CMS offers a deal to hospitals to cut Medicare appeals backlog

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Hospitals slap the government with lawsuits over 'two-midnight' policy to reduce observation stays
Hospitals slap the government with lawsuits over 'two-midnight' policy to reduce observation stays

In an effort to trim the huge backlog of Medicare claims appeals that has stymied long-term care and other providers, the government is offering a new way to settle some cases. Hospitals could receive a partial payment if they withdraw appeals related to inpatient status, the Centers for Medicare & Medicaid Services announced in an email Friday.

Many pending appeals stem from auditors' determinations that beneficiaries were designated as hospital inpatients when they should have been outpatients. To “more quickly reduce the volume of inpatient status claims,” CMS is now offering an “administrative agreement mechanism.” Hospitals that enter into such an agreement would receive 68% of the amount in dispute, the agency's memo stated.

Eligible claims must have a date of admission prior to Oct. 1, 2013, and hospitals may not settle some claims but continue to appeal others, according to CMS. Click here for further details.

The new administrative agreement policy does not apply to long-term care providers; however, LTC providers are eligible for a previously announced alternative dispute resolution process. This would allow them to largely sidestep administrative law judge hearings, where the most severe backlog has formed. Nancy J. Griswold, the chief ALJ, recently told a Congressional panel that there is no easy way to speed up the appeals process.

Long-term care providers have protested both the broken Medicare appeals process and the confusion over when to grant hospital inpatient status. Some stakeholders believe that this confusion has caused hospitals to err on the side of caution by keeping people in observation status rather than admitting them as inpatients, preventing them from qualifying for Medicare coverage of post-acute services.