HOSPITAL APPEAL SETTLEMENT UPDATE
What’s New 11/04/16- Join CMS on November 16, 2016 at 1:30 PM EST for a MLN Connects National Provider Call on the 2016 Hospital Appeals Settlement. To register or for more information, visit MLN Connects® Event Registration. Space may be limited, register early.
This current page will not be updated regarding the 2016 process. In early November, details on the settlement process will be posted on the go.cms.gov/HASP2016.
End of Temporary Suspension of the BFCC-QIO Short Stay Reviews- Update
On May 4, 2016, the Centers for Medicare & Medicaid Services (CMS) temporarily paused the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews to determine the appropriateness of Part A payment for short stay inpatient hospital claims. CMS took this action in an effort to promote consistent application of the medical review policies regarding patient status for short hospital stays and to allow time to improve standardization in the BFCC-QIOs’ review process.
Q: What is CMS announcing today?
A: CMS is announcing that, effective September 12, 2016, BFCC-QIOs will resume initial patient status reviews of short stays in acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to determine the appropriateness of Part A payment for short stay hospital claims.
Q: Why is CMS ending the temporary suspension of the BFCC-QIO short stay reviews?
A: CMS is lifting the temporary suspension of short stay reviews because:
- The BFCC-QIOs successfully completed re-training on the Two-Midnight policy;
- The BFCC-QIOs have completed a re-review of claims that were previously formally denied;
- CMS examined and validated the BFCC-QIOs peer review activities related to short stay reviews;
- The BFCC-QIOs performed provider outreach on claims impacted by the temporary suspension; and
- The BFCC-QIOs initiated provider outreach and education regarding the Two-Midnight policy.
Q: Will there be oversight of the BFCC-QIOs review of short stay inpatient hospital claims?
A: Yes. CMS will continue its oversight efforts by re-reviewing a sample of BFCC-QIO completed claim reviews each month, monitoring provider education calls, and responding to individual provider inquiries and concerns. Providers may send questions to the CMS Open Door Forum Mailbox at ODF@cms.hhs.gov.
Q: Has CMS made any changes to the BFCC-QIO guidance under which they will perform these reviews?
A: No. The BFCC-QIOs will continue to follow the guidance entitled, “Reviewing Short Stay Hospital Claims for Patient Status: Admissions On or After January 1, 2016,” which can be found at: /research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/medical-review/inpatienthospitalreviews.
Q: What types of outreach and education are the BFCC-QIOs using to educate providers?
A: The BFCC-QIOs were directed to use comprehensive outreach and communication approaches (i.e. website, newsletter, one-on-one training, and town hall type events) to continue to educate providers on when payment under Medicare Part A is appropriate under the Two-Midnight policy. BFCC-QIOs are required to educate providers using quality improvement core principles that facilitate continuous learning and promote greater provider understanding of the appropriate application of the Two-Midnight policy in accordance with the revisions in the CY 2016 OPPS Final Rule (CMS-1633-FC): /Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1633-FC.
Review of Claims Affected by Temporary Suspension of BFCC-QIO Short Stay Reviews FAQs- Update
On May 4, 2016, the Centers for Medicare & Medicaid Services (CMS) temporarily paused the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews to determine the appropriateness of Part A payment for short stay inpatient hospital claims. CMS took this action in an effort to promote consistent application of the medical review of patient status for short hospital stays and to allow time to improve standardization in the BFCC-QIOs’ review process.
On June 6, 2016, CMS required the BFCC-QIOs to re-review all short stay patient status claims that were denied under the QIO medical review process since the BFCC-QIOs began conducting these reviews on October 1, 2015.
The temporary suspension remains effective, and the BFCC-QIO short stay claim reviews will resume after the BFCC-QIOs have completed retraining on the inpatient admission policy, completed the re-review of previously formally denied claims, performed any needed provider outreach and education, and CMS validates the accuracy of the BFCC-QIOs’ performance of these activities. Many of these improvement steps have begun and are nearly complete. CMS will advise stakeholders when the suspension is lifted.
Q: What is CMS announcing today?
A: Today, CMS is announcing it has clarified the instructions for medical review of claims affected by the temporary suspension of the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews of acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to determine the appropriateness of Part A payment for short stay inpatient hospital claims. Specifically, CMS is announcing that these reviews will be limited to a six-month look-back period from the date of admission and announcing that Medicare Fee-For-Service (FFS) claims that:
1. Are outside the six-month look-back period and were formally denied (as defined below) are being removed from the provider sample for re-review and will be paid under Part A.
