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District Court orders HHS to Eliminate Medicare Appeals Backlog

On Monday, in an opinion issued by Judge James Boasberg, the U.S. District Court for the District of Columbia ordered the Department of Health and Human Services (HHS) to clear its backlog of Medicare reimbursement appeals by the end of 2020.  Judge Boasberg’s opinion granted a motion for summary judgment filed by the American Hospital Association in American Hospital Association v. Burwell (14-851).

Commending the AHA for offering a “thoughtful and reasonable four-year plan,” Judge Boasberg’s opinion adopts the deadlines and mandatory-percentage reductions put forth by the AHA; 30% reduction by December 31, 2017, 60% reduction by December 31, 2018, 90% reduction by December 31, 2019 and 100% by December 31, 2020.  The final point in AHA proposed plan, a requirement to grant default judgment in favor of claimants for appeals still pending at the ALJ level on January 1, 2021 without a hearing for more than one calendar year, raised concerns for the court and was not included in the order.  The judge’s order requires HHS file status reports with the court every 90 days.

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CMS posts 2016 Hospital Appeals Settlement details.
Beginning December 1, 2016, CMS will make available an administrative settlement process for inpatient status claims. This process will be open to eligible hospitals willing to withdraw certain pending appeals in exchange for timely partial payment (66% of the net allowable amount). To request participation in the process, hospitals must complete an Expression of Interest. The deadline for hospitals to submit their Expression of Interest is January 31, 2017. Under the proposed settlement process, the following facility types are 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.

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On Monday, October 31st, the Centers for Medicare & Medicaid Services (CMS) announced that they had awarded the long-awaited new round of contracts for the Medicare Fee-for-Service Recovery Audit Contractors (RACs). The agency identified the awarding of contracts to the following:
• Region 1 – Performant Recovery, Inc.
• Region 2 – Cotiviti, LLC
• Region 3 – Cotiviti, LLC
• Region 4 – HMS Federal Solutions
• Region 5 – Performant Recovery, Inc.
Per the announcement, “The RACs in Regions 1-4 will perform post-payment review to identify and correct Medicare claims that contain improper payments (overpayments or underpayments) that were made under Part A and Part B, for all provider types other than Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Home Health/Hospice,” CMS said on its website. “The Region 5 RAC will be dedicated to the post-payment review of DMEPOS and Home Health/Hospice claims nationally.”

On September 28, 2016 the Centers for Medicare and Medicaid Services (CMS) announced that it will “once again allow eligible providers to settle their inpatient status claims currently under appeal using the Hospital Appeals Settlement process.” At the time of the announcement no details on the new settlement offer were provided. Today, CMS announced that they will host a 2016 Hospital Appeals Settlement Call on November 16, 2016, from 1:30 to 3:00 P.M. CMS has created a Hospital Appeals Settlement Process 2016 webpage and indicated that details on the settlement process will be posted to the page in early November. Registration for the November 16th call is required and can be submitted through the MLN Connects Upcoming Events page.

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CMS has announced 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. Per the CMS announcement, the temporary suspension, which was instituted on May 4, 2016, is being lifted 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.

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CMS Imposes Limit to Look-Back Period for Two-Midnight Reviews.

CMS has announced that it has clarified the instructions for medical review of claims affected by the temporary suspension of the BFCC-QIO claim audits under the two-midnight inpatient admissions rule.   Specifically, CMS announced that these reviews will be limited to a six-month look-back period from the date of admission.  The imposition of the six-month look-back period is to help ensure that providers receiving denials for Part A claims have sufficient time  to rebill under Medicare Part B.

A Notice of Proposed Rulemaking (NPRM) related to the Medicare appeals process is now open for public comment. The NPRM is currently on the Federal Register’s public inspection page, and is scheduled to appear in the July 5, 2016, Federal Register. Comments are due by August 29, 2016. The NPRM can be viewed at:

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CMS has posted the draft Medicare Outpatient Observation Notice (MOON), Instructions, and a Supporting Statement.  The Medicare Outpatient Observation Notice (MOON) is a standardized notice developed to inform beneficiaries (including Medicare health plan enrollees) that they are an outpatient receiving observation services and are not an inpatient of the hospital or critical access hospital (CAH).  The MOON is mandated by the federal Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), passed on August 6, 2015.  The NOTICE Act requires all hospitals and CAHs to provide written and oral notification under specified guidelines.  The MOON, its instructions, and implementing regulations were published in the Federal Register on April 27, 2016, as part of the FY 2017 Medicare hospital inpatient prospective payment systems (IPPS) proposed rule. They are available for public comment through June 17, 2016

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GAO Study Concludes that Opportunities Remain to Improve Medicare Appeals Process
In a report requested by the Senate Finance Committee, the Government Accountability Office (GAO) has determined that opportunities still remain for HHS to improve the Medicare fee-for-service appeals process and to reduce the increased volume of appeals.  The GAO study concludes that (1) Absent more complete and consistent appeals data, HHS's ability to monitor emerging trends in appeals is limited and is inconsistent with federal internal control standards and (2) HHS efforts do not address inefficiencies regarding the way appeals of certain repetitious claims are adjudicated, which is inconsistent with federal internal control standards.  Based on the findings of the study, the GAO is making the following recommendations:
the Secretary of Health and Human Services should direct CMS, Office of Medicare Hearings and Appeals (OMHA), or Departmental Appeals Board (DAB) to modify the various Medicare appeals data systems to collect information on the reasons for appeal decisions at Level 3.
the Secretary of Health and Human Services should direct CMS, OMHA, or DAB to modify the various Medicare appeals data systems to capture the amount, or an estimate, of Medicare allowed charges at stake in appeals in Medicare Appeals System (MAS) and Medicare Operations Division Automated Case Tracking System (MODACTS).
the Secretary of Health and Human Services should direct CMS, OMHA, or DAB to modify the various Medicare appeals data systems to collect consistent data across systems, including appeal categories and appeal decisions across MAS and MODACTS.
the Secretary of Health and Human Services should implement a more efficient way to adjudicate certain repetitive claims, such as by permitting appeals bodies to reopen and resolve appeals.

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Effective July 1, 2016 when processing claims for drugs and biologicals (except those provided under the Competitive Acquisition Program for Part B drugs and biologicals (CAP)), use of the modifier JW to identify unused drugs or biologicals from single use vials or single use packages that are appropriately discarded with be required. CMS will no longer allow contractors’ discretion to determine whether the JW modifier is required for claims with discarded drugs and biologicals.  The JW modified, billed on a separate line, will provide payment for the amount of discarded drug or biological.  Also contained in the policy change is the requirement that providers record the discarded amounts of drugs and biologicals in the patient’s medical record.
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