News: CMS says hospitals received nearly $1.5 billion in 2015 Medicare billing settlement

CMS doled out $1.5 billion to more than a third of U.S. hospitals as part of a longstanding Medicare billing dispute, according to data released by the agency. The top payouts include New York-Presbyterian Hospital ($16 million), North Shore University Hospital in Manhasset, New York ($14.5 million), and CHI Memorial Hospital in Chattanooga, Tennessee ($10.9 million).

In total, 2,022 hospitals shared in the government payout, which settled 346,000 claims for reimbursement for treating Medicare patients admitted on or before Oct. 1, 2013. The largest payments resolved thousands of claims at once—Memorial Hospital’s settlement covered nearly 3,000 claims, according to CMS.

The settlements were a compromise to reduce the backlog of Medicare appeals. In 2014, CMS offered to pay hospitals 68% of the value of inpatient claims that had been held up in Medicare’s hearings and appeals process, some of which were awaiting a decision by an administrative law judge for more than eight years, according to the Office of Medicare Hearings and Appeals.

Medicare pays private contractors known as recovery audit contractors (RACs) to review hospital claims for improper payments. If a hospital disagrees with RACs’ decisions, they can appeal. Most RAC reviews focus on medical necessity of inpatient status, questioning whether it was necessary to admit certain patients to hospitals if cheaper outpatient treatment would suffice, an issue CDI professionals are all too familiar with.

While many hospitals opted to settle quickly for a discounted amount, some declined and chose to continue their appeal. 18% of appealed claims were overturned in favor of hospitals between October 1, 2013 and September 30, 2014, says CMS.