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HHS to Clear Medicare Appeals Backlog by 2022, Court Docs Show

HHS projects the Medicare appeals backlog to be clear by the 2022 fiscal year, but hospitals are still calling for a federal court to reinstate a deadline for the federal department.

Medicare appeals backlog

Source: Thinkstock

By Jacqueline LaPointe

- HHS is making significant progress with eliminating the growing Medicare appeals backlog, according to recent court documents. The federal department projects Medicare to clear the backlog by the 2022 fiscal year.

A 70 percent increase in funding from Congress will allow HHS to clear the Medicare appeals backlog in the next four years, the federal department explained.

The $182.3 million boost in Office of Medicare Hearings and Appeals (OMHA) funding from March 2018 will allow HHS to increase administrative law judge staffing by about 80 judges and 600 new positions over the next 14 months.

With additional personnel, OMHA should be able to resolve nearly 188,000 appeals per year, which is more than double the appeals court’s disposition capacity during the 2017 fiscal year.

HHS explained that OMHA’s FY 2017 adjudication capacity was “not enough to keep pace with the almost 113,000 new receipts received by OMHA in that year, resulting in an additional 28,000 appeals added to the backlog.”

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However, the additional funding and staff should allow the OMHA to process thousands more appeals annually than it receives. HHS predicts that the adjudication capacity will specifically increase by 23 percent in FY 2018, 42 percent by FY 2018, 108 percent by FY 2020, and about 122 percent in FY 2021 and 2022.

In addition to addressing the capacity issue at the OMHA level, HHS also told the federal court that it has made progress with decreasing the Medicare appeals backlog through settlements. HHS offered settlement options for certain appeals in the past year, which reduced the backlog by 465,000 backlog-related appeals.

Despite the promise of a backlog elimination by 2022, hospital groups are still not satisfied with the federal department’s progress.

The American Hospital Association (AHA), which sued HHS in 2014 to compel the federal department to resolve the backlog, is now pushing the federal court to reinstate a timeline that would require HHS to eliminate the Medicare appeals backlog by Dec. 31, 2020.

In December 2016, a federal judge ordered HHS to reduce the Medicare appeals backlog by a certain percentage each year until the department cleared the backlog by the end of 2020. The timeline required HHS to decrease the backlog by 30 percent by the end of 2017, 60 percent by the end of 2018, and 90 percent by the end of 2019.

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However, an appeals court ruled against the deadline in April 2017, arguing that a court cannot require HHS to follow a timeline that was impossible to achieve according to federal regulations.

HHS found the deadline-based remedy to be impossible to achieve because it would require the federal department to make payment on Medicare claims regardless of the appeal’s merit. The timeline would, therefore, violate the Medicare statute.

But the AHA recently told the federal court that the timeline would be appropriate now that HHS has the capacity to effectively reduce the Medicare appeals backlog.

“[P]erhaps deadline remedies should be back on the table. The entire point of the Court’s previous deadline-based remedy was to avoid interference with HHS’s policymaking discretion—the Court would set the deadlines and HHS would use its discretion in achieving them,” the hospital group wrote.

“Now that HHS is projecting that it has the budget to adjudicate more appeals than will enter the system (see id.), and thus make some headway against the backlog, the Court might reconsider whether a deadline-based remedy is warranted,” the group continued. “After all, both Plaintiffs’ proposed deadline remedy and HHS’s projections have the same end date for the backlog.”

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Formalizing the timeline would keep HHS on track and gives HHS an aggressive goal that would ensure steady progress toward elimination, the AHA argued.

Additionally, the AHA called for non-deadline remedies. The hospital group stressed that the court should order HHS to implement Recovery Audit Contractor (RAC) reforms.

The AHA advised HHS to impose a financial penalty on RACs with high overturn rates at the administrative law judge level.

RACs receive contingency fees on claims that they deny. Therefore, the contractors are financially incentivized to deny high-dollar claims, which leads to an uptick in Medicare appeals, the industry group explained.

A financial penalty for RACs with high overturn rates would disincentivize the contractors from unnecessarily denying claims, which would then reduce the Medicare appeals backlog and prevent it from forming again.

The AHA also called on HHS to allow Quality Improvement Organizations (QIOs), not RACs, to review inpatient status and other hospital claims. The QIOs would provider “better-trained reviewers, better-explained payment decisions, better collaboration between reviewers and providers, and— as a result—fewer appeals,” the group wrote.

Additionally, the hospital group asked the federal court to order HHS to reduce the interest of retained alleged overpayments, allow rebilling of appealed claims, and toll the time to file 340B drug claim appeals.

HHS countered that imposing a financial penalty on RACs would violate federal law. But even if the AHA’s proposals were possible, they would not improve the Medicare appeals backlog.

 “The data show that AHA's fundamental premise underlying this litigation—that the RACs are the drivers of the backlog and that further changes to the RAC program are needed to solve the problem—is no longer valid,” the HHS court document stated.

“AHA’s latest RAC-related proposals thus would not help to reduce the backlog but likely threaten the economic viability of an already significantly curtailed program that Congress requires to exist,” the document continued.

HHS and hospital groups have been at odds over how to reduce the Medicare appeals backlog since 2014. While HHS has made progress with reducing the backlog, which has been growing up until this year, hospital groups are looking for permanent reforms to ensure the backlog does not occur in the future.

A federal court will have to decide whether recommendations from industry stakeholders are possible for HHS.

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