Waiting Room: Medicare Appeals Tie Up Hospitals' Millions

by Mark Friedman  on Monday, Jun. 30, 2014 12:00 am  

During the federal government’s 2009 fiscal year, there were only 35,831 appeals filed with the Office of Medicare Hearing & Appeals for a review from an administrative law judge. In just four years, that number ballooned to nearly 385,000, the American Hospital Association’s lawsuit said.

Peterson, Baxter’s CEO, said it was around 2012 that Baxter Regional began getting notices from Connolly, the RAC for Arkansas, questioning the hospital’s judgment when it admitted patients.

“If you were getting 10 percent of whatever you recouped, wouldn’t you send out a great big fishing net?” he said.

After combing through medical records, Connolly found some patients didn’t “meet admission criteria, and so it should have been treated as an outpatient or observation patient,” Peterson said. “And we believe they met inpatient criteria.”

He said the hospital would receive, on average, about $8,900 a day for an inpatient patient, while if the patient was classified as an observation or outpatient, the pay would be $950 a day.

Melissa Jackson, senior associate director for policy at the American Hospital Association, told Arkansas Business last week that the RACs in some cases are going back and looking at the records of patients treated three years ago.

“The RAC is using, in most cases, someone who is not a physician to look at the claim,” Jackson said.

Based on the patient’s charts, the RAC will determine whether that patient should have been treated as an outpatient instead of an inpatient, she said.

CMS said on its website that each RAC has on its staff nurses, therapists and a physician.

Over the past two years, Connolly has questioned Baxter Regional about $11.6 million in charges to Medicare, Peterson said.

He said Baxter was able to prove its case and didn’t have to repay $7 million.

Baxter, like other hospitals, is waiting its turn to explain to an administrative law judge why it should have the $3 million returned to it that Connolly claims was improperly paid. By the end of the year, Peterson said the amount Baxer will be fighting to reclaim will rise to $4.6 million. Baxter expects to have a 90 percent success rate at the appeals level.



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