Let’s Make A Deal: Medicare Expands Settlement Process

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By Matt Phifer

The Medicare agency has unveiled an expanded alternative dispute resolution process to try to reduce the backlog of cases in the administrative appeals process.

In a presentation that lasted over an hour, the Centers for Medicare & Medicaid Services May 22 explained the expanded settlement conference facilitation (SCF) process, which is designed to help appellants and the CMS come together to reach a solution for claims appealed to the Office of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals Council. Once settlements are reached, any appeals connected to the dispute will be resolved.

An aim of the expanded program will be to reduce the backlog of cases facing the CMS’s appeals process. In her letter presenting the OMHA’s Fiscal Year 2018 Congressional Justification, Chief Administrative Law Judge Nancy Griswold emphasized that the processing time for administrative appeals had reached 1,051 days as of Feb. 28, 2017.

In that budget request, the OMHA explained that its appeals workload increased by 315 percent from 2010 to 2016. It blamed the flood of appeals on the increasing number of beneficiaries, updates and changes to Medicare and Medicaid coverage and payment rules, the growth in appeals from Medicaid state agencies, and national implementation of the Medicare Fee-For-Service Recovery Audit Program.

In June 2014, the OMHA unveiled the first iteration of the SCF program to reduce the appeals backlog. The OMHA claimed the pilot program resolved over 2,400 unassigned administrative law judge appeals.

Reaching a Deal

Those wishing to make a deal must meet strict requirements. Qualifying appellants must be Medicare providers or suppliers with either 25 or more SCF eligible appeals pending at OMHA and the appeals council or at least one appeal with more than $9,000 in billed charges.

All appeals must involve the reconsideration of a decision by an independent contractor that arises from Medicare Part A or Part B. All the appeals must have been filed on or before Nov. 3, 2017, and meet a litany of other requirements, including not being involved in another settlement process, such as the low volume appeals initiative. An appeal with a scheduled ALJ hearing or that had an ALJ hearing is ineligible for the program.

“I think it’s just generally a great, expanded avenue for providers looking for different options than waiting three to five years for an appeal,” Nick Alarif, an associate at McDermott Will & Emery in Washington who formerly worked at OMHA, told Bloomberg Law.

According to the CMS, interested appellants will submit a request to enter the program through an email. The CMS, being on equal footing with the provider as a party in the dispute, will have 15 days to respond as to whether it wishes to participate in the SCF process.

If the CMS chooses to participate, a spreadsheet will be created of all the appellant’s SCF eligible appeals before OMHA and the Medicare Appeals Council. The provider must fill out a few things on the spreadsheet, then the parties will move toward the settlement conference. According to the CMS representative on the call, a settlement conference would occur about four weeks after any pre-conference.

Ross Burris III, an attorney at Polsinelli in Atlanta who has been following the evolution of the SCF process since it started, sees both positives and negatives to the process.

“This is a faster way to get a resolution. Now I would not expect those offers to be very high,” Burris told Bloomberg Law. “The risk of all these offers is you’re only being offered” what Medicare allows.

Any settlement reached through the SCF process will still be labeled officially as a denial in the Medicare program, which Burris said could cause problems for some providers when trying to receive payment through copays or secondary payment.

Express Lane

One of the highlights of the CMS’s rollout was a new faster settlement process called SCF Express.

Through the express program, the CMS will offer a settlement to a provider based on preliminary data. The appellant can take the offer within seven days or proceed to the settlement conference process.

“I think the new SCF Express is a novel idea in getting a faster resolution of going through your appeals,” Alarif told Bloomberg Law. “That’s great if the settlements are good.”

“I don’t see why you wouldn’t do it; I would do it,” Burris said. “The interesting thing about the whole process is nothing hurts, it just possibly is a waste of time.”

Burris told Bloomberg Law he thought the express process would be especially appealing to appellants who no longer own the provider or supplier, but are left holding old claims and want to get them off the books.

“They’re not as worried about setting precedents,” Burris said. “They just have a higher interest in making it go away for a dollar sum.”

Chipping Away at Logjam

A real question remaining is whether the expanded SCF program will actually unclog the logjam in the Medicare administrative appeals process. The wait to see an administrative law judge can be well over three years.

Alarif sees the expanded process as one tool that will make an impact. “The amount of appeals pending at OMHA are just astounding, so you’re going to need to do more, but these [measures] are getting there,” Alarif told Bloomberg Law.

A big factor that will determine the program’s ability to reduce the logjam is what kind of settlement offers providers and suppliers receive.

Both Alarif and Burris told Bloomberg Law that providers need to consider the strength of their claims and if a claim is weaker, it may be better to use the SCF option, especially since an appellant does not lose its space in line if it rejects the settlement offer.

Burris pointed out that many providers have already waited so long, they’ve paid the money or been recouped against, so they begin to view the appeals process as “what’s another year of waiting?”

With the knowledge that many providers have a higher winning percentage before administrative law judges, they may be willing to wait.

“If the offer is not going to be very high and the common wisdom is you have a better than 50 percent chance anyway, and you’ve waited several years, why not just keep waiting?” Burris asked.

The expanded program will go into effect in early June.

The Office of Medicare Hearings and Appeals did not respond to Bloomberg Law’s request for comment.

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