HHS Ahead of Schedule for Eliminating Medicare Appeals Backlog
The Medicare appeals backlog fell by 25 percent by the third quarter of FY 2019 compared to FY 2018 levels, HHS recently reported to a federal court.
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By - HHS reduced the Medicare appeals backlog at the administrative law judge level by 25 percent through the third quarter of fiscal year (FY) 2019, according to a recent status report obtained by the American Hospital Association (AHA).
The status report submitted to a federal court showed that HHS is ahead of schedule for reducing the Medicare appeals backlog at the administrative law judge level by the end of FY 2022.
A federal court ruled in favor of the AHA and other hospital plaintiffs last year and ordered HHS to decrease the number of pending Medicare appeals at the administrative law judge level according to a specific schedule.
The schedule mandated HHS to reduce the FY 2018 backlog of 426,594 appeals by 19 percent by the end of FY 2019, 49 percent by the end of FY 2020, and 75 percent by the end of FY 2021. The court then expects HHS to fully eliminate the backlog completely by FY 2022.
The first status report submitted to the federal court in July showed that the federal department hit its first goal of reducing the Medicare appeals backlog by about 19 percent as of July 1. The most recent report recently published by the AHA showed that the department is still making significant progress at the Office of Medicare Hearings and Appeals level, which houses the administrative law judges.
This month, the department reported that “[f]rom November 1, 2018 through the end of the third quarter of FY 2019, there has been a net reduction of 108,340 appeals pending at OMHA with a total of 318,254 appeals pending at OMHA by the end of the third quarter, which is a 25.4 percent reduction from the starting number of appeals identified in the Court’s November 1, 2018 Order (426,594 appeals).”
According to the AHA, HHS’ success with reducing the backlog largely stemmed from resolutions and settlement facilitation conferences, which HHS expanded in 2018 to allow for an alternative dispute resolution process.
Additionally, recovery audit contractor receipts remained low by the third quarter of FY 2019, with only 97 reported, AHA reported.
The AHA has previously argued that recovery audit contractors are one of the main drivers of the Medicare appeals backlog. The association explained to a federal court last year that recovery audit contractors receive a contingency fee based on ever improper Medicare payment identified and recovered, which incentivizes the contractors to go after more payments.
The AHA contended that the financing structure of the program has led to more aggressive improper payment investigations, and therefore, more appeals. A survey fielded by the AHA in 2016 found that six out of ten recovery audit contractor-reviewed claims did not show an overpayment despite the contractors identifying the claims as such. The survey also revealed that hospitals appealed almost half of all payments deemed improper by their recovery audit contractor.
The recovery audit contractor program needs to be reformed to effectively eliminate the Medicare appeals backlog at all levels of the process, AHA has argued. Specifically, the association has advised HHS to impose financial penalties on contractors with high overturn rates.
CMS announced recovery audit contractor reform last year. The agency implemented new rules that require contractors to maintain a 95 percent accuracy score or face a reduced volume of claims to investigate. The agency also started to hold back contingency fees until after the appeal clears the second level of the appeals process.
“As a result of these efforts, we’ve reduced RAC-related provider burden to an all-time low, as evidenced by the significant decrease in the number of RAC-reviewed claim determinations that are appealed and the corresponding reduction in the appeals backlog,” CMS Administrator Seema Verma wrote when announcing the reforms.
