Wachler & Associates, P.C.

The Department of Health and Human Services recently unveiled the next two steps in its ongoing efforts to reduce the significant volume of claims pending at the Administrative Law Judge (ALJ) level of the Medicare appeals process, each of which involve additional settlement options for providers to resolve their pending claim appeals.

The first new settlement option was announced by the Centers for Medicare & Medicaid Services (CMS), which CMS refers to as the “low volume appeals settlement option (LVA).” As the name suggests, the LVA will be limited to provider appellants with a low volume of claims pending at the ALJ and Medicare Appeals Council (MAC) levels of appeal. While CMS has only released limited details with respect to the LVA’s eligibility requirements at this time, CMS defined “low volume” as fewer than 500 Medicare Part A or Part B claim appeals pending at the ALJ and the MAC, combined, as of Nov. 3, 2017. Additionally, the billed value of each appeal must be $9,000 or less. According to CMS, for those eligible providers whose pending appeals meet these thresholds, and who also meet “certain other conditions,” CMS will offer to settle eligible appeals at 62 percent of the net allowed amount.

While CMS currently instructs interested appellants to continue to monitor its website in the coming weeks for further details on the LVA settlement, it is expected that the LVA will be similar to the previous Part A appeals settlements offered by CMS, which included at 68 percent settlement offered in October 2014 and a 66 percent settlement offered in September 2016. These prior settlements were offered to hospitals with eligible inpatient status claims pending in the Medicare appeals process. Meanwhile, the upcoming LVA will be the first global settlement offered by CMS outside of the inpatient status appeal arena, and the first to be available to Part B provider types. However, it is unclear at this time whether the LVA will be directed at specifically identified Part A and Part B services, or will be available to all Part A and Part B claims that meet the volume-related thresholds cited in the LVA announcement by CMS.

In addition to the LVA, a second settlement option was recently announced by the Office of Medicare Hearings and Appeals (OMHA). While technically not considered a “new” settlement option, OMHA announced it will be expanding its current Settlement Conference Facilitation (SCF) program. Phase I of the SCF program was originally launched in July 2014 to provide an alternative dispute resolution process for eligible Medicare providers to enter into open and non-binding settlement discussions with CMS with the goal of reaching a mutually agreeable resolution for claims pending at the ALJ appeal level. Under Phase I, participation in the SCF program was limited to claims meeting narrow eligibility requirements, including only Part B claims in which the request for ALJ hearing was submitted in 2013. Phase II of the SCF program, which opened in October 2015, expanded the eligibility requirements for Part B claim appeals to include claims in which the request for ALJ hearing was filed by September 30, 2015, among other expanded eligibility criteria. Finally, Phase III was introduced in February 2016, which opened up the SCF program to eligible Part A claim appeals. The SCF program has provided an attractive option for providers who are currently in the midst of the three-year ALJ waiting period. By participating in the SCF program, providers can both achieve timely resolution of their appeals and eliminate the risks associated with the inherent uncertainties of prevailing at the ALJ hearing. Furthermore, by participating in the SCF program, appellants forfeit neither their hearing rights nor the time already invested in awaiting an ALJ hearing. In the event a provider and CMS do not mutually agree on a settlement amount at the SCF, the provider’s claim appeals would simply return to the ALJ level of appeal in the order the hearing request was originally received by OMHA.

At this time, OMHA has not released any further details surrounding the upcoming SCF expansion, but it is reasonable to speculate the eligibility requirements will be expanded to include those providers who have filed their ALJ appeals more recently given that the SCF is currently only available to ALJ appeals filed prior to October 1, 2015. Much like the LVA, OMHA instructs interested appellants to continue to monitor the OMHA website for additional details about the SCF expansion in the coming weeks.

Although additional details of each program are forthcoming, the LVA and expansions to the SCF program are welcomed additions to the current alternative dispute resolution programs offered by CMS and OMHA in recent years. While additional resolutions will likely need to be offered in the future to eliminate the current ALJ appeals backlog, the LVA and expanded SCF are certainly a step in the right direction. Perhaps most importantly, because CMS is authorized to recoup any alleged overpayment amounts while an ALJ appeal is pending, many providers are not financially positioned to withstand payment withholds by CMS for such an extended period of time. Thus, the recently announced settlement options may enable certain providers to efficiently resolve their appealed claims, receive timely payment, and remain in business.