Faced with an 18-month backlog of hundreds of thousands of appeals on cases in which auditors say hospitals billed Medicare for inpatient services that should have been billed at outpatient rates, the Centers for Medicare & Medicaid Services (CMS) is offering hospitals a deal:  drop your appeals and accept a payment of 68 percent of the amount in dispute.

Under the offer, acute-care and critical access hospitals have until October 31 to accept CMS’s terms, and once the paperwork is completed, they should receive their payments within 60 days.  Hospitals must be willing to relinquish all of their short stay-related claims; they cannot seek payment for some but continue to appeal others.

The offer has both appeal and risk:  on one hand, hospitals that have large sums of money – millions – tied up in appeals could receive a welcome infusion of cash; on the other hand, accepting the agreement means foregoing the possibility of additional money they might have received if their appeals succeeded.

The cases all involve Medicare-covered short hospitals stays in which hospitals billed Medicare for inpatient stays but Medicare’s auditors – contractors that perform audits for the agency under its Recovery Audit Program (RAC) – concluded that such care should have been billed at less-costly outpatient rates.  Only appeals of this type of case are eligible for the settlement offer.

To learn more about the appeals backlog and Medicare’s plan for addressing it, read this notice on CMS’s web site.