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Readers Write: What to Ask When Deciding to Take the CMS 68 Percent Settlement Offer

October 15, 2014 Readers Write No Comments

What to Ask When Deciding to Take the CMS 68 Percent Settlement Offer
By Bill Malm

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The October 31 deadline for providers to decide whether or not to take the 68 percent settlement offer from CMS is quickly approaching. This settlement enables any provider to withdraw their pending inpatient appeals in exchange for a timely partial payment which equals 68 percent of the net allowable amount. CMS is offering this settlement in order to reduce the volume of inpatient status claims currently pending in the appeals process and to alleviate the administrative burden to both providers and Medicare.

Many healthcare organizations have already submitted their request to take this agreement, but if your hospital is still weighing the pros and cons of doing so, some key factors for consideration include the following.

  • Does your hospital have significant dollars at risk or a high volume of outstanding appeals? Hospitals with a large number of appeals and/or a significant amount of revenue tied up in the appeals process may benefit from seeing the appeals through the ALJ process. Interest payments alone could outweigh any reason to settle.
  • Was your hospital’s appeal strategy based on an internal review process that appealed only strong cases, writing off weaker cases? Hospitals that had a denial review strategy and chose to appeal only those cases with a reasonable likelihood of success may not want to agree to a 32 percent reduction in payment and forfeit the Limitation on Recoupment 935 interest. On the other hand, hospitals that appealed cases indiscriminately are promised 68 percent of the net payable amount. In the end, this may result in a higher payment for these organizations.
  • What was your hospital’s recoupment strategy? Is the expected interest on a successful appeal financially substantive or marginal? If your facility allowed immediate recoupment of overpayments following receipt of Demand Letters, then your claims are not subject to 935 interest. Conversely, 935 interest is owed when claims were involuntarily recouped and you prevail at the ALJ level. For claims that wait years for an ALJ hearing, this payment could be substantial.
  • How badly do you need your money? This may seem like a silly question, but keep in mind that strong appeals and long wait times will likely result in payments with greater than 100 percent value, but it may be a very long time before you see that money. Can you afford to wait? Hospitals that accept the settlement can expect reimbursement within 60 days of a fully executed agreement.
  • What is the cost associated with pursuing your appeals? Hospitals with high costs associated with the pursuit of appeals may want to consider the settlement.  Those costs might include consultants, attorneys, and expert witnesses. The cost of internal personnel time and resources should also be considered.

Deciding whether or not to take this settlement depends on a variety of circumstances. The final decision should be based on a position of financial strength and a strategic choice rather than a short-term stopgap out of necessity.

Bill Malm is senior manager of revenue integrity communications at Craneware.

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