2. Are outside the six-month look-back period and were not formally denied are being removed from the provider sample for re-review and will be paid under Part A.
3. Are within the six-month look-back period and were not formally denied will be reviewed when we resume QIO reviews as per our sub-regulatory guidance at /Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews.
4. Are within the six-month look-back period and were formally denied are being re-reviewed by the BFCC-QIO to determine whether the initial review decision was consistent with the two-midnight policy in effect at the time of the hospital admission.
For purposes of these instructions, “formally denied” is defined as meeting the following three criteria:
1. The provider was sent an initial results letter by the BFCC-QIO; and
2. The BFCC-QIO conducted and completed provider-specific education on claims in question; and
3. The BFCC-QIO sent the provider a final results letter and the denial was sent to the MAC for effectuation.
Q: Why is CMS announcing a clarification to these instructions and limiting BFCC-QIO re-review to a six-month look-back period for claims impacted by the temporary suspension of the Beneficiary and Family Centered Care (BFCC) reviews?
A: Generally, when a Medicare Part A claim is denied by the BFCC-QIO, the provider has the opportunity to rebill under Medicare Part B within one calendar year after the date of service. The imposition of a six-month look-back period for claims impacted by the temporary suspension of the BFCC reviews is being implemented to help ensure that providers receiving denials for Part A claims have sufficient time to rebill under Medicare Part B.
Temporary Pause of QIO Short Stay Reviews- Update
On May 4, 2016, the Centers for Medicare & Medicaid Services (CMS) temporarily paused the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations’ (QIOs) performance of initial patient status reviews to determine the appropriateness of Part A payment for short stay inpatient hospital claims. CMS took this action in an effort to promote consistent application of the medical review of patient status for short hospital stays.
What are short stay reviews?
Short stay reviews are reviews of claims for inpatient admissions to determine whether such claims were appropriately paid under Medicare Part A. Additional information related to short stay reviews is available here .
Who does short stay reviews?
At this time, BFCC QIOs are responsible for conducting initial short stay reviews. Recovery Auditors may also conduct short stay reviews, but only for those providers that have been referred to them by the BFCC-QIO as exhibiting persistent noncompliance with Medicare payment policies.
When did BFCC QIOs start conducting short stay reviews?
Beginning on October 1, 2015, the QIOs assumed responsibility for conducting initial patient status reviews of providers to determine the appropriateness of Part A payment for short stay inpatient hospital claims. These reviews were previously conducted by the Medicare Administrative Contractors (MACs).
Why is CMS pausing short stay reviews?
CMS became aware of inconsistencies in the BFCC-QIOs’ application of the two-midnight policy for short hospital stay reviews, and on May 4, 2016, we temporarily paused short stay patient status reviews to give us time to improve standardization in the BFCC-QIOs’ review process.
CMS is requiring the BFCC-QIOs to re-review all claims they denied in their medical review process since October 2015 to make sure medical review decisions and subsequent provider education are consistent with current policy. The current “pause” will allow time for the BFCC-QIOs to conduct these re-reviews.
When will the reviews resume?
The pause is temporary, and the claim reviews will resume after the BFCC-QIOs have completed retraining on the two-midnight policy, completed the re-review of previously denied claims, and performed any needed provider outreach and education. Many of these improvement steps have begun. CMS believes that BFCC–QIOs reviews will resume within 60-90 days. CMS will advise stakeholders when the pause is lifted.
What does this mean for claims that have already been denied?
CMS is working with the BFCC-QIOs to improve quality, including through educational sessions on practical application of the two-midnight policy, and is requiring that beginning June 6, 2016, that the BFCC-QIOs re-review all short stay patient status claims that were denied under the QIO medical review process. CMS urges hospitals to work with your BFCC-QIO (KEPRO at https://www.keproqio.com/ or Livanta, LCC, http://LivantaQIO.com/) to see if denied claims have been re-reviewed (undergone a final determination) before you appeal a claim denial. Hospitals will receive a letter from the BFCC-QIO if denied claims are being re-reviewed, as well as a letter detailing the re-reviewed decisions. If a hospital already submitted an appeal, then the BFCC-QIO will share its re-review findings with the appeals adjudicators to be taken into consideration during the appeal process. If upon re-review it is determined that the claim was incorrectly denied, the appeals adjudicators will issue revised determinations as necessary.
