(as first posted in the Hospice Log Blog on April 12, 2018)

This year CMS is rolling out two new programs aimed, finally, at helping to settle certain types of pending provider reimbursement appeals. The programs are the Low Volume Appeals Initiative and Settlement Conference Facilitation.

As pointed out on the Hospice Law Blog before, CMS’ longstanding policy of refusing to negotiate overpayment findings has been a significant factor in clogging the appeals system. With no settlement options, each case must be decided on its merits, imposing a huge (indeed unmanageable) burden on the appeals system.

These two new programs comprise a decent, if tentative, start. If you are a provider with pending ALJ appeals filed on or before November 1, 2017, you may be eligible for one or both of these options.

The Low Volume Appeals Initiative is available through early June 2018 to any provider with fewer than 500 pending ALJ appeals filed on or before November 3, 2017. For any such appeal valued at not more than $9,000, CMS is offering to pay the provider 62% of the value of the claim(s) in such appeals. Such a settlement will apply to all eligible appeals – no picking and choosing. This option is not available for any claim which forms the basis of an extrapolated overpayment.

Settlement Conference Facilitation is for appeals valued at more than $9,000 and not more than $100,000 or for providers with more than 500 pending claims. SCF will not encompass extrapolated overpayments unless the entire extrapolated overpayment is for a total of $100,000 or less. It is not clear what terms will be offered to settle such claims, but the conference is an opportunity to discuss, and so cannot hurt.

These initial steps are signs of progress, but much more is needed to heal the broken appeals system.

A critical problem in trying to settle any case with the government, whether with Medicare or any other agency, is the bureaucratic chain of command. Approvals are required from managers and often from people in other agencies (like the Department of Justice or Department of Treasury). Sadly, the U.S. government is hard pressed to sit down at a table and negotiate in real time. CMS should ask Congress for far more discretion to settle wide ranges of claims. There is no proof that better decisions are made by involving multiple agencies.

Beyond working to settle more claims, CMS still needs to take further steps to address the factors that spawn so many appeals.

Specifically, CMS should impose restraints on the private contractors that assess overpayments, including: (a) precluding denials based on technicalities that do not constitute conditions of payment; such technical denials are unjustifiable forfeitures that are eventually vacated; and (b) requiring contractors to afford deference to providers making real time complex medical necessity decisions; while CMS, and other governmental agencies, get deference from courts, CMS fails to give deference to doctors and interdisciplinary teams making complex real time medical necessity determinations; instead, CMS’ private contractors, often without the experience that providers have, second guess complex medical necessity decisions, often based upon hindsight.

These factors lead to hundreds of thousands of unjustifiable denials that clog and debilitate the appeals system.

Providers are entitled by statute to speedy appeals. To ensure these rights, CMS must not only work to compromise more classes of denied claims, but must also set reasonable ground rules for the issuance of denials by its private contractors in the first instance.