Blog, Reimbursement

Guide to Hospital Reimbursement Appeals

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Proper Medicare reimbursement is crucial for hospitals. It fuels their ability to provide high-quality care, invest in cutting-edge technology, and attract skilled staff. The complexities of Medicare cost reporting, however, can lead to denials and discrepancies, thus threatening financial stability.

Hospitals facing cost report denials often embark on a challenging appeals process. Stringent deadlines, precise discrepancy documentation, and well-supported arguments are all essential for success. However, navigating the legalities, reimbursement calculations, and intricate Medicare regulations can be overwhelming.

Turn Medicare appeal challenges into victories by listening to BESLER’s expert-led webinar and podcast series. Kristin DeGroat, BESLER’s General Counsel; Christina Brown, BESLER’s Director of Reimbursement; and Leslie Goldsmith, Partner at Bass, Berry & Sims, offer invaluable legal expertise and guidance on the finer points of navigating the hospital reimbursement appeals process.

Understanding Cost Report Appeals 

Hospitals rely on Cost Reports to secure fair Medicare reimbursement. These reports outline the costs incurred during healthcare service delivery and are crucial in determining payment for treating Medicare beneficiaries. Medicare intermediaries review the submitted Cost Reports for accuracy and may request additional documentation.

The reviewed Cost Report, along with established payment policies, ultimately determine a hospital’s current reimbursement. However, the significance of Cost Reports goes beyond immediate financial impact. 

The data they contain, when combined with information from Medicare Parts A & B (MedPar), builds a critical foundation. This combined dataset informs Congress and the Centers for Medicare & Medicaid Services (CMS) when setting future payment rates and making policy decisions regarding Medicare reimbursement.

Protested Amounts

Hospitals can dispute disallowed costs through “protested amounts.” The hospital includes these costs on the Cost Report (usually on Worksheet E) as allowable under Medicare. Hospitals should preserve appeal rights by either claiming the cost as allowable or “self-disallowing” it, providing an explanation and estimated reimbursement amount. This ensures the ability to fight for these costs later, even if initially denied.

Amendments vs. Reopenings

Navigating Cost Report adjustments can involve two key options: amendments and reopenings. While both aim to rectify errors, they differ in purpose and timing:

Amendments

Amendments are ideal for addressing material errors identified before the official Notice of Program Reimbursement (NPR) is issued. These errors must significantly impact the hospital’s reimbursement. 

Common reasons for amendments include miscalculations or incorrect application of specific cost reporting rules, like Disproportionate Share Hospital (DSH) adjustments. Medicare Administrative Contractors (MACs) may decline amendments unless they significantly affect reimbursement.

Reopenings

The provider, CMS, or the MAC can initiate reopenings. They are allowable within three years of the NPR being issued, providing a broader window for addressing errors. If fraud is suspected, there’s no time limit for requesting a reopening.

The Provider Reimbursement Review Board (PRRB) Appeals

The Provider Reimbursement Review Board (PRRB) is an independent panel that settles hospital reimbursement disputes. Established by federal law, the PRRB has five members with expertise in healthcare and finance. Hospitals can appeal decisions, including final Cost Reports, quality program payment reductions, and even inaction from Medicare contractors.

Filing Requirements

Navigating a PRRB appeal requires strict adherence to deadlines and details. Appeals must address a final decision exceeding $10,000 (individual) or $50,000 (group) and be filed within 180 days.

The Office of Hearings Case and Document Management System (OH CDMS) has required all electronic filings to include supporting documents like the determination appealed and relevant adjustment documentation. Success depends on presenting a well-supported case with clear evidence and strong arguments, in addition to meeting requirements.

Life Cycle of a PRRB Appeal

After disagreeing with a Medicare reimbursement decision, the PRRB appeal progresses through several stages in its life cycle. First, ensure the criteria for a PRRB appeal are met. This entails disagreeing with a final determination, meeting a minimum dispute amount, and filing within 180 days.

