Reimbursement News

GAO: Backlog Persists for Claims Reimbursement Appeal Process

The GAO found that a backlog of claims reimbursement disputes will continue unless HHS agencies standardize types of data collected and include more appeals information in their systems.

By Jacqueline LaPointe

- Discovering that a claim has been denied is hard enough, but the appeals process that manages claims reimbursement disputes may be even harder to handle for most healthcare providers.

Claims reimbursement appeals process generally takes longer than statutory timeframe

According to a recent report from the Government Accountability Office (GAO), the number of appeal decisions given after statutory timeframes had generally increased between 2010 and 2014 and the backlog of appeal decisions is not expected to improve in the near future.

The report noted that level three and four (out of five total) of the administrative appeal process had significant delays in providing appeal decisions. For example, administrative law judges gave 96 percent of level three appeal decisions in 2014 after the statutory timeframe.

The Centers of Medicare and Medicaid Services (CMS) told the GAO that the delays were mainly caused by high volumes of appeals as well as challenges with implementing new correspondence tools and a lack of budget to hire more staff.

Upon investigation, the GAO uncovered that claim denial appeals for Medicare fee-for-service claims had risen significantly between 2010 and 2014.  Level three of the appeals process had experienced a 936 percent increase in cases disputing Medicare claim denials. The slowest rate of increase was at level one with 62 percent more appeals.

Medicare Part A services and denied durable medical equipment, prosthetics, orthotics, and supplies (DMPEOS) claims were the most common sources of appeals during the period.

The Department of Health and Human Services (HHS) attributed the rise in appeals volume to an increase in integrity programs that aimed to prevent healthcare fraud and identify improper payments. For example, Congress expanded the Recovery Audit Program, which identifies and resolves improper Medicare payments, in 2009.

Under these programs, Medicare Part A and B claim denials increased by 12.5 and 9 percent respectively, causing appeal rates to also rise.

HHS also explained that healthcare providers are more likely to appeal denied claims in the wake of more integrity programs.  More providers and state Medicaid agencies filed appeals during 2010 and 2014, while appeals filed by beneficiaries declined.

However, a smaller number of providers and state Medicaid agencies had submitted a large portion of the appeals. Four DMPEOS providers and one state Medicaid agency had filed half of the appeals at level three in the first quarter of the 2015 fiscal year alone.

While more claims reimbursement disputes led to delays in decisions, it also caused an increase in Medicare spending. CMS pays interest on reversed postpayment claim denials if a decision is not reached by the statutory deadline.

Between 2010 and 2015, CMS paid $17.8 million in interest payments due to deferred appeal decisions.

The GAO reported that HHS can reduce appeal volumes and decrease decision times by improving its data systems, including the application of consistent control standards.

CMS currently uses three data systems across the different administrative levels to manage appeals information. However, these systems capture data with different levels of specificity, which makes it difficult to track cases as they progress.

A prime example of this is hospice claims. The system at level one classifies hospice cases as “other” while level three considers them under home health appeals. Levels two and four, however, track hospice appeals as its own category.

The systems also do not gather all the information from the cases, such as reasons for level three appeal decisions and amounts of allowed Medicare payments, stated the GAO.

At level three, the system does not include the rationale for the appeal decision, such as if the judge admitted new evidence or if CMS program guidance was disputed or followed. This information could be useful for HHS in regards to reducing level three appeals.

The amounts of claims reimbursement in question are also not included in most systems, noted the report. By collecting payment amounts, the GAO explained that HHS could conveniently stop appeals that reach a level with an amount limit, appellants would combine appeals to reach amount limits, reversal rates based on payable could be calculated, and agencies would know how much is at stake.

“The collection of these types of data, specifically reasons for ALJ [administrative law judge] decisions and the Medicare allowed amount associated with an appeal, could help HHS agencies strengthen their existing monitoring and data collection activities,” stated the report.

“This would be consistent with the federal standards for internal control that require agencies to conduct ongoing monitoring to assess the quality of performance over time to ensure operational effectiveness, and to run and control agency operations using relevant, reliable, and timely information.”

Despite several improvements that HHS agencies have made to provide more prompt adjudication, such as prior authorization models, clarifying coverage policies, and providing alternative dispute resolution programs, the GAO still predicted that the appeals backlog will not decrease.

Until HHS agencies are able to eliminate or consolidate appeals, the volume of cases will continue to surpass its adjudication capacities, concluded the report.

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