Updated on: November 29, -0001

The 68-Percent Settlement Offer: Why Some Did and Did Not Accept

By
Original story posted on: November 5, 2014

In reading over the recent “CMS (Centers for Medicare & Medicaid Services) Settlement Agreement Offers” published by RACmonitor.com, I was actually surprised that more folks weren’t opting for the 68-percent solution to the current appeals backlog. I was, however, even more pleased than I was surprised. I think the settlement offer is a terrible deal for providers, and even though the survey revealed that there was not a huge difference in outstanding dollars between those who would take the deal and those opting out, it was interesting that the higher the outstanding dollar amounts, the less likely it was that the organization would take the settlement.

I believe that a bit of the answer to all of this lies in the reasons given by the respondents for not participating. Around half felt that they could do better, either based on prior experience or the fact that others had reported success. Think about it: if the government was willing to settle for 68 percent, then it would make sense that most practices would come out better with an appeal. One problem is that audits cost money, win, lose, or draw. As such, there are those that will choose to settle rather than end up in the red anyway because the cost of the appeal might exceed the cost of recovery. This could be easily resolved by forcing the Recovery Auditors (RACs) to pay the practice for the cost of the audit on those findings that are reversed back in favor of the provider.

What else I found interesting was the fact that 61 percent of those who were appealing were still waiting just to schedule an administrative law judge (ALJ) hearing – and then another 15 percent had a hearing scheduled but were still waiting for the hearing to occur. Remember a few weeks ago, when the RACs announced that the reversal rate was only 18.8 percent? Well, here is that lie uncovered; it was only 18.8 percent because 76 percent of those appealing had not yet had the opportunity to have their cases heard.

I was particularly impressed by those who stated that they would not take the settlement because they were not willing to let CMS get away with this type of shenanigan. Anyone who has raised kids knows that rewarding bad behavior only produces more bad behavior. Consider this: the 68-percent settlement makes clear that CMS is admitting that the RACs are wrong two-thirds of the time, but rather than fix that problem through more appropriate disincentive programs or greater oversight, they just put more Band-Aids on a major hemorrhage.

I have a great deal of respect (and sometimes sympathy) for Chief Administrative Law Judge Nancy J. Griswold and the great work done by the ALJs under her leadership. It is simply wrong that Congress, rather than provide her with the resources necessary to fix the backlog, has given the U.S. Department of Health and Human Services (HHS) permission to break the law and deny due process to tens of thousands of healthcare providers. Wouldn’t it be better just to address the problem head-on?

I guarantee that if a provider were to do to CMS what CMS is doing to the providers, there would be a much higher price to pay.

About the Author

Frank Cohen is the Director of Analytics and Business Intelligence for DoctorsManagement. He is a healthcare consultant that specializes in data mining, applied statistics, practice analytics, decision support, and process improvement. Mr. Cohen is also a member of the National Society of Certified Healthcare Business Consultants (NSCHBC.ORG). 

Contact the Author

frank@frankcohengroup.com

Comment on this Article

editor@racmonitor.com

 

This email address is being protected from spambots. You need JavaScript enabled to view it.