- CMS paid nearly $1.47 billion to healthcare providers last year to settle Medicare reimbursement disputes, according to data recently released by the federal agency. The settlements were distributed to 2,022 hospitals to end the appeals process for approximately 346,000 claims.
The federal agency paid the hospitals as part of a 2014 agreement to settle disputed Medicare inpatient claims for patients that were admitted on or before October 1, 2013. With a substantial claims appeals backlog to manage, CMS offered to pay out 68 percent of the net allowable amount of disputed claims, if hospitals agreed to withdraw their pending appeals.
Hospitals included in the settlement agreement received between $198.65 and more than $15 billion to resolve their appeals.
New York-Presbyterian Hospital received the biggest payment, with almost $16 million dollars to settle 1,750 disputed claims. Another five hospitals, including four from New York, received over $10 million for their appealed claims.
CMS developed the 68 percent deal in 2014 to reduce the volume of inpatient claims tied up in the appeals process. The offer was designed to “alleviate the administrative burden of current appeals on both the provider and Medicare,” CMS stated in a FAQ page.
By accepting the settlement deal, CMS also noted, neither the provider, nor the federal agency would be admitting fault or liability regarding the “administratively-resolved eligible claims.” In exchange, Medicare agreed to pay hospitals for a portion of the claims in a timelier manner than the appeals process.
Many of the hospitals accepted the federal agency’s deal to receive a portion of their claims revenue that had been stuck in the appeals process for months, or, in some cases, years. The settlement also presented hospitals with the opportunity to cut administrative costs and burdens associated with the Recovery Audit Program and appeals process.
According to a June report from the American Hospital Association, about 43 percent of providers spent more than $10,000 in the first quarter of 2016 managing the Recovery Audit Program, which reviews claims for Medicare improper payments and denies claims when it identifies a potential issue.
The report also found that the appeals process to be time-consuming for providers. More than 81 percent of providers stated that the administrative law judge overseeing their appeal took longer than the 90-day statutory limit to determine a ruling.
Following the recent release of the settlement data, some hospitals expressed concerns about the Medicare claims appeals backlog and the discounted rate for claims as part of the deal.
“This settlement with CMS is for denials of payment under various levels of appeal by Cone Health,” Jeff Jones, Chief Financial Officer of Moses Cone Health System in North Carolina, told the Winston-Salem Journal. “The dispute had been going on with CMS for a few years, and the outcome was less than what we originally expected to receive.”
Moses Cone Health System received over $3 million to settle 1,126 disputed claims, according to CMS data.
Some local hospital associations that include some of the hospitals involved in the deal have also voiced their disappointed with the settlement and the claims appeal process.
“The good news is that the hospitals received some compensation for the work performed years ago,” John Bartimole, president of the Western New York Healthcare Association, told Buffalo Business First. “The reason it could have been better news is that it only represented 68 cents on the dollar. Still, to have the issue cleared is a relief, both to the government and to hospitals, and the dollars are always welcome.”
Despite the settlement deal for claims prior to October 2013, the Medicare claims reimbursement appeal backlog has persisted. In a June report from the Government Accountability Office (GAO), the number of appeals decisions given after statutory limits had increased between 2010 and 2014. The federal watchdog also projected that the backlog would not improve in the near future.
GAO found that level three and four (out of five total in the appeals process) experienced significant delays in producing appeal decisions. For example, administrative law judges at level three gave 96 percent of their appeal decisions in 2014 after the statutory time limit.
CMS told the federal watchdog that the delays were primarily caused by high volumes of appeals, challenges with implementing new correspondence tools to streamline the process, and a lack of budget to hire more staff to manage the increase in appeals.
In June, the Department of Health and Human Services (HHS) released a proposal to modify the Medicare appeals process to reduce the number of unresolved cases. The proposed rule would implement several administrative changes, such as a boost in the number of available adjudicators, promote decision-making consistency across the appeals levels, and streamline the process to reduce the amount of time adjudicators spend on repetitive issues and procedural matters.
The proposed rule did not contain any settlements to quickly resolve existing pending appeals, but the federal department is accepting comments on the proposal until August 29.