HHS Finally Faces Judicial Reckoning Over Providers’ Medicare Claim Appeals

In February, the U.S. Court of Appeals for the District of Columbia Circuit said the time may be near when the federal courts will have to do something about the burgeoning Medicare appeals backlog, and it looks like that time is now.

The HHS won’t get any more time to fix a backlog of 760,000 Medicare appeals before facing litigation filed by the American Hospital Association and others (Am. Hosp. Ass'n v. Burwell, 2016 BL 307248, D.D.C., No. 14-cv-851, 9/19/16).

The U.S. District Court for the District of Columbia said in a Sept. 19 ruling that the Department of Health and Human Services wasn’t making enough progress to reduce the huge backlog of Medicare appeals pending at the administrative law judge level of claim review, and it could no longer wait for Congress to provide a legislative fix.

Judge James E. Boasberg said the measures outlined by the HHS to the court to address the backlog would only reduce the pace of backlog growth, and that he was obligated to deny the agency’s requested stay of litigation until Sept. 30, 2017, the close of the next federal appropriations cycle.

The court in particular singled out modifications to the Recovery Audit Contractor program (blamed by the AHA for the increase in Medicare appeals) as being insufficient to reduce the ALJ backlog despite the HHS's discretionary authority to make more sweeping changes to the program.

Boasberg's focus on the modest changes to the RAC program (affecting only 7 percent of RAC appeals), as well as AHA's concerns, could be a signal that the court plans to include changes to the RAC program in a future court order. RACs are tasked with detecting and recovering Medicare overpayments and are paid on a contingency-fee basis by the government.

The court repeated its assertion that it was “loath to intervene” in what was essentially an executive and legislative issue, but said some legal action must be taken now given that administrative and congressional fixes appeared unlikely to bring the HHS into compliance with the statutory ALJ review deadline. Boasberg, however, didn’t grant the plaintiff’s request to order the HHS to come into immediate compliance with the statutory ALJ review deadline, but instead ordered the parties to appear on Oct. 3 to “discuss how next to proceed.”

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