Judge Asks AHA to Develop Medicare Appeals Backlog Solutions

April 04, 2018 - A federal judge is calling on the American Hospital Association (AHA) to recommend strategies to reduce the growing Medicare appeals backlog, a recent court order stated.

According to the AHA’s website, US District Judge James Boasberg expressed frustration with the lack of progress from HHS with decreasing the backlog. The Medicare appeals backlog reached 607,402 pending cases at the administrative law judge level as of June 2017. With such a significant backlog, administrative law judges took an average of almost three years to adjudicate a case, over 11 times longer than the statutory deadline of 90 days.

The problem is likely to worsen, former HHS Secretary Tom Price told the court in 2017. He projected the Medicare appeals backlog to increase to 950,520 cases by the end of the 2021 fiscal year.

The AHA and several other industry groups sued HHS in 2012 because of the growing Medicare appeals backlog. The groups argued that delaying Medicare appeal decisions past the 90-day statutory limit was illegal and hospitals suffered as revenue remained stuck in the appeals process.

In 2016, Judge Boasberg ordered HHS to eliminate the Medicare appeals backlog by the end of 2020. He required the federal department to incrementally clear the appeals stuck at the administrative law judge level according to a timetable. The timetable mandated that HHS decrease the backlog by 30 percent each year until Dec. 31, 2020.

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Failing to meet the final deadline would result in the federal department granting default judgments in favor of the providers whose Medicare appeals had been sitting at the administrative law judge level without a hearing for more than a calendar year.

However, an appeals court rescinded the elimination timetable, arguing that a court cannot require HHS to follow a timetable that the federal department felt was impossible to achieve. Sylvia Burwell, HHS Secretary at the time, explained that the timetable would require her to “make payment on Medicare claims regardless of the merit of those claims,” which would conflict with Medicare regulations.

The case was sent back to a lower court for possible reinstatement if HHS could not prove that the timetable was impossible to achieve.

While the five-year timetable has not been restored, Judge Boasberg is asking for AHA expand on its recommendations provided in previous court sessions on how to decrease the Medicare appeals backlog.

The industry group previously argued that HHS should implement three reforms to meaningfully decrease the growing backlog. The proposed solutions included offering a settlement option, delaying provider repayment of disputed Medicare claims, and penalizing Recovery Audit Contractors (RAC) with high overturn rates.

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HHS recently implemented the first solution. The federal department developed a low-volume appeals settlement option earlier this year. The federal department will pay providers 62 percent of the billed amount on appealed claims if providers remove all eligible claims from the appeals process.

The settlement option is only open to providers with less than 500 claim appeals at the Office of Medicare Hearings and Appeals (OMHA) and Medicare Appeals Council levels.

In addition, HHS intends to expand its Settlement Conference Facilitation program this month. According to the federal department, the program is “an alternative dispute resolution process at OMHA that gives certain providers and suppliers an opportunity to resolve their eligible Part A and Part B appeals.”

The program will only resolve appeals with requests for an administrative law judge hearing or Counsel review filed on or before Nov. 3, 2017. Providers must also have 500 or more pending appeals at the OMHA or Council levels and the appeals must each be over $9,000 in billed charges.

HHS has yet to elaborate on its plan to open the Settlement Conference Facilitation program.

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The AHA also emphasized the implementation of financial penalties in the RAC program. RACs review claims that have already been reimbursed for improper payments and recoup overpayments.

While RACs are meant to identify improper payments, approximately 62 percent of claims that completed the appeals process after a RAC denial were overturned in favor of the provider, the AHA reported.

RACS are not accurately pinpointing improper payments as evident by the high overturn rate, the industry group argued. As a result, the Medicare appeals backlog is growing as providers appeal RAC denials.

“The Court should order the Secretary to implement a more effective check on the RAC program by imposing financial penalties on RACs for high reversal rates,” the AHA stated in 2016. “In order to effectively deter indefensible claim denials, the financial penalties must be significant and must be linked to a meaningful level of the appeals process.”

Judge Boasberg asked the AHA to expand on these recommendations by June 22, 2018. HHS will have until July 6, 2018, to respond to the proposed solutions.