Medicare Part A Providers Should Not Wait to Facilitate

By Andrew Wachler and Erin Roumayah

The Office of Medicare Hearings and Appeals (OMHA) recently announced the expansion of its settlement conference facilitation (SCF) pilot program to Medicare Part A providers. The SCF pilot enables Medicare providers and the Centers for Medicare and Medicaid Services (CMS) to voluntarily facilitate eligible claims pending for administrative law judge (ALJ) hearing at the third level of the Medicare appeals process. If facilitation does not result in settlement, the claims will return to queue for an ALJ hearing in the order in which OMHA originally received the ALJ hearing request.

OMHA’s recent expansion of the pilot to Medicare Part A providers is a significant development for the Medicare appeals community. Historically, Medicare providers did not have access to an established alternative resolution process. Rather, providers had to challenge each and every claim denial through the Medicare appeals process, which often required trying the case at ALJ hearing or beyond. Due to the lack of an established alternative dispute resolution process, increased and more-aggressive audit activity by CMS, and low rates of overturned denials at the lower levels of the Medicare appeals process, among other contributing causes, there is now a significant backlog of appeals at the ALJ level of the Medicare appeals process. The backlog of appeals began to accumulate in fiscal year (FY) 2012, when OMHA received nearly double the quantity of appeals that it was able to decide. In FY 2013, OMHA received more than three times the appeals that it received in FY 2012. Current estimates suggest that there are nearly 1 million claims pending for hearing before OMHA and that at current rates, some already filed claims could take a decade or more to resolve.

The SCF pilot was launched in June 2014 to curb the growing backlog of pending Medicare appeals. Initially, the pilot was restricted to eligible claims filed by Medicare Part B providers and suppliers. For a Part B claim to be eligible, the provider or supplier’s ALJ hearing request had to have been filed in 2013 and it could not already be assigned to an ALJ for hearing. In Fall 2015, OMHA released “Phase II” of the pilot which expanded the claim eligibility criteria for Medicare Part B providers and suppliers. In Phase II, for a Part B claim to be eligible, the provider or supplier’s ALJ hearing request had to have been filed on or before September 30, 2015 and the claim could not yet be scheduled for ALJ hearing. Phase 1 of the pilot, which is now complete, settled over 2,600 unassigned Medicare Part B ALJ appeals which represents the work of more than two ALJ teams in one year. Phase II of the pilot is currently ongoing.

Medicare Part A providers are now eligible to participate in the pilot through Phase III, which OMHA announced on February 25, 2016. To participate, a Medicare Part A provider must satisfy the eligibility criteria, which include but are not limited to:

  • The request for hearing was filed by December 31, 2015 and the claims are not scheduled for ALJ hearing (the provider has not received a Notice of Hearing);
  • There are at least 50 claims and $20,000 collectively in controversy;
  • The amount of each individual claim is $100,000 or less (or if extrapolated, the extrapolated overpayment is $100,000.00 or less);
  • The ALJ jurisdictional requirements on the appealed claims are met; and
  • The request for facilitation must include all of the provider’s pending appeals for the same item or service at issue that meet SCF criteria.

Hospital claims that were eligible for CMS’ Part A Hospital Appeals Settlement (68% Settlement) announced in October 2014 are ineligible for SCF Phase III, regardless of whether the hospital participated in the 68% Settlement. Hospitals that were ineligible for the 68% Settlement may be eligible for Phase III. Specifically, psychiatric hospitals, inpatient rehabilitation facilities, long term care hospitals, cancer hospitals and children’s hospitals were ineligible for the 68% Settlement but may be eligible to participate in SCF Phase III. For all hospitals, claims that were ineligible for the 68% Settlement may be eligible for Phase III. DRG denials, denials due to insufficient documentation of conservative treatment prior to a surgical procedure and other non-“patient-status” denials may be eligible for resolution through SCF Phase III. Hospitals are encouraged to re-evaluate the eligibility criteria for the 68% Settlement to determine whether they can participate in SCF Phase III.

In recent years OMHA and CMS have proposed various initiatives, such as the 68% Settlement, to reduce the pending appeals backlog and improve efficiencies in the appeals process. The SCF pilot, however, remains the only alternative resolution process through which providers can negotiate a settlement to their claims. CMS’ 68% Settlement offered eligible participants an early resolution to pending appeals but the settlement value was non-negotiable and pre-determined. In June 2014 OMHA announced a statistical sampling initiative through which Medicare Part A providers and Part B providers and suppliers could request a random statistical sampling of their pending eligible ALJ appeals. The assigned ALJ would make findings of fact and conclusions of law on the sampled claims and then extrapolate the findings to the appellant’s universe of eligible appeals. Although the statistical sampling initiative enables an efficient and potentially expedited resolution of large volumes of claims, the appellant has no opportunity to negotiate a settlement.

There are multiple benefits to participation in the SCF pilot. First, the pilot is a voluntary adjudication process for both CMS and appellants. Either party may withdraw from the pilot at any point prior to execution of the settlement agreement. Further, by participating, an appellant does not forfeit its hearing rights or its place in queue for an ALJ hearing. Also, the pilot is designed to be an expedited resolution process, whereby the settlement conference will be scheduled as soon as three to four weeks after a pre-settlement conference call is held between the parties and the OMHA facilitator. The pre-settlement conference call is to be scheduled as early as four weeks after an appellant receives OMHA’s confirmation notice, which confirms OMHA’s receipt of the appellant’s complete SCF request package. All Medicare Part A providers, such as hospitals, skilled nursing facilities, nursing homes, hospices and home health agencies, should consider immediately reviewing their pending Medicare appeals and requesting participation in Phase III of the SCF pilot.

Providers can initiate the process by filing an SCF Expression of Interest. OMHA encourages provider participation in SCF Phase III by permitting related business entities to combine multiple provider numbers in one SCF Expression of Interest and allowing providers with eligible Part A and Part B claims to submit respective Part A and Part B Expressions of Interest in one email to OMHA.

Unlike other alternative resolution programs released by CMS and OMHA, the SCF pilot enables appellants to proactively seek expedited resolution of their claims and participate in negotiating settlement, while retaining their rights to administrative and legal review. The SCF Pilot is a practical alternative to resolve pending Part A and Part B appeals years before the claims would otherwise be heard at hearing. All Medicare providers are encouraged to not wait, but facilitate.

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