The recent offer made to qualifying hospitals by the Centers for Medicare and Medicaid Services proposing partial payment for disputed claims is a teaching moment: Hospitals must submit timely appeals or face significant financial losses. To read more about this, click here.
In making this one-time offer, CMS is attempting to rid itself of a two-year pileup of claims. This backlog results from a four-level appeals process with statutory and regulatory deadlines. Hospitals, of course, are well schooled in the challenges of the process, filing a myriad of Medicare and other appeals with public and private health plans, all on tight deadline.
CMS’s settlement offer – which required acceptance by November 25, 2014 – has three main conditions:
- The appeals must have been filed no later than October of the prior year.
- The appeals had to be current – that is, in active appeals status.
- The claims would be paid at 68 percent of the payable amount.
Hospitals considering the compromise have focused on the third point – the haircut reimbursement rate. And yet, for many hospitals, 68 percent is an enticing offer: The steep CMS discount aside, even some small hospitals will still see millions of dollars in reimbursement.
Besides the obvious near-term plus of the cash payout and the freeing of resources to fight for more recent claims, the agreement offers several important lessons for future claim disputes:
Lesson 1: Only Appealed Claims Are Viable
Healthcare providers improperly denied claims must be prepared to file appeals and exhaust all available administrative levels in order to receive a meaningful review.
Medicare has four levels of appeal, and only the last level – before an administrative law judge – offers hospitals an independent review and a final decision. The CMS backlog occurred at the fourth level, and that was the driver for CMS’s settlement offer. In short: appeal, appeal, appeal.
Lesson 2: Persevere and Give the Process Time to Work
Only those providers that persevered in filing initial appeals, and seeking timely additional levels of appeal, received the CMS compromise offer. The process can take up to a year for the first-level appeal alone. If appeals were dismissed before the fourth level for untimely filing, those hospitals would have no chance to benefit from the agreement.
Only older claims were included in the settlement. Claims whose appeals were less than a year old were excluded from Medicare’s offer. And claims over three years old were still in the Medicare appeals pipeline. Hospitals cannot skip the long, arduous CMS process and go to court. So keep filing appeals and never give up.
Lesson 3: Stay Current on Private Health Plan Appeals
CMS’s offered payout required the disputed claims to be in active appeal status or otherwise appealable. That means that hospitals needed to appeal in a timely manner at all levels. Indeed, each level of appeal should be timely to ensure the prospect any future recovery from any payer – even at a discounted rate. Hospitals dealing with public payers like CMS are bound by federal statutes and regulations to appeal or else forever waive their rights to recovery.
Unfortunately, private health plans – citing their provider manuals and contracts – often raise this same argument. While statutory limitations are hardly negotiable or subject to open interpretations, provider service agreements and provider manuals are seemingly not as strict. Provider manuals often include appeal rights and terms. Language is key here: The manuals use terms like “may” appeal instead of “shall” or “must” – implying a limitation exists only on administrative remedies of the payer, dealing with internal review only.
A hospital should not have to file an appeal with private health plan’s appeals and grievance department in order to preserve its right to recovery through litigation. The question of whether a provider’s untimely appeal prevents it from ever seeking further rights should be answered with a resounding No.
Unfortunately, that answer has not yet crystallized in our judicial system’s legal doctrines. Therefore, until contractual terms and provider manuals clearly delineate these rights in favor of providers, hospitals and other healthcare providers must safeguard post-appeal remedies in the courts by filing timely appeals.
Anderson & Quinn, LLC is a renowned law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
