When the Centers for Medicare & Medicaid Services announced that it would offer 68% payment for organizations that would drop their appeals with a deadline of acceptance of November 2, many wondered who might accept the terms. Granted, there would be a hunk of money in hand now, and no lengthy appeals process to go through — a process with no guarantee of success. But there are principles, too, right?
Hospital Peer Review asked one hospital what it is thinking about in making a decision.
Linda Jo Spencer, the Hospital Compliance and Privacy Officer at Middlesex Hospital in Middletown, CT, outlined six things the hospital is looking at in determining what to do:
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Success rate of historic appeals.
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Interest rate of denied cases.
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Impact on the reduction of inpatient days on the cost report.
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Bad debt.
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Costs associated with the appeal process.
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Cash flow.
The hospital has more than 400 cases in the appeal process and has been "historically successful at overturning these denied cases at the Administrative Law Judge (ALJ) level," Spencer says. The offer is simply an attempt to reduce the backlog at the administrative law judge level, since it could take as long as four years just to hear all of the cases that Middlesex alone has in the queue.
She continues, "If the hospital pursued this settlement offer by CMS, the hospital would be agreeing to a 32% reduction in reimbursement and will forfeit the interest that has accrued on the denied claims which could be as much as 133% of the favorable claim. In addition, since these claims will continue to be in denied’ claim status by CMS and will not be counted as inpatient days on the hospital cost report, it will impact the graduate medical education calculations."
Further, after the Administrative Agreement is signed, the hospital cannot pursue any co-pays and deductibles that haven’t been collected on these claims or characterize them as bad debt, she says. "In this calculation, costs associated with the appeal process are being reviewed — such as staff and physician time for compiling medical records, responding to the appeals, writing appeals, and attending ALJ hearings. Also, the effect of cash-flow delays in the appeal process versus taking the settlement now is an important factor."
She concludes, "The decision to appeal or settle is being carefully considered." No word at press time as to what that decision is.
For more information on this topic, contact Linda Jo Spencer, Hospital Compliance and Privacy Officer, Middlesex Hospital, Middletown, CT. Email: [email protected].
