CMS offers to settle disputed short-term hospital claims

The Centers for Medicare & Medicaid Services wants to end the long wrangling with hospitals over short-term inpatient stays.

The CMS offered to pay hospitals to settle the cases that are in dispute or under appeal, which may total as many as 800,000. The total sum represents 68 percent of what the hospitals say they are owed, according to a notice posted on the CMS website and could run into the hundreds of millions of dollars, the New York Times reported.

The settlement represents "an administrative agreement to eligible hospitals willing to resolve their pending appeals in exchange for timely partial payment to alleviate the administrative burden of current appeals on both the hospital and Medicare system," CMS spokesperson Aaron Albright told the Times. The offer was made to resolve the growing backlog of short-stay cases on appeal, which the agency said exceeds the resources the Office of Medicare Hearings and Appeals can muster to adjudicate them.

Currently, hospitals appeal about half of all RAC payment denials and clawbacks. But the backlog in the five-step process to appeal a payment denial has been growing steadily. According to a recent survey by the American Hospital Association, nearly 90 percent of hospitals that responded said they experienced waits of 120 days or more to obtain a hearing in front of a federal administrative law judge--the venue where they are most likely to prevail in an appeal.

It is unclear whether hospitals--which have 60 days to decide whether to accept the payments--would jump at the offer. Although the American Hospital Association said the offer would "provide some temporary relief" it also criticized it as narrow and would not resolve the fundamental dispute among CMS, hospitals and recovery audit contractors, who have been clawing back hundreds of millions of dollars for short inpatient stays, insisting the hospitals should be paid at the much lower outpatient rate. The settlement, for example, does not cover any short-term hospital stays that occurred after Oct. 1 of last year.

To learn more:
- here's the information on the CMS website
- read the New York Times article