Updated on: June 22, 2012

Collecting Underpayments, Acting Like RACs

By
Original story posted on: August 31, 2011

tim-powellYour Medicare Advantage plans almost overnight all have tried to add a new wrinkle to collecting on underpayments for non-contracting plans. They want to pretend they are Medicare - well, kind of.  What do I mean? Well, Medicare Advantage plans are required to pay Medicare rates as a "floor" if they are not contracted with you. As most of you know, Medicare pays a base payment amount plus an add-on for certain providers, and the program reimburses claims with those add-on payments through an electronic process.

 

These add-on payments include Disproportionate Share Hospital (DSH) and Indirect Medical Education or (IME) payments. Medicare settles with hospitals for these add-on amounts through the cost report process. Medicare also pays for bad debts on the cost report. Medicare regulations include a 120-day window during which to dispute the payment amount of claims, but since add-on payments by Medicare amount to estimates, disputes tied to such payments can be handled through the cost report. In addition, providers with disputes on claim payments can ask to reopen them at any time during a three-year period.

 

Non-contracting Medicare Advantage plans are taking the perspective that even though they are not Medicare, they can impose the same 120-day limit on payment disputes. Furthermore, they are arguing that the payment factors for add-on payments are included in the same period.  They also are arguing that providers have no reopening rights for claim issues.

 

What are the rules for non-contracted plans?

 

CMS has published a supporting document for "out-of-network" payments at:

http://www.cms.gov/MedicareAdvtgSpecRateStats/downloads/oon-payments.pdf

 

In part, CMS via this document says:

 

"Coordinated care plans, such as HMOs and PPOs, and PACE plans are generally required to reimburse non-contracting providers at least the original Medicare rate for Medicare-covered services. PFFS plans are permitted to establish their own fee schedules and balance-billing rules, which, in some cases, differ from original Medicare payment rates and balance-billing rules. Although a non-network PFFS plan must reimburse all providers at least the original Medicare payment rate, a provider treating an enrollee of a PFFS plan will need to carefully examine the fee schedule and balance billing rules of a PFFS plan to decide if the terms and conditions of participation warrant a decision to treat and be ‘deemed' a contracting provider. A decision to treat a specific PFFS plan enrollee is ad hoc and does not require the provider to treat other PFFS plan enrollees."

 

But the devil is in the details, as they say. While MA plans are required to pay Medicare as a floor, they define that floor.

 

If Medicare Advantage plans are Medicare, what rights do providers have?

 

When disputing Medicare reimbursement payments, providers can:

 

  • Dispute DSH and IME amounts included in the calculations by adjusting payment factors in filed cost reports up to the date that the reports are audited.

 

  • Appeal audit findings of add-on amounts within 180 days of cost report settlement.

 

  • Request reopening of claim payments for a four-year period.

 

o   § 405.980 Reopenings of initial determinations, redeterminations, and reconsiderations, hearings and reviews.(a) General rules. (1) A reopening is a remedial action taken to change a final determination or decision that resulted in either an overpayment or underpayment, even though the final determination or decision may have been correct at the time it was made based on the evidence of record.

o   § 405.986 Good cause for reopening. (a) Establishing good cause. Good cause may be established when (1) There is new and material evidence that (i) Was not available or known at the time of the determination or decision; and (ii) May result in a different conclusion; or (2) The evidence that was considered in making the determination or decision clearly shows on its face that an obvious error was made at the time of the determination or decision.

 

Medicare Advantage plans are arguing that they get to benefit from one small part of the Medicare rules and ignore the rest of the rules to limit your payments. Don't let them.

 

 

About the Author


Timothy Powell, CPA, is president of TP Consulting. Tim began his healthcare career in the early 1980s running audits of some of the largest chain organizations in the country, such as American Medical International and National Medical Enterprises, while working for Blue Cross of California. Tim has consulted, through his own regional consulting firm and the Big 4 firms for more than 30 years. Tim is an accomplished software developer with 20 years of experience writing and selling applications. around electronic billing and claims data. 

 

Contact the Author


tpowell@tp-cons.com

 

To comment on this article please go to editor@racmonitor.com

 

CMS Heat Is On - Hence the RAC Attack


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