Judge Calls for Medicare Appeals Backlog Elimination by 2020

December 08, 2016 - The Department of Health and Human Services (HHS) must eliminate the Medicare appeals backlog at the administrative law judge review level by Dec. 31, 2020, a federal judge recently decided.

The most recent decision ends a two-and-a-half-year long case against HHS. The American Hospital Association (AHA) and several hospitals started the case to compel the federal department to comply with statutory deadlines for Medicare appeals hearings.

“Now, after a motion for summary judgment, a motion to dismiss for lack of jurisdiction, an appeal to and remand from the D.C. Circuit, and a motion to stay, the Court can finally grant Plaintiffs a remedy,” wrote District Judge James E. Boasberg in his opinion. “The incantation of mandamus does not generate an instantaneous cure-all for complex problems, however, and so this Opinion focuses on the form the relief will take.”

The case stemmed from a substantial Medicare appeals backlog at the third level of the administrative appeal process. HHS reported in July that appeal hearings at the administrative law judge level were not typically held for 935.4 days, ten times longer than the 90-day statutory limit.

The federal department also projected the administrative appeals backlog to increase by more than 700,000 appeals by the of 2016.

To resolve the Medicare appeals backlog, Boasberg issued a timetable that detailed when the federal department must reduce and eventually eliminate the Medicare appeals backlog. HHS must abide by the following schedule:

• 30 percent decrease in the current backlog of cases pending at the administrative law judge level by Dec. 31, 2017

• 60 percent decrease in the current backlog of cases pending at the administrative law judge level by Dec. 31, 2018

• 90 percent decrease in the current backlog of cases pending at the administrative law judge level by Dec. 31, 2019

• No backlog of pending cases at the administrative law judge level by Dec. 31, 2020

In addition to the timetable, the federal judge ordered HHS to provide the court with a status update every 90 days. The federal department must report its “progress in reducing the backlog and should include updated figures for the current and projected backlog, as well as a description of any significant administrative and legislative actions that will affect the backlog.”

If HHS fails to meet the deadlines, then the department may also have to grant default judgement in favor of the providers and other stakeholders issuing the claims denial appeal by Jan. 1, 2021. The default judgement would only apply to Medicare appeals that have been pending at the administrative law judge level without a hearing for more than a calendar year.

HHS Secretary Sylvia Mathews Burwell responded to District Judge Boasberg’s decision by arguing that the timetable would require her to “make payment on Medicare claims regardless of the merit of those claims,” which would conflict with Medicare regulations.

Boasberg countered Burwell’s statement by stating that HHS has already violated Medicare statute by not complying with statutory deadlines for Medicare appeals and the timetable provides a reasonable period for “proper claim substantiation.”

The American Hospital Association (AHA) viewed the court’s decision as a “victory for hospitals that continue to have billions of dollars in Medicare reimbursement tied up in a heavily backlogged appeals system.”

AHA General Counsel Melinda Hatton added, “To meet the court-ordered backlog reductions, we trust that HHS will implement real reforms critical to resolving the backlog, including fundamental reforms of the Recovery Audit Contractor program.”

In October, the AHA also provided HHS with three solutions to reduce the Medicare appeals backlog. The hospital group proposed offering reasonable settlements to providers, postponing repayment of disputed Medicare claims and interest, and imposing financial penalties on Recovery Audit Contractors with high turnover rates.

The AHA also put forth the timetable adopted by the court as an alternative to the proposed solutions.

While HHS questioned the AHA’s three proposed initiatives, according to Judge Boasberg’s opinion, it did implement one of them. CMS recently announced a settlement offer for providers with claims stuck in the appeals process.

The federal agency will pay interested hospitals 66 percent of the net allowable amount of some appealed inpatient status claims at the administrative law judge and Departmental Appeals Board levels. Providers can choose to take the settlement or continue with the appeals process. But if they accept the settlement, they must withdraw all pending appeals for inpatient status claims.

“CMS believes this process will ease the administrative burden of current appeals, and the associated litigation risk, for both the hospital and Medicare program,” CMS stated on its website.

Dig Deeper:

• Can Changes to Medicare Reimbursement Appeals Reduce Backlog?

• How to Maximize Revenue with Improved Claims Denials Management