Where is there more information on this temporary pause?
On July 1, 2015, CMS released proposed updates to the “Two Midnight” rule regarding when inpatient admissions are appropriate for payment under Medicare Part A. The fact sheet detailing the proposed changes can be located at: /Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-07-01-2.
At the same time, CMS notified the public of upcoming changes in our education and enforcement strategies. Those changes are detailed below:
Quality Improvement Organizations (QIOs)
Beginning on October 1, 2015, the QIOs assumed responsibility for conducting initial patient status reviews of providers to determine the appropriateness of Part A payment for short stay inpatient hospital claims. These reviews were previously conducted by the Medicare Administrative Contractors (MACs). From October 1, 2015 through December 31, 2015, short stay inpatient hospital reviews conducted by the QIOs will be based on Medicare’s current payment policies. Beginning on January 1, 2016, QIOs and Recovery Auditors will conduct patient status reviews in accordance with any policy changes finalized in the OPPS rule and effective in calendar year 2016.
Medicare Administrative Contractors (MACs)
As of October 1, 2015, MACs have completed the third round of Inpatient Probe and Educate reviews (although some provider education may continue beyond this date). After October 1, 2015, MACs may continue to conduct CMS-approved claim reviews unrelated to patient status (e.g., coding reviews, reviews to determine the medical necessity of the procedure conducted, etc.).
The congressionally-imposed prohibition on Recovery Auditor patient status reviews expired on October 1, 2015 (Section 521 of the Medicare Access and CHIP Reauthorization Act of 2015, (Pub. L. 114-10)). However, CMS will not approve Recovery Auditors to conduct patient status reviews for dates of admission of October 1, 2015 through December 31, 2015.
Beginning in January 2016, Recovery Auditors may conduct patient status reviews only for those providers that have been referred by the QIO as exhibiting persistent noncompliance with Medicare payment policies, including, but not limited to: having high denial rates and consistently failing to adhere to the Two Midnight rule (including repeatedly submitting inappropriate inpatient claims for stays that do not span one midnight), or failing to improve their performance after QIO educational intervention. Recovery Auditors may continue to conduct reviews of short stay inpatient claims for other reasons, including CMS-approved claim reviews unrelated to patient status (e.g., coding reviews, reviews to determine the medical necessity of the procedure conducted, etc.).
Note: These changes in enforcement and education strategies will not affect the reviews conducted by the Comprehensive Error Rate Testing (CERT) contractor or those reviews conducted for the purpose of identifying fraudulent behaviors, such as Zone Program Integrity Contractor reviews.
Summary of Inpatient Status Reviews
Through September 30, 2015
MACs conducting probe and educate.
October 1, 2015 through December 31, 2015
QIOs begin conducting reviews. MACs completing some remaining provider education.
January 1, 2016 and beyond
QIOs continue conducting initial reviews. RACs conducting further reviews upon referral by QIOs.
Hospital Appeals Settlement Updated 9/28/2016
What's New: CMS has decided to once again allow eligible providers to settle their inpatient status claims currently under appeal using the Hospital Appeals Settlement process. Specific details of the settlement will be released in the near future. Please continue to monitor CMS’ website for additional information: /Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews
August 18, 2016- CMS executed settlements with 2,022 hospitals, representing approximately 346,000 claims. CMS paid approximately $1.47 billion to providers.
June 2015- As of June 1, 2015, CMS has executed settlements with more than 1,900 hospitals, representing approximately 300,000 claims. CMS has paid approximately $1.3 billion to providers.
March 26, 2015- The Centers for Medicare & Medicaid Services (CMS) is in the process of completing Round 1 of the settlement process. Round 2 validations have begun. Settlement participants are encouraged to see the revised "Critical Steps for Providers in the Appeals Settlement Process" found in the Downloads section below for additional Round 2 instructions.
February 25, 2015- CMS hosted an informational call with Hospital Appeals Settlement Participants. The call provided information on the Round 2 process and allowed for a question and answer session. The transcript from this call can be found in the Downloads section below.
As noted in a Federal Register Notice released by the Office of Medicare Hearings and Appeals (OMHA) in January 2014, “the unprecedented growth in claim appeals continues to exceed the available adjudication resources to address [such] appeals…” CMS supports OMHA’s efforts to bring efficiencies to the OMHA appeals process.
