Majority of Hospitals Ready to Settle for 68-Percent

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Original story posted on: October 29, 2014

With tomorrow’s deadline fast approaching for hospitals to participate in the Centers for Medicare & Medicaid Services (CMS) 68-percent settlement offer, 58.4 percent of RACmonitor readers are indicating that they would opt to accept the offer rather than pursue other settlement offers available from CMS.

The survey, conducted by RACmonitor last week, revealed that 31.5 percent of respondents are toughing it out and will not participate in either the settlement conference facilitation pilot nor the statistical sampling initiative – two of the three options put forth by CMS in an effort to reduce the volume of inpatient status claims pending in the appeals process. 

Settlement Offer via Responses  

Statistical Sampling Initiative:  2.1%
Settlement Conference Facilitation Pilot:  0.8%
68-Percent Settlement Offer:  58.4%

The survey also revealed that 6.3 percent of respondents were not participating in any offer from CMS, while 4.62 percent were undecided. Of those who indicated that they would not be participating, 15.1 percent noted that they have been successful at the ALJ level and are confident that they will “get more money” if they continue to appeal (though acknowledging that they will have to wait longer for an decision to be rendered).

Sending a Message to CMS

In describing why they would not be participating, 3.8 percent of such respondents felt that the 68-percent settlement offer was not a “fair settlement amount,” with several noting that they might have participated had the amount been higher. Interestingly, 5.5 percent declined to participate because they wanted to send “a message to CMS” that the RAC system is unfair and that in accepting to participate would be a recognition that they thought the RAC were doing “a good job.” 

Dollars at Risk 

The survey also asked respondents to report how much money was at risk for their facility – and there was a wide range, with some reporting less than $100,000 and some reporting up to $25 million dollars.

“There was not a very significant difference in the dollars associated (with) outstanding appealed claims between those who were choosing the 68-percent settlement and those who were not; $1.2 million and $1 million, respectively,” senior healthcare analyst Frank Cohen told RACmonitor. “What I did notice, however, was that those respondents who reported outstanding claims values at the higher end of the scale (in excess of $5 million) tended more towards not settling – and the main reason was that they either had positive experiences in the past of exceeding a 68-percent reversal rate or were confident that they would do better for whatever other reasons.”

The survey also asked respondents to indicate the level at which they were in the appeal process. Nearly 61 percent reported that they were waiting for the scheduling of a hearing at the administrative law judge (ALJ) level, whereas 15.3 percent are scheduled for an ALJ hearing.

Appeal Level

Reconsideration:  3.4%
Re-determination:  2.5%
Hearing is scheduled:  15.1%
Waiting for a hearing:  60.9%
Other:  18.1%

In a “Medical Learning Network (MLN) Connects” issued Aug. 29, CMS announced that it would offer acute-care and critical access hospitals (CAHs) an administrative agreement to resolve their pending appeals and waive their rights to request an appeal in exchange for what the agency described as a “timely partial payment of 68 percent of the net payable amount.”

In the document, CMS went on to note that it “encourages hospitals with patient status claim denials currently in the appeals process to make use of this administrative agreement to alleviate the burden of current appeals on both the hospital and Medicare system.”

About the Author

Chuck Buck is the publisher of RACmonitor and the executive producer and program host for Monitor Mondays.

Contact the Author

cbuck@panaceainc.com

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PROGRAM NOTE: 

Senior healthcare analyst Frank Cohen appears on Monitor Mondays this coming Monday, November 3, 10 AM ET to provide a look behind the numbers. Register to listen.

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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