CMS Proposes Settlement Option to Resolve Patient Status Claim Denials Pending in the Medicare Appeals Process

On August 29, 2014, CMS announced it will offer “an administrative agreement to any hospital willing to withdraw their pending appeals in exchange for timely partial payment (68% of the net allowable amount)”, in an effort to quickly reduce the volume of inpatient claim denials pending in the Medicare appeals process. Currently, Acute Care Hospitals (including those paid via Prospective Payment System (PPS), Periodic Interim Payments (PIP), and Maryland waiver; as well as Critical Access Hospitals are eligible to submit a settlement request under the administrative agreement process. Psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS), Inpatient Rehabilitation Facilities (IRFs), Long-Term Care Hospitals (LTCHs), cancer hospitals and children’s hospitals are not eligible to exercise this option.

Claims eligible for the administrative agreement are inpatient-status claim denials currently pending in the appeals process with denials based on the finding that the services may have been reasonable and necessary but treatment did not need to be provided on an inpatient basis. The claims must involve dates of admission prior to October 1, 2013 and situations where the patient was not a Part C enrollee. Notably, hospitals will not be permitted to settle some claims and continue the appeal on others.

The administrative agreement option comes on the heels of two other recent pilot programs, the Settlement Conference Facilitation Pilot Program and the Statistical Sampling Pilot Program, both of which are aimed at reducing the substantial backlog of claims at the administrative law judge level of the Medicare appeals process.

CMS outlined the steps involved in the administrative agreement process on its website and will also hold a MLN Connects National Provider Call on Tuesday, September 9, 2014 from 1-2 pm ET to provide additional information about this option.

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