CMS believes that the changes in Final Rule 1599-F (published in August 2013) will not only reduce improper payments under Part A, but will also reduce the administrative costs of appeals for both hospitals and the Medicare program.
To more quickly reduce the volume of inpatient status claims currently pending in the appeals process, CMS offered an administrative agreement to any hospital willing to withdraw their pending appeals in exchange for timely partial payment (68% of the net allowable amount). 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.
The following facility types were ELIGIBLE to submit a settlement request:
- Acute Care Hospitals, including those paid via Prospective Payment System (PPS), Periodic Interim Payments (PIP), and Maryland waiver; and
- Critical Access Hospitals.
The following facility types were NOT eligible to submit a settlement request:
- Psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS);
- Inpatient Rehabilitation Facilities (IRFs);
- Long-Term Care Hospitals (LTCHs);
- Cancer hospitals; and
- Children’s hospitals.
A full definition of each of these facility types can be found at §1886(d) or §1820(c) of the Social Security Act. This agreement applies to all eligible claims from eligible providers. Eligible claims are those denied by a Medicare contractor on the basis that services may have been reasonable and necessary but treatment on an inpatient basis was not, that are either under appeal or within their administrative timeframe to request an appeal review, with dates of admissions prior to October 1, 2013, and where the patient was not a Part C enrollee. The hospital could not choose to settle some claims and continue to appeal others. Certain hospitals could be excluded from this settlement opportunity based on pending False Claims Act litigation or investigations.
To request such an agreement, hospitals followed the process in the Downloads section below "Hospital Participant Settlement Instructions".
Round 1: Hospital submits their proposed spreadsheet of eligible claims/appeals for CMS review, along with a signed Administrative Agreement. CMS validates the information and notifies the hospital if there are any discrepancies from the contractor eligible claims list. Proceedings on all eligible pending appeals will be stayed.
- If CMS has identical information to that submitted, the original agreement is countersigned by CMS, and payment will be provided. The impacted appeals will be dismissed.
- If discrepancies are identified, the subset of agreed upon claims are made the subject of an initial agreement signed by both parties, payment is provided, and the impacted appeals will be dismissed. The subset of claims in which there is disagreement regarding eligibility will continue on to the second round of review. Appeals will continue to be suspended as the settlement is reviewed.
Round 2: Hospital will review the discrepancies from the first round validation process and resubmit a revised spreadsheet and Administrative Agreement for CMS validation within 2 weeks of receipt.
- If CMS has identical information to that submitted, the original agreement will be countersigned by CMS, and payment will be provided within 60 days. The included appeals will be dismissed.
- If discrepancies are identified, CMS and the hospital will conduct Round 2 discussions until both parties are in agreement, and a new agreement will be signed for payment. The impacted appeals will be dismissed.
All Settled claims are subject to additional review at a later date to verify eligibility to be included in this settlement. As stated in the Administrative Agreement, CMS retains the right to recoup any duplicate or incorrect payments made for claims that were, but should not have been, included under this Agreement.
Hospitals seeking general information regarding the process can listen to a recording of a teleconference held on September 9. The recording is posted here.
See the downloads section below for the most recent frequently asked questions. Email any questions to MedicareSettlementFAQs@cms.hhs.gov.
CMS posted a REVISED Eligible Claim Spreadsheet on September 9.
CMS posted a REVISED Administrative Agreement (PDF) on September 19, which resolved an issue with the fillable hospital name field being too short for some hospital names.
Effective 10/15/2014, if a hospital was unable to produce a list of all eligible claims in a timely manner, the hospital could submit a request for a "Potentials List". For more information on this process, see "Hospital Participant Settlement Instructions" in the Downloads section below.
Hospital Participant Settlement Instructions (updated 2/20/2015) (PDF)
Eligible Claim Spreadsheet (updated 9/9/14) (XLSX)
Adminstrative Agreement (9/16/14) (PDF)
Hospital Appeals Settlement FAQs (updated 10/31/2014) (PDF)
Critical Steps for Providers on the Appeals Settlement Process (updated 2/20/2015) (PDF)
Reviewing Short Stay Hospital Claims for Patient Status (PDF)
Policy Decision Guideline - Temporary Suspension of Two-Midnight Reviews (PPTX)
Reviewing Short Stay Hospital Claims for Patient Status Final (DOCX)