Once eligible, the formal appeal, along with supporting documents, is filed electronically through the OH CDMS. The process advances by exchanging written arguments with the MAC and attending a hearing before a PRRB panel, conducted in various formats. After the hearing, the PRRB issues a written decision, which providers can further appeal through a reconsideration request or a federal court lawsuit.

Commonly Appealed PRRB Issues

Navigating the complexities of Medicare reimbursement can lead to disputes that appear before the PRRB. Hospitals facing appeals typically encounter a recurring set of issues:

Disproportionate Share Hospital (DSH) Payments

DSH payments are a critical source of funding for hospitals serving a high volume of low-income patients. These payments help offset the additional costs associated with treating this vulnerable population. Calculating a hospital’s Disproportionate Patient Percentage (DPP) is crucial for determining the DSH payment amount, as it considers the percentage of patients covered by Medicaid and Medicare.

Recent changes have added complexity to the calculation process by phasing out traditional DSH payments for uncompensated care payments. Disagreements between hospitals and Medicare contractors emphasize the need to understand DSH calculations and the appeals process.

Graduate Medical Education (GME) and Indirect Medical Education (IME) Payments

These programs financially support hospitals in training future healthcare professionals. The methods used to calculate these payments, such as resident full-time equivalent (FTE) counts and available bed factors, can cause disputes. The weighting of resident FTEs beyond the initial residency period, as seen in Hershey Medical Center v. Becerra, is another area where hospitals might seek appeal.

Nursing and Allied Health Education Costs

Nursing and Allied Health Education Costs are considered pass-through expenses for hospitals that operate their educational programs. The specific allowable costs (clinical vs. classroom) can differ based on whether the program is provider-operated. Recent heightened scrutiny from CMS audits has made this a more frequent concern for hospitals.

Medicare Bad Debt

When Medicare beneficiaries are unable to pay their copays and deductibles, hospitals can incur bad debt. However, to qualify for reimbursement, they must demonstrate “reasonable collection efforts” and adhere to the CMS “must bill” policy. Additionally, determining financial hardship for patients can be a complex issue that hospitals may need to address during appeals.

Wage Index

The wage index influences healthcare reimbursement by considering labor costs in their geographic area. Hospitals can appeal the final wage index if they doubt the calculation accuracy, as seen in Citrus HMS, LLC v. Becerra. Appeals usually concentrate on a hospital’s data, as illustrated in Dignity Health v. Price.

Quality Reporting

Hospitals participating in various Medicare programs are required to submit quality data to CMS. Failure to comply can result in reduced annual payment updates. While hospitals frequently file PRRB appeals regarding quality reporting, success at the PRRB level for these issues is less common.

Understanding these common issues can help hospitals anticipate potential areas of dispute and prepare for a more effective appeal process.

Your Guide to Successful Hospital Cost Report Appeals

Managing day-to-day operations while diligently monitoring cost reports and reimbursement accuracy can stretch teams thin. Hospital reimbursement appeals process intricacies and careful documentation, legal comprehension, and potentially intricate calculation requirements may strain internal resources.

BESLER brings specialized knowledge and experience to the table, allowing your internal team to focus on core competencies. Our expertise empowers you to navigate the complexities of a PRRB appeal confidently, ultimately increasing your chances of a favorable reimbursement decision.

Partner with BESLER During the Hospital Reimbursement Appeals Process

Securing fair Medicare reimbursement through hospital Cost Report appeals requires a well-supported approach with strict deadlines and specific requirements. While the process can be complex, understanding key concepts and the role of the PRRB empowers hospitals to navigate disputes over staffing costs, bad debt, and quality reporting. 

BESLER’s specialists alleviate this burden, simplifying hospital cost report appeals. Our Guide to Appeals podcast and webinar series focus on Cost Report appeals with a dive deep into the intricacies, equipping you with the knowledge you need to navigate every step. 

Don’t let reimbursement complexities hinder your ability to deliver exceptional care. Team up with BESLER for a proactive approach to optimize healthcare revenue integrity and ensure your hospital receives its deserved reimbursement.

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