To appeal or not to appeal: that is the question. Medicare cost report appeals can be extremely profitable, but which issues are worth the time and effort to appeal?
Without doubt certain appeal issues are extremely valuable. In fact, according to an article by the Los Angeles Times, the 2008 Rural Floor Budget Neutrality Adjustment Factor Appeal and subsequent litigation is estimated to award over $3 billion to the 2,200 hospitals that appealed this issue.
In this article, we will share the framework for deciding how and when to appeal underpaid or denied Medicare Part A reimbursement claims and explore the different types of appeals.
Medicare Cost Report Appeals Process
Appeals are powerful tools for providers because they send a clear and direct message to the Medicare Administrative Contractors (MAC), as well as elected representatives in Congress, laser focusing attention on unfair or debatable Medicare payment practices.
The Provider Reimbursement Review Board (PRRB) handles appeals of facility related Medicare payment issues, typically for items paid through the Medicare Cost Report settlement process. Types of facilities filing appeals include acute care IPPS hospitals, rural referral centers (RRC’s) and critical access hospitals (CAH’s), long term care hospitals (LTACS), hospices, skilled nursing (SNF’s), and behavioral health facilities.
The timeline and level of return for successfully appealing specific contested underpayments can differ greatly from issue to issue – such as Medicare Bad Debt, DSH, GME, or Allied Health Sciences. When submitting an appeal on a filed Cost Report, or challenging audit adjustments on an NPR (Notice of Program Reimbursement), a provider must carefully determine, on an issue-by-issue basis, what level of resources to invest in protecting appeal rights.
If you’re exploring the possibility of engaging an outside partner to appeal on your behalf, providers should consider the following things:
- Probability of success;
- The dollar amount at stake;
- And the estimated timeline to resolution.
Items protested on the filed Cost Report, prior to audit and the resulting NPR, require a written rationale for why the provider feels each item should be paid, and a detailed calculation supporting the protested amount.
To realize financial benefit from protecting appeal rights on the as-filed Cost Report, sufficient time and resources must be dedicated to properly file the appeal with the PRRB. Providers must be prepared to follow up the appeal filing with legal briefs and potentially participate in a hearing and further Federal Court litigation if the issue cannot be administratively resolved in a timely manner.
NPR appeals, (as distinguished from Federal Register appeals), must be filed in a timely manner with the PRRB within 180 days of receipt of the NPR. The NPR is presumed to arrive by 5 days after the date on the NPR issuance, effectively allowing for a total of 185 days to file. (Reference: PPRB Rules Version 3.2, Rule 4.3.1, Commencement of Appeal Period).
Fact vs Policy Appeals: Adapting Your Appeals Strategy to the Issue
As a general rule, fact-based appeals are resolved quicker and via a different route than payment policy challenges. Since fact and policy related appeal differ in terms of time to final settlement and delegated resolution authority, it is essential to make some high-level distinctions between these major genres of appeal issues before getting into the weeds about the scope of appealable adjustments and relative cost benefit for individual issues.
Fact-Based Appeals
Frequently the MAC’s audit adjustments are due to perceived deficiencies in the accuracy and completeness of the provider’s supporting Cost Report detail, particularly for those data elements that drive reimbursement.
With documentation disputes, there may be no substantive disagreement between the provider and the MAC about the underlying reimbursement method or CMS policy. These appeals typically involve a claim and counterclaim regarding the quality, quantity, and timeliness of supporting data.
The MAC’s documentation related adjustments can address issues rooted in fact, such as proof of eligibility detail for traditional DSH, or billing records supporting claims for Medicare Bad Debt.
In terms of return on investment, it is important to note that the CMS Appeals Support Contractor (ASC) – also known as the Federal Specialized Services or FSS – for Medicare Part A Provider Appeals, resolves a significant number of appeals that are well-presented and substantiated with fact-based evidence. The appeal settlement agreements are referred to as “Administrative Resolutions” (ARs). ARs usually result in additional payments to the provider.
Policy-Related Appeals
Certain contested Medicare payment practices with substantial financial impact result from disputed CMS policy interpretating and applying reimbursement regulations and laws. Such was the case with the RFBNA $3 billion underpayment, which ultimately resolved in the providers’ favor.
Policy related appeals generally correspond to the interpretation and application of official CMS issuances such as annual IPPS Final rules, CMS Rulings, or Technical Direction Letters (TDLs).
CMS Ruling are decisions of the Administrator that serve as precedent final opinions and orders and statements of policy and interpretation. Rulings provide clarification and interpretation of complex or ambiguous statutory or regulatory provisions relating to Medicare, Medicaid, Utilization and Quality Control Peer Review, private health insurance, and related matters.
The CMS appeals contractor, or FSS, is tasked with handling appeals and negotiating AR’s. FSS has virtually no discretion to settle cases pertaining to policy matters until that policy has been changed by CMS, possibly in response to a court decision or CMS reconsideration acceding to provider-initiated push back.
Appeals of policy or regulatory driven cost report adjustments need to be initiated in the same manner as fact-based hospital specific issues. Policy oriented issues appealed at the individual hospital level can later be added to group appeals of the same issue. National policy issues are complex and usually not settled for several years, and even then, only after multiple appeals to higher courts including the Supreme Court.
As such, challenges to CMS standing reimbursement practices are generally too expensive and risky for a single hospital to litigate. Group appeals present a united front to CMS and provide a much more economical avenue to profitable resolution because they divide the appeal cost among many providers.
One strategy for appealing policy issues is to initially add the issue as a placeholder to the list of the hospital’s appealed issues, specifically to protect appeal rights in the shorter term. Once filed with the PRRB, the placeholder issue can later be transferred to a multi-provider group appeal.
Federal Register Appeals
Certain reimbursement issues with significant financial impact, such as the DRG Base year appeal, can, and arguably, should be appealed directly from CMS issuances published in the Federal Register as well as from the cost report.
Federal Register appeals are prospective in nature and so do not require an NPR or even a filed Cost Report as prerequisites for filing with the PRRB.
It is important to note however, once the initial Federal Register appeal is filed, the same issue should be appealed yet again via the Cost Report NPR route at the time when the Federal Register item appealed ultimately and effectively reduces future Cost Report settlements.
Federal Register appeals need to be filed 180 days from the date of publication in the Federal Register and do not have the 5-day mailing buffer that Cost Report appeals have from the NPR issuance date.
Contact Blue & Co. About Cost Report Appeals
Blue & Co., LLC has substantial experience helping clients navigate these appeals, resulting in tens of millions of dollars of additional reimbursement.
If your healthcare organization would like additional information on the Medicare Cost Report appeals process, reach out to members of our reimbursement team or your local Blue & Co. advisor today.
Jack Ahern, Reimbursement Principal
jahern@blueandco.com
