Express option, make an impact on the backlog of appeals.

Appellants must have realistic expectations as they approach the "settlement" process. CMS is the payor and its employed staff are the "negotiators." CMS appreciates that the settlement process is attractive to providers as a cost savings mechanism (no labor or legal costs) and because of the time value of money. CMS's offers may be expected to reflect that. There is no independent assessment of the claims at this level. We anticipate that CMS will review reconsideration decisions at the second level of appeal to see the nature of the denials and the bona fides of the provider. Beyond that, there is little pretense that the settlement is based on substance or medical necessity.

¹ OMHA published a PowerPoint for its Medicare Learning Network Event on May 22, 2018, that includes these eligibility criteria for the SCF. However, as of this article's publication, HHS's website states appellants must have a "total of 500 or more appeals pending at OMHA and the Council combined . . . or . . . any number of appeals pending at OMHA and the Council that each have more than $9,000 in billed charges." It appears OMHA is still in the process of updating its materials on HHS's website regarding the SCF, and this article relies on the most recent information on the eligibility criteria from OMHA's PowerPoint.

Reviewed by Leslie Demaree Goldsmith