Special (Limited) CMS Offer to Settle Claims on Appeal

With little fanfare just before the Labor Day weekend, CMS announced a program in which it would enter into administrative agreements with eligible providers in exchange for the providers’ withdrawal of pending appeals (“Settlement Process”). This announcement follows massive backlogs in administrative appeals resulting from retroactive denials of inpatient claims by Medicare contractors, including recovery auditor contractors (“RAC”), as well as a lawsuit brought by the American Hospital Association challenging these delays. Under the Settlement Process, CMS is willing to pay “68% of the net allowable amount” for eligible claims within 60 days. According to CMS, eligible providers should submit requests to participate in the Settlement Process by October 31, 2014, and eligible providers may file for an extension of time to request a settlement if they are unable submit requests by the end of October. Although this Settlement Process holds promise for certain providers, it does not apply to all providers or all claims.

Eligible Providers

Only acute care hospitals and critical access hospitals may participate in the Settlement Process. The following providers are not eligible to participate:

  • Cancer hospitals;
  • Children’s hospitals;
  • Inpatient rehabilitation facilities;
  • Long-term care hospitals; and
  • Psychiatric hospitals that are paid under the inpatient psychiatric facility prospective payment system.

CMS may exclude eligible providers from participating in this Settlement Process if they are subject to pending False Claims Act litigation or investigations.

Eligible Claims

Only the following claims are eligible:

  • Claims for dates of admissions prior to October 1, 2013;
  • Claims for patients that were not Medicare Part C enrollees; and
  • Claims that are pending appeals of inpatient-status claim denials, which were rejected by Medicare contractors, including RACs.

An eligible provider may select the eligible claims it would like to settle, while continuing to appeal certain other claims.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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