Kusserow on Compliance: CMS Round 2 process for inpatient claims settlements

CMS announced Round 2 of the settlement process for inpatient claims denied on the basis of patient status. CMS contends that hospitals should have billed the denied inpatient claims as outpatient claims. In September 2014, CMS offered hospitals the opportunity to settle the denied inpatient claims for a timely partial payment equal to 68 percent of the net allowable amount. CMS believes that the changes in their Final rule 1599-F (78 FR 50496, August 19, 2013) will not only reduce improper payments under Medicare Part A, but will also reduce the administrative costs of appeals for both hospitals and the Medicare program.

During Round 1, Medicare Administrative Contractors (MACs) reviewed denied inpatient claims submitted by participating hospitals and created a contractor eligible claims list. For all denied inpatient claims that matched the contractor eligible claims list, CMS will countersign and settle with each hospital according to the original Round 1 administrative agreement. Where MACs disagreed with particular claims submitted by hospitals during Round 1, MACs will issue a disagreement spreadsheet of ineligible claims to each provider. The Round 2 process will allow hospitals to further resolve the eligibility of denied inpatient claims through the submission of further evidence and through direct work with CMS and MACs. Once a MAC issues a disagreement spreadsheet, a provider has 14 calendar days to review and submit comments to the spreadsheet as well as submit a new administrative agreement to CMS. Once hospitals and MACs come to an agreement during Round 2, CMS will issue a secondary settlement payment for inclusion of those claims in the settlement process.

The deadline for hospitals to request settlement was October 31, 2014. CMS encouraged hospitals with inpatient status claims currently in the appeals process or within the timeframe to request an appeal to make use of this administrative agreement mechanism to alleviate the administrative burden of current appeals on both the hospital and Medicare system.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.