Navigating the Currents of Medicare Cost Report Appeals

The Medicare cost report appeals process has become even more intricate with the number of health care laws enacted or amended over the last decade. As a result, both The Centers for Medicare & Medicaid Services (CMS) and health care providers need an objective third-party to help them navigate through the intricacies of appeals related to Medicare reimbursements.

At the end of each fiscal year, hospitals and institutional health care providers are required to file a cost report with the government, somewhat like a tax return, that gives details of all the costs and payments accrued through the year, with the aim of accurate reimbursement from the Medicare program. Typically, health care providers file an appeal if they dispute a Medicare Administrative Contractors’ (MACs) audit adjustment or if they contest the application of new CMS reimbursement rules and regulations.

As modifications are continuously made and updated for reporting requirements, regulations, and expectations for claiming allowable Medicare reimbursement, there is a corresponding impact on the number of cost report appeals received by MACs. As a result, MACs have seen an uptick in pending or open cost report appeal cases. The management of the cost report appeals process for health care providers is challenging as the workload increases in volume and complexity.

“The provider has included a specific cost on their cost report and we, as the MAC, make an adjustment to it,” explains an associate from National Government Services, an Anthem company that provides health IT solutions and services to government agencies and handles cost report appeals for health care providers.

“For example, the provider might claim bad debt expense reimbursement for $1 million. After reviewing the bad debt expense based on current published rules and regulations, a determination may be made only allowing $600,000 in claimed bad debt expense, resulting in the disallowance of the remaining $400,000 in claimed expense. The provider might not agree with the adjustment to disallow the expense, resulting in the provider engaging their appeal rights.”

More Pending or Open Appeals

It is becoming more common for providers to appeal a determination or a change to reimbursable cost rules or regulations that CMS or the government has established. “That has driven up the level of pending or open appeals that we have right now,” the National Government Services associate noted.

If there are disputes about the treatment of claimed costs and whether a health care provider should be reimbursed, the provider files an appeal with the Provider Reimbursement Review Board (PRRB). The PRRB controls, manages and tracks all appeals. After the appeal is acknowledged, it is given a case number. Then critical due dates are set for various activities that the MAC and health care provider both follow. If the appeal cannot be resolved amicably between the MAC and provider, a hearing would be necessary.

Need for Consistency

Each MAC has its own geographical territory and handles the hospitals and health care providers within its territory. For instance, National Government Services handles all Medicare reimbursement issues for the hospitals in its area, including cost reports, claims, and the appeals process. If National Government Services handled a health care provider’s cost report review, then the company can seamlessly manage the appeals process. National Government Services also supports other MACs in a subcontract role. National Government Services manages cost report appeals with one consolidated team using consistent policies and procedures, instead of managing each contract/territory separately. This approach helps mitigate any inconsistencies which may occur when appeals are processed independently by each MAC.

 “When you have numerous territories and MACs, and the fact that many appeals fall into areas of the regulations that may not be clearly defined, we may proceed with one approach and another MAC may have a different approach,” the National Government Services associate noted. The cost report appeals workload is a heavy mix of auditing and legal interpretation of rules and regulations, and both of those are subject to professional opinion.

“We write a lot of legal briefings or documents called ‘position papers’ that outline our position of the arguments of the appeal. When you have numerous MACs administered by multiple organizations, it does lead to an opportunity for inconsistency,” he noted.

Seamless Appeals Process

Built on a foundation of creating innovative and cost-saving programs, National Government Services has decades of experience in the federal health care space. The company is uniquely positioned to provide solutions for evolving federal health care challenges.

For instance, National Government Services uses a one-stop shop concept for cost report appeals. The company handles the entire cost reporting appeal process, from acknowledgement to closure, with the same team for both prime and subcontracting arrangements. This allows a seamless operation because the provider works with the same National Government Services staff for the entire life of the appeal.

National Government Services has been able to effectively manage the process by developing strict policies, case management, and specific experts to handle the workload while leveraging technology such as workpaper management software to make the full appeal process electronic. This allows all National Government Services staff to have secure access regardless of their physical location.

“Everything that comes into our shop is handled by a small group of people. Having a dedicated team to focus on the receipt of cost report appeals has driven consistent performance results. The performance results are predicated on robust controls and policies intended to ensure all associates are handling things properly,” said the National Government Services associate.

For instance, CMS has a web-based system called STAR, or System for Tracking Audit & Reimbursement, which CMS developed to track the process of an appeal. The National Government Services’ Appeals Team developed a workflow and controls ensuring the STAR system is updated within 10 days after receiving documentation from a health care provider.

To be effective, National Government Services approaches every appeal as an intermediary. “We don’t automatically take the government’s position and we don’t automatically take the provider’s position. We analyze each individual case on its own merit. We want to make the appeal or problem right, if there is a problem.”

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