Court Denies HHS Wish to Delay Medicare Appeals Backlog Case

September 21, 2016 - A federal district court recently denied a request from the Department of Health and Human Services (HHS) to postpone proceedings on a Medicare appeals backlog case until Sept. 30, 2017, according to the court’s decision.

US District Judge James E. Boasberg asserted that the ongoing lawsuit, filed by the American Association Hospital (AHA) and three hospitals in May 2014, has “equitable grounds for mandamus,” which would require HHS to comply with statutory deadlines for all Medicare appeals. Therefore, the court could not issue further delays to the proceedings.

“As was true two years ago, the Court is reluctant to intervene,” said Boasberg. “But the backlog and delays have only worsened since Plaintiffs first sought the Court’s help, and the Secretary’s proposed solutions are unlikely to turn the tide. The Court accordingly will deny the Secretary’s Motion for Stay.”

Providers can appeal Medicare claims denials through a four-step administrative appeals process, the court decision explained. Each step must be completed within a statutory deadline. For example, a determination must be handed down within 60 days at the first two levels and within 90 days at the Office of Medicare Hearings and Appeals and Departmental Appeals Board levels.

A Medicare appeal should go through all four steps of the appeals process within a year. However, a substantial backlog recently formed at the third level, where administrative law judges review appeals, causing decision delays.

Between 2010 and 2014, the number of appeals filed at the third level increased by 936 percent. Ninety-six percent of administrative law judge decisions were issued after the 90-day limit, according to a Government Accountability Office report from May.

As a result, the average number of days to receive a decision from the Office of Medicare Hearings and Appeals jumped from 415 days to 935 days, stated HHS in a report from July.

With healthcare revenue stuck in the appeals process for many providers, the AHA decided to file a lawsuit to compel the federal department to follow legal deadlines. But HHS requested a stay of proceedings in May until the next appropriations cycle.

Judge Boasberg denied the HHS request because the federal department’s proposed administrative and legislative fixes are not enough to constitute sufficient progress towards a solution according to the court’s standards.

In a previous court briefing cited in the recent decision, HHS Secretary Sylvia Mathews Burwell offered four administrative resolutions for reducing the Medicare appeals backlog. The fixes included efforts to encourage more settlements at the CMS-governed appeals levels and the addition of more front-end limitations, such as prior authorizations for particular services. HHS projected the changes to decrease pending appeals by 27,000 and 269,000 cases respectively by the end of 2020.

Burwell also proposed several changes to the highest appeals levels, such as an option to waive the right to an oral hearing before a judge, bringing retired judges back to help mitigate the caseload, and using analytics to make decisions for certain cases. HHS estimated that the interventions would reduce the pending appeals by 56,000 cases in the next four years.

HHS also proposed changes to the Recovery Audit Program, including limiting the number of reviews under a given topic, paying contractors only after decisions are upheld, and offering providers the chance to discuss the appealed claim. The proposal is projected to decrease the number of appeals by 22,000 cases by the end of 2020.

While HHS contended the administrative changes would lead to 50 percent fewer backlogged appeals at the Office of Medicare Hearings and Appeals in 2020, Judge Boasberg stated that the figures do not account for the growing number of appealed cases every year. He noted that the backlog would still be over 1.9 million cases by the end of 2020 with the increasing rate of appeals.

“ ‘Significant progress toward a solution’ cannot simply mean that things get worse more slowly than they would otherwise,” wrote Boasberg. “It has to mean real movement towards statutory compliance. The process must improve. By the Secretary’s own numbers, the proffered administrative fixes do not clear that bar.”

Secretary Burwell also offered several legislative resolutions, such as increasing the budget for the appeals process, permitting HHS to use payment recoveries from the Recovery Audit Program to supplement higher level appeals offices, and using less expensive Medicare Magistrates in lieu of administrative law judges.

However, legislative fixes rely on timely Congressional action, and Congress has yet to hold hearings on the proposed budget increases, countered Judge Boasberg. Congress also refused to provide additional funding to the Medicare appeals process for 2016.

“While it is not the Court’s role to comment on the priorities of a co-equal branch of government, it must draw the conclusion that Congress is unlikely to play the role of the cavalry here, riding to the rescue of the Secretary’s besieged program,” stated Judge Boasberg.

The court concluded that Secretary Burwell’s proposed resolutions would not result in “meaningful progress” to cut down the Medicare appeals backlog and the lawsuit’s call for mandamus has grounds for further proceedings.

The AHA commended the court’s decision. In a statement, Melinda Hatton, AHA Senior Vice President and General Counsel, said that it “rightly recognizes that HHS has neither developed nor even offered any realistic plan for resolving the backlog of appeals and that only a court order will ensure that it takes the immediate, concrete, and feasible steps necessary to come into compliance with the mandatory deadlines.”

Dig Deeper:

• What is Healthcare Revenue Cycle Management?

• Can Changes to Medicare Reimbursement Appeals Reduce Backlog?