Medicare Appeals Backlog Could Be Reduced By Restructuring Process, Senator Says

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By James Swann

April 28 — A current backlog of more than 500,000 unresolved Medicare appeals could be reduced by funneling only the most complex appeals to administrative law judges (ALJs), Sen. Ron Wyden (D-Ore.) said during a Senate Finance Committee hearing April 28.

Medicare appeals involve claims denied by Recovery Audit Contractors (RACs) and other Medicare contractors because of questions concerning their propriety.

Wyden said the Office of Medicare Hearings and Appeals (OMHA) could “allow less complicated and contested cases to be handled by a different set of hearing officers so that they can be processed more quickly.” That will leave the more complicated and difficult cases to be handled by administrative law judges, he said.

Finance Committee Chairman Orrin Hatch (R-Utah) said the Medicare appeals backlog has had the negative effect of delaying payments to providers and blocking Medicare coverage for beneficiaries.

Hatch said appeals are taking an average of 547 days to be processed in fiscal year 2015—“far too long for beneficiaries to find out whether their medical services will be covered or for providers to find out if they will be paid.”

In contrast, the bulk of appeals were processed in just 94 days in FY 2009.

The rise in the Medicare appeals backlog has coincided with the growth of the RAC program, which is designed to detect and recover overpayments to providers such as hospitals. RACs collected $3.65 billion in Medicare overpayments during fiscal year 2013, according to a Centers for Medicare & Medicaid Services report from fall 2014.

The hearing featured testimony from Nancy J. Griswold, the chief ALJ for the OMHA, who said that increasing OMHA's funding could help relieve the appeals backlog.

Griswold said President Barack Obama's FY 2016 budget proposal would increase the OMHA's budget from $87.3 million to $270 million.

“This additional funding would provide for the addition of 119 new ALJ teams and 82 Medicare Magistrates and increase OMHA's yearly adjudication capacity from 77,000 appeals per year to approximately 278,000 appeals per year,” Griswold said.

There are five levels within the Medicare appeals process:

• an initial claims redetermination by a Medicare Administrative Contractor (MAC);

• a claims reconsideration by a qualified independent contractor (QIC);

• a hearing before an ALJ;

• a review by the Medicare Appeals Council; and

• a judicial review in U.S. district court.

 

OMHA Reforms

Beyond the funding increase, Griswold listed several ideas from the president's FY 2016 budget proposal that could help ease the appeals backlog, including allowing the Department of Health and Human Services to use recoveries from RACs to fund the OMHA appeals process for claims that were denied by RACs.

Other ideas from the budget proposal included creating a refundable fee for all providers and suppliers filing an appeal, allowing magistrates to hear certain Medicare appeals and allowing the OMHA to resolve certain appeals without a hearing when no facts are in dispute.

Griswold said a number of factors were likely responsible for the appeals backlog.

One of the factors is the RAC program, Griswold said, which “has led to more appeals as providers exercised their right to a hearing.” In addition, the Medicare population has expanded due to more baby boomers becoming eligible for coverage.

Kristin Walter, a spokeswoman for the Council for Medicare Integrity, a RAC trade association, said the council supports the creation of a fee that providers would pay when filing a Medicare appeal.

“Recovery auditors are already penalized when they create an overpayment determination and support it through two levels of appeal, only to see it overturned at the ALJ level,” Walter said.

“It’s only fair that appellants be held accountable as well,” Walter said.

Contractor Recommendations

Apart from Griswold, the committee heard testimony and recommendations from two Medicare contractors involved in the first two levels of the appeals process.

Sandy Coston, chief executive officer and president of Diversified Service Options, said appeals at the ALJ level should be sent back to the previous appeals level when new evidence is submitted, an idea also supported by the OMHA.

“In cases where new evidence is submitted at the ALJ level, remanding these case back to the prior level for handling would result in a reduction in the ALJ backlog, as well as quicker resolution for the providers,” Coston said.

Coston also agreed with the OMHA proposal requiring provider to pay a fee for each claim appealed. Fees would be refunded if the appeal led to a claim denial being overturned.

“This would discourage the filing of non-meritorious appeals thereby reducing the backlog and provide a level of funding for reinvestment in program hiring and administration,” Coston said.

In addition, Coston said increased provider education could help reduce the backlog. If providers learn how to file claims properly, they'll get it right the first time, she said, resulting in fewer denials and fewer appeals.

Diversified serves as the Medicare Part A and Part B MAC for Jurisdictions N, L and H, covering Florida, Puerto Rico, the U.S. Virgin Islands, Delaware, the District of Columbia, Maryland, New Jersey, Pennsylvania, Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.

Thomas Naughton, a senior vice president with MAXIMUS Federal Services, a QIC, said the appeals backlog could be reduced by establishing a support unit for ALJs capable of providing expertise on RAC audits. The unit would provide subject matter experts such as nurses, physicians and certified coding specialists who could help the ALJs resolve appeals.

Naughton also said that transitioning to electronic submission of documents at all levels of the appeals process would provide “significant time and cost efficiencies while ensuring access to the complete case file.”

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com