Hospitals Sue to Compel HHS to Meet Deadlines for Reviewing Appeals

Following a hearing earlier in the week where the mounting Medicare appeals backlog took center stage, the American Hospital Association (AHA) and several hospitals filed a lawsuit May 22 seeking to compel the Department of Health and Human Services (HHS) Secretary to meet statutory deadlines for reviewing Medicare claim denials. At the end of last year, the Office of Medicare Hearings and Appeals (OMHA) decided to suspend assignment of most new requests for Administrative Law Judge (ALJ) hearings for at least two years as a result of the Medicare appeals backlog, which AHA said stood at 480,000 as of February 12, with 15,000 new appeals filed each week. According to the lawsuit, which was filed in the U.S. District Court for the District of Columbia, "[l]engthy, systematic delays in the Medicare appeals process, which far exceed statutory timeframes, are causing severe harm to providers of Medicare services, like the Plaintiff hospitals." At the third level of appeal, an ALJ has a statutory deadline of 90 days from the time a provider files its appeal with OMHA to hold a hearing and render a decision. But the complaint said "it is taking far longer than ninety days even to docket new requests for an ALJ hearing, let alone decide them." Coupled with delays in other steps of the appeals process, hospitals may be waiting up to five years or even longer to have their claims proceed through the four-level administrative appeals process, which is supposed to conclude by statute within a year, the lawsuit alleges. "Because the appeals process, as currently operating, cannot provide adequate redress, Plaintiffs have no option but to bring this mandamus lawsuit to require the Secretary's compliance with the deadlines established by law," the complaint says. The hospitals that joined the lawsuit are Baxter Regional Hospital, Inc., in Mountain Home, AK; Covenant Health, in Knoxville, TN; and Rutland Hospital, Inc., in Rutland, VT. Lawmakers Question Medicare Appeals Backlog The House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing May 20 where government witnesses faced tough questioning about the Medicare appeals backlog and its impact on providers. At the hearing, Representative Mark Meadows (R-NC) noted the backlog, which he said already is at a tipping point, is projected to reach 1 million. “[A]t what point does it become a crisis?” he asked. Meadows said even with increased funding, at the current maximum adjudication rate of 79,000 a year, it would still take about ten years to work through the backlog of appeals. “That’s a taking in my book. Would you wait 10 years for your salary?” he said. Improve Contractor Oversight Lawmakers have said the recovery audit contractor (RAC) program is contributing significantly to the backlog, which some say will only get worse if the controversial two-midnight policy is implemented. See related item in this issue. “Today, our subcommittee sought answers from CMS on the significant burden of the Medicare MAC [Medicare Administrative Contractor] and RAC audit processes on our nation’s healthcare providers,” said Subcommittee Chairman James Lankford (R-OK). “Our focus today was to figure out why the audit process is failing both providers and beneficiaries. We cannot allow this broken process to continue without significant reform.” “Small, community healthcare providers continue to buckle under the weight of Medicare’s withheld payments, paperwork and compliance procedures,” Lankford said, urging CMS to improve its oversight of contract auditors to ensure they are focusing on fraud, not “overburdening honest providers." An official from the HHS Office of Inspector General (OIG) testified that CMS needs to do a better job of ensuring its contractors are performing effectively. “OIG reviews of [Medicare] contractors over the past decade have consistently identified problems, including failure to use data to assess contractor performance and inadequate response when contractors do not meet performance standards,” said OIG Acting Deputy Inspector General for Evaluation and Inspections Brian P. Ritchie. Kathleen King of the Government Accountability Office told the panel different requirements for Medicare’s various contractors “may reduce the efficiency and effectiveness of such reviews.” RAC Improvements Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity Deputy Administrator and Director Shantanu Agrawal, MD said RACs have returned over $7.4 billion to the Medicare Trust Fund from their implementation in fiscal year (FY) 2010 through the first quarter of FY 2014. Agrawal said CMS currently is in the process of procuring the next round of contracts for the RAC program. In February, CMS announced a “pause” in the Medicare RAC program during the procurement process. CMS said the “pause in operations” would give the agency an opportunity “to continue to refine” and improve the Recovery Audit Program. To that end, the agency also announced several changes to the program based on industry feedback. Agrawal said the agency believes the changes, which include requiring RACs to wait until the second level of appeal is exhausted before receiving their contingency fee and establishing revised additional document request limits that will be diversified across different claim types, “will result in a more effective and efficient program, including improved accuracy, less provider burden, and more program transparency.”