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CMS Holds Conference Call on 68% Settlement Offer

On Tuesday, September 9, the Medicare Learning Network (MLN) hosted a Conference Call regarding the newly revealed 68% settlement offer from the Centers for Medicare & Medicaid Services (CMS) for short-stay inpatient status claims. In an effort to ‘more quickly reduce the volume of inpatient status claims’ pending in the appeals process, CMS offered an administrative agreement to any hospital willing to withdraw all of their pending short-stay inpatient status claim denial appeals in exchange for partial payment of 68% of the net allowable amount as long as the date of admission was prior to October 1, 2013 and the claim is either pending appeal or the appeal has been filed and is pending review. In its release, CMS further noted that only acute care hospitals and critical access hospitals are eligible to submit a settlement request; psychiatric hospitals, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children’s hospitals are not permitted to submit a settlement request.

The purpose of the Conference Call was to provide interested stakeholders an opportunity to speak with CMS representatives in order to ask questions and obtain a better understanding of how this settlement process will work. Wachler & Associates healthcare attorneys participated in the Conference Call and came away with a deeper understanding of how this process works, but there are still unanswered questions. First and foremost, submissions for settlement are due by October 31, 2014. If your entity cannot meet this deadline, you may ask CMS for an extension. Additionally, short-stay inpatient status claims pending at any level of the appeals process are eligible to be submitted for settlement.

In sum, eligible claims must also meet four requirements: (1) they must be pending in the appeals process or within the timeframe to appeal; (2) the date of admission for the claim must have been prior to October 1, 2013; (3) the denial must be based on a patient status review; and (4) the claim must not have been previously withdrawn or re-billed for payment under Part B. During the Conference Call participants requested clarification of whether the rebill for Part B must not have been submitted or whether it must not have been paid. CMS indicated that it would provider further clarification on this issue through the Frequently Asked Question (FAQ) page on CMS’ website for hospitals. In agreeing to settle all claims for the 68%, the entity agrees to the dismissal of all associated claims (the entity may not pick and choose which ones to settle) and agrees that the settlement will serve as the final administrative and legal resolution of all eligible claims. However, this resolution does not resolve any potential False Claims Act reviews by the Department of Justice. Additionally, eligible claims include claims from any Medicare contractor so long as the denial was based on a patient status review.

A final point of emphasis pertains to whether interest will be paid under Section 935 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) upon such claims if they are settled. Representatives from CMS indicated that Paragraph 3 of the settlement agreement indicates that payment in full by CMS would not include 935 interest on the claims. If a hospital paid interest on an overpayment (i.e. the hospital prevented recoupment at the earlier stages of appeal, but interested in favor of CMS accrued on the alleged overpayment) during subsequent recoupment of an alleged overpayment, that interest will be included in the net allowable amount that is used to calculate the settlement. If this same interest accrued on the alleged overpayment, but the hospital has not begun to repay any of that interest, then that interest balance will be waived. Finally, if CMS does not make payment on the settlement within 60 days of finalization, interest will accrue and be paid to the entity.

The CMS settlement offer is an enticing offer for hospitals. By accepting the settlement, hospitals will receive reimbursement from the settlement in a much timelier manner than waiting for final adjudication of the appeals. Furthermore, hospitals will be able to conserve the resources required to challenge these denials. However, before choosing to settle, a hospital should weigh the costs and benefits, including calculating the amount of 935 interest the hospital could forego if it accepts CMS’ settlement offer. For further information on this new settlement process please see our past blog post in addition to the CMS’ FAQ Document on the topic and the PowerPoint presentation provided by CMS that accompanied the Conference Call.

If you have any questions regarding this process, or require assistance in pursuing a settlement, do not hesitate to contact the healthcare attorneys at Wachler & Associates, P.C. at (248) 544-0888 or at wapc@wachler.com.