CMS Offers Deal to Hospitals to Drop RAC Appeals

On August 29, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a deal to hospitals willing to drop pending inpatient-status claims appeals. These appeals have grown exponentially in recent years due to the review process of recovery auditor contractors (RACs). Through the deal, CMS would pay 68% of the claims at issue in exchange for the hospital’s withdrawal of these types of pending RAC appeals. CMS made this announcement through an unassuming posting on its website.

This deal is currently only available to Acute Care Hospitals and Critical Access Hospitals. The move, however, shows that CMS recognizes the problems arising from the significant backlog in pending RAC appeals and perhaps indicates that further change is coming.

Eligible hospitals should be aware that the offer is only to settle inpatient-status claims. Further, the option of submitting a request for settlement through this program is all-or-nothing for each hospital, i.e., CMS reiterated that “a hospital may not choose to settle some claims and continue to appeal others.”

Hospitals that want to take advantage of this deal and request a settlement must follow the procedure outlined by CMS on its website and must submit such request by October 31, 2014, although extensions may be granted.