The financial terms offered are marginally less attractive than its 2014 settlement pact for disputed claims.
Hospitals that have appealed Medicare billing denials for inpatient services have a new federal settlement offer to consider.
Details of the settlement deal are available on a Centers for Medicare & Medicaid Services (CMS) webpage and on slides that CMS officials released last week.
Under an administrative process set to begin December 1, the settlement deal offers payment at a rate of 66 cents on the dollar for disputed billing claims in exchange for hospitals dropping their appeals.
The offer applies to acute-care hospitals and Critical Access Hospitals (CAHs) that have appeals at the Administrative Law Judge (ALJ) and Departmental Appeals Board (DAB) levels.
Two-Midnight Rule: Initial Reviews to Resume
In 2014, CMS offered a slightly sweeter settlement deal aimed at alleviating a massive appeals backlog.
Despite settling about 346,000 claims with 2,022 hospitals in the 2014 settlement offer, more than 884,000 Medicare claims were awaiting adjudication at the ALJ level for the federal fiscal year ending September 2015.
Under the 2014 settlement deal, hospitals received payments totaling about $1.47 billion, according to CMS.
The deal on the table now is designed to convince more acute-care hospitals and CAHs to drop their appeals, according to the 2016 settlement process webpage. "CMS has decided to once again allow eligible providers to settle their inpatient status claims currently under appeal," the webpage states.
Whether a patient was appropriately designated for inpatient status is a key requirement for a disputed billing claim to be eligible for the settlement deal.
"Eligible claims are those denied by a Medicare contractor on the basis that services may have been reasonable and necessary but treatment on an inpatient basis was not," the webpage says.
The so-called two-midnight rule that went into effect in October 2013 is linked to many of the disputed billing claims eligible for settlement.
Two-Midnight Rule Must be Fixed or Replaced, Say Providers
Under the rule, which CMS is using to draw a line in the sand on patient status, medical care is deemed appropriate for inpatient status and reimbursement at Medicare A rates based mainly on two factors:
- If a patient is expected to be in a hospital for a period of time spanning at least two midnights or
- If a patient actually received care for a period spanning at least two midnights.
Otherwise, hospital care provided for less than two midnights is reimbursed at the lower outpatient rate under Medicare Part B.
Physician judgment is a crucial factor in the determination of medical necessity for hospital care under the two-midnight rule, and physicians are urged to document why treatment in an outpatient setting would be unsafe.
Hospitals have until January 31, 2017 to file an "expression of interest" to start the settlement administration process.