On Nov. 3, 2017 the Centers for Medicare and Medicaid Services and the Office of Medicare Hearings and Appeals (OMHA) (the division of the U.S. Department of Health and Human Services that administers the Medicare appeals process) announced two new settlement opportunity for Medicare Part A and Part B providers and suppliers with eligible fee-for-service appeals pending in the administrative appeals process. These new programs are the Low Volume Appeals Settlement (LVA) and the expanded Settlement Conference Facilitation program (SCF). CMS offered LVA as a lump-sum settlement offer for eligible Appellants with certain eligible appeals. SCF affords eligible Appellants an opportunity to negotiate a lump-sum settlement offer on certain eligible appeals. SCF and LVA have complimentary eligibility criteria that collectively have the opportunity to resolve nearly every Medicare Part A or Part B claim under $100,000.00 in billed charges that is pending at the Administrative Law Judge (ALJ) or Medicare Appeals Council (Council) levels of the Medicare appeals process as of Nov. 3, 2017.

CMS and OMHA announced these new settlement opportunities consistent with their efforts in recent months and years to combat the backlog of appeals pending at the ALJ and Council levels of review in Medicare’s administrative appeals process. Although Congress established a ninety day timeframe for ALJs to hear and decide appeals at the third level of the administrative appeals process, appellants are waiting well over three years for a hearing and decision by an ALJ. The backlog in the appeals process is the result of multiple contributing factors such as more Medicare beneficiaries, more aggressive audit activity by Medicare contractors, increased claim denials and low rates of overturned appeals at the lower-levels of the Medicare appeals process. Despite CMS’s efforts in recent years to modify the administrative appeals process by revising the regulations which govern the appeals process, and OMHA’s efforts to streamline efforts and increase efficiencies in the appeals process, OMHA continues to receive more appeals that it can adjudicate in any given year. The backlog in appeals necessitates the release of new settlement opportunities for appellants, and appellants should consider participation in both the LVA and SCF processes.

The LVA Settlement is open to Medicare Part A and Part B appellants with eligible fee-for-service appeals pending in the administrative appeals process. CMS defines “low volume” as appellants with less than 500 appeals pending before the ALJ or Council levels of review, combined. Eligible and participating appellants are permitted to withdraw pending, eligible appeals from the backlogged Medicare appeals process in exchange for a non-negotiable settlement sum as final resolution of the disputed appeals. Through LVA, Appellants are offered 62 percent of the net Medicare approved amount of their eligible claims.
CMS provided the following appeal eligibility criteria for the LVA Settlement:

1. The appeal was pending before the OMHA and/or Council level of appeal as of November 3, 2017;

2. The appeal has a total billed amount of $9,000 or less;

3. The appeal was properly and timely filed at the OMHA or Council level as of November 3, 2017;

4. The claims included in the appeal were denied by a Medicare contractor and remain in a fully denied status in the Medicare system;

5. The claims included in the appeal were submitted for payment under Medicare Part A or Part B;

6. The claims included in the appeal were not part of an extrapolation; and,

7. As of the date the LVA Settlement Agreement is fully executed, the appeal was still pending at the OMHA or Council level of review.

There are practical considerations for appellants to consider while participating in the process. First, an appellant cannot choose to settle some eligible claims and not others. By participating in LVA, an appellant agrees to settle all pending and eligible claims. Therefore, appellants that practiced an aggressive appeal philosophy in appealing all or nearly all of the denied claims stand to benefit from participation in the LVA Settlement as it offered a guaranteed payout sum on claims that otherwise may not have achieved favorable resolution before the ALJ or Council. Secondly, as with the prior settlements, neither the appellant nor CMS make any admissions of fault or liability and the claims settled will remain denied in CMS’ common working file. Therefore, by settling claims through LVA appellants may incur refund obligations to other payors.

Initially the LVA Settlement was released with two eligibility periods depending on an appellant’s NPI number. On March 30, 2018, however, CMS announced that regardless of an appellant’s NPI number, it was extending the deadline to participate until June 8, 2018. It is currently too soon to gauge the success of the LVA Settlement. However, given the program’s broad eligibility criteria for both appellants and appeals, it is expected that the LVA Settlement will make some impact on clearing the backlog and freeing adjudication resources for OMHA and the Council.

SCF is an alternative dispute resolution process which applies mediation principals to allow Medicare Part A and Part B appellants to negotiate a lump sum settlement of eligible claims with CMS. If a settlement is reached, a settlement agreement is signed the day of the settlement conference and the settled claims are withdrawn and dismissed from the Medicare appeals process.

CMS has published preliminary eligibility criteria for the expanded SCF, which once implemented will include:

1. The appellant must be a Medicare provider or supplier that has been assigned an NPI;

2. The appeals involve request(s) for ALJ hearing or Council review filed on or before November 3, 2017 with a total of 500 or more appeals pending at OMHA and the Council combined; or with any number of appeals pending at OMHA and the Council that each have more than $9,000 in billed charges;

3. The request(s) for ALJ hearing and/or Council review must arise from a Medicare Part A or Part B Qualified Independent Contractor (“QIC”) reconsideration decision;

4. All jurisdictional requirements for OMHA or Council review were met for the eligible appeals;

5. The amount of each individual claim in an appeal must be $100,000 or less (for the purposes of an extrapolated statistical sample, the overpayment amount extrapolated from the universe of claims must be $100,000 or less);

6. The appellant cannot have filed for bankruptcy and/or expect to file for bankruptcy in the future; and

7. Certain appellants that have or have had False Claims Act litigation or investigations pending against them, or other program integrity concerns, including pending civil, criminal, or administrative investigations will be ineligible.

The expanded SCF program is designed to resolve large volumes of claims at the ALJ or Council levels, or lower volumes of claims at the ALJ or Council levels with high billed charges. With such broad eligibility criteria we anticipate that many appellants will be eligible to participate in the SCF process. There are recommended best practices and strategies for participation in SCF. Prior to the facilitation CMS will select a sample of claims that it will review. CMS will then form an opinion on the strength of the claims. Appellants should prepare a thorough evaluation of the sample claims through a comprehensive position paper with supporting documentary evidence and testimonial support and share this information with CMS prior to the facilitation. Appellants should also consider showcasing their major strengths, accolades and any unique considerations for CMS’ review. A thorough and strong posturing of the case prior to the facilitation can have a substantial impact on the success of the facilitation.

The voluntary and expedited nature of the SCF process should be attractive to Medicare appellants. If settlement is not reached, an appellant’s claims return to the ALJ appeals process in the order in which they were originally received. Although OMHA did not establish a firm time table for initiation and completion of the SCF process, a conservative estimate is that this process takes a minimum of ten weeks from the date an appellant receives OMHA’s spreadsheet identifying eligible claims until the date of the facilitation. In comparison to the Medicare appeals process that at recent estimates takes nearly 173 weeks at the ALJ level of appeal alone, SCF offers an expedited resolution process.

SCF and LVA promote the efficient use of judicial and appellant resources and encourage expedited resolution opportunities. Where the alternative to participation in these programs is the backlogged administrative appeals process, appellants with pending and eligible claims should consider participation in SCF and LVA.