Policy & Regulation News

Texas legislator asks Medicare to retract billing settlement

By Elizabeth Snell

- Typically, settling disputed inpatient billing claims is seen as a positive thing. However, the chairman of the House Ways and Means Committee’s health panel believes that Medicare’s current plans to do so could result in the overcompensation of hospitals.

The Center for Medicare & Medicaid Services (CMS) has proposed to pay 68 cents on the dollar if hospitals drop appeals of inpatient billing claims that auditors rejected after determining care should have been delivered on an outpatient basis. According to Rep. Kevin Brady (R-Texas), paying 68 percent of the maximum amount a hospital could recover is far more than the hospital would receive under the typical outpatient-level reimbursement. Brady wrote his concerns in a letter to Department of Health & Human Services (HHS) Secretary Sylvia Burwell.

“How can the Committee ensure that this settlement is in the best interest of the limited resources available in the hospital insurance Trust Fund?” Brady asked. “How can hospitals be sure this rate is reflective of current reimbursement standards in either of CMS’ inpatient or outpatient prospective payment systems?”

How HHS has statutory authority for this settlement process is also something that Brady questioned. Specifically, he said that HHS needs to provide a better explanation for how it has authority under the Federal Claims Collection Act to offer this settlement. The Act in question gives authority to settle hospital appeal of claims for inpatient services that CMS contractors have determined should have been billed and paid as hospital outpatient services, Brady wrote.

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  • “It is unclear how the HHS-referenced statute and its accompanying regulatory citation provide the necessary authority as they pertain specifically to overpayments while the hospital’s appeals pertain to a determination of a lack of medical necessity and, thus, non coverage.”

    Moreover, Brady said that it was shocking to first hear about the new settlement policy in the news. The announcement was posted on the agency’s website on a Friday afternoon before a holiday weekend, he said, which even the New York Times noticed as an interesting move. Brady claimed that his staff asked CMS about the development and authority for a settlement process numerous times and was never given “satisfactory responses.”

    Brady explained that CMS’ “all or nothing” approach toward settling hospital claims is particularly troubling. Every discharge is unique and the circumstances that apply in one case do not necessarily hold true in another, he said.

    Instead, Brady wants CMS to work with Congress to develop “a fair, transparent and conclusive settlement process that upholds the best interest of beneficiaries, providers and taxpayers.”

    As of Wednesday, CMS had no direct comment on the letter, according to Law360. An agency spokesman repeated the agency’s prior statement about the plan and told the news source he was unable to provide an estimate of the settlement’s total potential price tag.