November 16, 2016

News Alert: CMS Unveils New Details on the Reopened Hospital Settlement Process

By Andrew B. Wachler, Esq. and Jessica C. Forster, Esq.

  On Nov. 16, the Centers for Medicare & Medicaid Services (CMS) held an MLN Connects national provider call to educate providers and interested parties on the details regarding the recently unveiled 2016 settlement offer on pending appeals.

The call provided background regarding the previous 2014 settlement and an overview of the components of the new settlement. Specifically, CMS announced that beginning Dec. 1, it will allow hospitals to engage in an inpatient claims settlement process. 

CMS will make a payment of 66 percent of the net payable amount of the denied inpatient claims for eligible hospitals that agree to dismiss all associated appeals and accept the settlement as a final administrative and legal resolution.  

CMS also clarified that the providers eligible for the 2016 settlement include acute-care hospitals (including those paid via the Inpatient Prospective Payment System, periodic interim payments, or the Maryland waiver) and critical access hospitals. Facility types that are not eligible to submit a settlement request are include psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children’s hospitals.

Furthermore, CMS clarified that eligible claims for the 2016 settlement include those associated with scenarios in which:

  1. The claim was denied by an entity that conducted a review on behalf of CMS;
  2. The claim was not for items or services furnished to a Medicare Part C enrollee;
  3. The claim was denied based on an inappropriate setting determination (i.e. a patient status denial such that the service might have been reasonable and necessary, but treatment on an inpatient basis was not);
  4. The first day of the admission was before Oct. 1, 2013;
  5. The hospital appealed the denial in a timely fashion;
  6. As of the date of an executed settlement agreement submitted to CMS by the hospital, the appeal decision was still pending at the administrative law judge (ALJ) or the Medicare Appeals Council levels of review, or the hospital had not yet exhausted its appeal rights at the ALJ or Council level; and
  7. The hospital did not receive payment for the service as a Part B claim. 

With regard to the requirement that the appeal must be pending at the ALJ or Council levels, CMS announced during the call that it has concluded there are no eligible claims (i.e. those with days of admission before Oct. 1,2013) pending at the lower levels of appeal. Therefore, those levels are not part of the eligibility criteria.

As opposed to the 2014 settlement, wherein hospitals had to create an initial list of eligible claims for CMS approvals, under the 2016 settlement hospitals will complete an expression of interest form. The form is available online at http://go.cms.gov/HASP2016. Following completion of the expression of interest from, the hospital will email it to CMS at MedicareAppealsSettlement@cms.hhs.gov; the subject line of the email should include the Provider Name-Provider Number (6-digit PTAN) and the expression of interest and must be emailed on or before Jan. 31, 2017. 

Based upon the expression of interest, CMS will generate a list of potentially eligible claims.  CMS then will email a copy of the administrative agreement and a spreadsheet listing eligible claims to the hospital. Following receipt, the hospital will have 15 calendar days to review the spreadsheet of eligible claims for accuracy, sign the administrative agreement, and return it to CMS via the MedicareAppealsSettlement@cms.hhs.gov email address. 

If the hospital finds discrepancies in the spreadsheet, it must complete the eligibility determination request and submit to CMS within 15 calendar days of receipt of the initial spreadsheet. If this occurs, CMS and the hospital will work with the Medicare Administrative Contractor (MAC) to reach a consensus with regard to the claims. In the event that a consensus is not reached, the hospital may either accept the claims as stated by CMS or choose not to proceed with the settlement. 

Following CMS’s approval of the final spreadsheet and countersignature on the administrative agreement, CMS will send both to the hospital’s MAC for processing, final validation, and payment. According to CMS, payment will be made to the hospital within 180 days of the CMS signature on the administrative agreement. There will be a single payment made per hospital provider number or per owner/operator of multiple-setting hospitals. Following payment, the appeals will be dismissed. There will be no notices of dismissal or procedural order of the dismissals received by hospitals. 

During the national provider call, CMS emphasized a number of major changes to the 2016 settlement process compared with the 2014 settlement.  These changes include the following:

  • Providers will submit an expression of interest, and CMS will create a list of potentially eligible appeals, instead of the provider creating the list.
  • Providers will verify the list of potentially eligible appeals compiled by CMS, instead of the provider compiling and submitting a list of claims to CMS for verification.
  • Providers will sign the administrative agreement when they agree to the list and commit to the settlement, instead of signing the agreement first and then deciding to proceed with or abandon the process.
  • The MACs will price the appeals included in the agreement after it has been signed by both parties, instead of pricing the claims up front.
  • There will only be one payment made, instead of two rounds of payment.

