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AHA Offers HHS Solutions to Reduce Medicare Appeals Backlog

The AHA asked a federal judge to require HHS to implement several solutions to decrease the Medicare appeals backlog, including a settlement option and repayment delays.

By Jacqueline LaPointe

- The American Hospital Association (AHA) recently advised the Department of Health and Human Services (HHS) to implement three solutions that would significantly reduce the Medicare appeals backlog at the administrative law judge level.

The AHA called on a federal judge to require HHS to implement practicable solutions to reduce the Medicare appeals backlog

The potential solutions include offering reasonable settlements to providers, postponing repayment of disputed Medicare claims and tolling the interest, and imposing financial penalties on recovery audit contractors for high overturn rates.

“The three reforms described above offer real solutions to remedy the Secretary’s continued statutory violations,” the organization stated in a request to a federal judge. “The Court should therefore order the Secretary to implement some meaningful version of all three reforms, or to offer and implement proposals of her own that would have at least as significant an effect on reducing the backlog and on minimizing its impact in the interim.”

Meaningful reforms and solutions are needed to resolve the growing Medicare claims appeals backlog, the AHA contended. At the administrative law judge level, hearings are not typically held for 935.4 days, ten times longer than the 90-day statutory time limit, according to a cited HHS report from July.

HHS also estimated that the administrative appeals backlog will grow to more than 700,000 appeals by the end of this year.

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To start alleviating the Medicare claims appeals backlog, the AHA recommended that the HHS Secretary pursue broad, reasonable settlements like she did in 2014 with Medicare hospitals that had inpatient status claims stuck in the appeals process.

In 2014, CMS offered hospitals the option to settle some inpatient status claims for 68 percent of the claim amount. Eligible hospitals could take the settlement or choose to wait for the appeals process to decide on their claims.

CMS paid nearly $1.47 billion in 2015 to 2,022 hospitals as part of the settlement offer, the federal agency reported in August. The settlements ended the appeals process for roughly 346,000 claims.

The AHA suggested that HHS extend the 68 percent settlement option to all hospitals or all Medicare Part A providers. The HHS Secretary, the organization added, should at least offer reasonable settlements to a significant portion of providers and suppliers who have general commonalities, including inpatient rehabilitation facilities, skilled nursing facilities, and durable medical equipment suppliers.

HHS should also delay disputed claims repayments and interest accruals on claims for as long as the appeal is pending beyond statutory timeframes at administrative review levels, the AHA advised. The repayment deferment would ensure that provider who have claims reimbursement revenue stuck in the appeals process would have the capital available for operations and quality improvements.

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The AHA also contended that the delay in interest accrual would prevent providers from being unfairly penalized for claims appeals that take longer than the statutory time limits.

The organization stated that HHS could implement repayment and interest accrual deferments through demonstration projects targeting post-payment reviews. For example, HHS could implement a demonstration for hospitals or other Part A providers who are more affected by appeals process delays and whose financial challenges more directly impact public health. The federal department could also develop demonstrations for providers whose pending claims are greater than a specific monetary threshold.

HHS stated in prior court cases that the Secretary does not have statutory authority to suspend repayment and interest accrual, but the AHA noted that significant delays in the Medicare appeals process override the regulation.

Medicare stipulates that interest on overpayments should accrue on and after the original notice of overpayment, but the stature also states that the appeals process should only take a year. Since HHS is responsible improper statute implementation, the federal department should not be entitled to recover the additional interest.

The AHA also argued that HHS regulations state that the Secretary can suspend debt collection activities if a debtor requests a waiver or review.

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The final solution proposed by AHA would implement financial penalties on recovery audit contractors (RAC) for poor performance. The Recovery Audit Program contributed to more claims appeals between 2010 and 2014, GAO reported in May. But 57 percent of RAC-related appeals were overturned in the provider’s favor at the administrative law judge level in 2014.

“The Court should order the Secretary to implement a more effective check on the RAC program by imposing financial penalties on RACs for high reversal rates,” the AHA advised. “In order to effectively deter indefensible claim denials, the financial penalties must be significant and must be linked to a meaningful level of the appeals process.”

Alternatively, the AHA developed another plan to reduce the Medicare claims appeals backlog if the court does not agree with their solutions. The organization called on the court to compel HHS to make quantifiable progress according to a set schedule and report to the court on its progress every 60 days.

The AHA put forth the following schedule for eliminating the Medicare claims appeals backlog at the administrative law judge level:

• 30 percent reduction in backlog by Dec. 31, 2017

• 60 percent reduction in backlog by Dec. 31, 2018

• 90 percent reduction in backlog by Dec. 31, 2019

• Elimination of backlog by Dec. 31, 2020

• On Jan 1., 2021, default judgement in favor of all claimants whose appeals are still pending without a hearing for more than a year

In September, a federal judge struck down an HHS request to delay court proceedings on the Medicare appeals backlog case. The judge stated that proposed HHS efforts to reduce the backlog, such as implementing more prior authorizations for certain services, adding more administrative law judges, and working with Congress to increase the appeals budget, were not sufficient to make “meaningful progress.”

The case will be reconsidered for mandamus, which, if granted, would require HHS to comply with statutory timeframes for the Medicare claims appeals process.

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