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HHS Proposes Changes to Medicare Reimbursement Appeals Process

A proposed rule would modify the Medicare reimbursement appeals process in order to reduce the substantial backlog of pending appeals.

By Jacqueline LaPointe

- Earlier this week, the Department of Health & Human Services (HHS) released a notice of proposed rulemaking (NPRM) to modify the Medicare reimbursement appeals process in efforts to reduce the substantial backlog of unresolved appeals.

HHS proposes rule to change Medicare reimbursement appeals process, reduce backlog

“The proposed regulatory changes that appear in today’s NPRM are the latest in a series of administrative actions designed to reduce the number of pending appeals and encourage resolution of cases earlier in the Medicare appeals process,” stated HHS in a press release.

More than 1.2 billion Medicare fee-for-service claims were processed in 2015, and about 10 percent were denied. Out of the total denied claims, approximately three percent, totaling 3.7 million claims, were appealed.

HHS explained that more Medicare claims have recently been denied because of the increase in beneficiaries due to the baby boomers and more disabled individuals and a national focus on integrity programs, such as the Recovery Audit Program.

However, more denied claims resulted in more appeals. The increase in appealed claims has led to a 442 percent increase in the number of appeals that go through the Office of Medicare Hearings and Appeals (OMHA) and a 267 percent increase at the Medicare Appeals Council.

READ MORE: CMS Pauses Home Health Pre-Claim Review Demonstration

By the end of 2015, there was a total of 898,891 pending appeals at both levels, which would take about 11 years for the OMHA and six years for the Council to process.

To reduce the Medicare appeals backlog, HHS has proposed several administrative changes, such as expanding the number of available OMHA adjudicators, increasing decision-making consistency across all appeals levels, and promoting efficiency by streamlining the process so adjudicators spend less time on repetitive issues and procedural matters.

Specifically, the proposed rule would grant the HHS Departmental Appeals Board with the authority to identify certain decisions as precedential. This provision aims to increase consistency of decisions across all levels and provide clear direction to adjudicators on repetitive issues.

The proposed rule also would allow attorney adjudicators to review administrative records and draft appropriate orders for certain appeals rather than using an administrative law judge, who can be used to conduct other hearings.

Attorneys would only be able to develop orders for certain appeal requests, such as issuing dismissals based on an appellant’s request to withdraw from a hearing, remanding appeals for information, and holding reviews of other dismissals.

READ MORE: CMS Suggests Hospital Medicare Reimbursement Policy Changes

The provisions in the proposed rule are part of a three-part strategy to improve the Medicare reimbursement appeals process. The other components of the strategy include investing in new resources across the five levels of appeal to advance adjudication capacity, propose legislative reforms that would boost funding, and adding new authorities to manage the appeals volume.

“If the Administration could implement the administrative authorities set forth in this NPRM in conjunction with the proposed funding increases and legislative actions outlined in the FY 2017 President’s Budget, we estimate that the backlog of appeals could be eliminated by FY 2021,” explained HHS.

“The NPRM demonstrates HHS’s continuing commitment to addressing the Medicare appeals workload challenges and is one part of HHS’s comprehensive effort to address the appeals workload through every available administrative means under current statutory and budgetary authorities.”

HHS has called on the healthcare community to submit comments on the proposed rule by August 29, 2016.

Despite its potential to decrease the Medicare reimbursement appeals backlog, the American Hospital Association (AHA) has expressed uncertainty about the proposed rule.

READ MORE: AMGA: Align Medicare Reimbursement, Measures for High-Value Care

“We are skeptical that these proposals will do more than scratch the surface of the severe backlog in ALJ [Administrative Law Judge] appeals that has led to hospitals facing multi-year waits for hearings,” said Tom Nickels, AHA’s Executive Vice President, in a statement. “We are deeply disappointed that HHS has not made more progress in addressing the delays despite the more than two years since the delays began.”

“Further, we find the timing of today’s proposals interesting, given that it’s just days before HHS was required to respond in court to show progress in resolving the backlog as part of our lawsuit challenging the ALJ delays.”

Additionally, the proposed changes to the Medicare appeals process comes almost a month after the Government Accountability Office (GAO) released a report that stated the appeals backlog was likely to persist despite HHS initiatives to provide more prompt adjudication.

The GAO advised HHS to improve the consistency of data collected by HHS across the levels to monitor appeals and develop a more efficient procedure for managed appeals with repetitious claims.

Dig Deeper:

How to Rescue Revenue Cycle with Medicare Appeals Pending

Quantify Denial Rates for Smooth Revenue Cycle Management


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