Important resources for providers considering the settlement are available at the website http://go.cms.gov/HASP2016. The email address for submissions is MedicareAppealsSettlement@CMS.hhs.gov, and the email address for questions is MedicareSettlementFAQs@cms.hhs.gov.

Finally, CMS addressed a number of questions during the national provider call. The initial questions were received from individuals prior to the call, and CMS had previously prepared answers. During this portion of the call’s question-and-answer session, CMS clarified a number of issues, including that the spreadsheet generated by CMS will not include the price of claims or net-allowable amounts. The pricing will be completed at effectuation by the MAC. 

In addition, CMS clarified that if a provider abandoned the 2014 settlement Process, that provider may still be eligible for the 2016 settlement process. However, if a provider participated in the 2014 settlement process and received payment, all eligible claims should have been included, and therefore, there would be no eligible claims meriting participation in the 2016 settlement process. 

One caller raised an issue regarding the fact that a RAC and MAC had actually identified claims for which demand letters had not been issued at the time of the 2014 settlement process, but since its finalization, the demand letters had been issued. CMS requested that the caller contact CMS directly regarding this issue, because these claims could be eligible for the new CMS settlement, which would contradict CMS’s statement that no claims pending at the redetermination or reconsideration levels of appeal are eligible for the settlement. Providers that believe they have this issue should contact CMS via MedicareSettlementFAQs@cms.hhs.gov to help facilitate inclusion in the new settlement process.

During the call, participants also inquired about a number of other issues, including the rationale for a reduced settlement amount of 66 percent associated with the 2016 settlement process. CMS’s response was that because the claims that were not settled in 2014 continued through the appeals process for those two years, they were an administrative burden on the U.S. Department of Health and Human Services (HHS), thus the reduced settlement amount.

CMS also clarified that unlike the 2014 settlement process, wherein the hospital submitted its administrative agreement with the initial submission of the spreadsheet, the 2016 settlement process begins with the hospital’s expression of interest. The expression-of-interest form submitted by the hospital will not “pend” the eligible claims from moving forward in the appeals process. Only a hospital’s signed administrative agreement, which is filed further into the process, will “pend” the eligible claims.

Furthermore, CMS clarified for a caller and the other participants that any interest that a hospital paid on the alleged overpayments will be refunded to the hospital as part of the settlement. In addition, interest that had accrued, but the hospital had not yet paid, would be adjusted to zero.

Finally, one caller asked an important question regarding the balance of the claims that are settled through the 2016 settlement process that will remain denied on associated cost reports, and the February 2016 final rule mandating the reporting and returning of identified overpayments. The provider asked that CMS clarify in writing that these claims do not mean that a provider must engage in a duty to investigate and identify potential overpayments due to their unique status as settled claims. CMS agreed that it would post a specific FAQ on its website to address this issue. 

Hospitals that believe they are eligible for the new settlement and have eligible claims should carefully review and discuss strategy with their leadership to determine if it would be advantageous for them to engage in the 2016 settlement process.  In addition, hospitals should regularly review CMS’s website for more details on the 2016 settlement process; go online to http://go.cms.gov/HASP2016 for updates, new FAQs, and information regarding upcoming additional national provider calls on this issue. 

About the Authors 

Andrew B. Wachler is the principal of Wachler & Associates, P.C.  He graduated Cum Laude from the University of Michigan in 1974 and was the recipient of the William J. Branstom Award. He graduated Cum Laude from Wayne State University Law School in 1978. Mr. Wachler has been practicing healthcare and business law for over 25 years and has been defending Medicare and other third party payer audits since 1980.  Mr. Wachler counsels healthcare providers and organizations nationwide in a variety of legal matters.  He writes and speaks nationally to professional organizations and other entities on a variety of healthcare legal topics.

Jessica Forster is an associate at Wachler & Associates, P.C.  She dedicates a considerable portion of her practice to defending healthcare providers and suppliers in the defense of RAC, Medicare, Medicaid and third party payer audits.  Her practice also includes the representation of clients in Stark, anti-kickback, and fraud and abuse matters. 

Contact the Authors

awachler@wachler.com

jforster@wachler.com

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