Kusserow’s Corner: AHA Lambasts CMS for Two Year Backlog on Claims Appeals

In my January 15, 2013 blog entitled, “ALT Hearings for Medicare Claims Appeals is Broken; New Appeals Suspended for Two Years,” I reported that an open memorandum from Nancy Griswold, Chief Administrative Law Judge in the Office of Medicare Hearings and Appeals (OMHA), suggested that the entire appeals process is broken and at a standstill. Griswold stated that “due to the rapid and overwhelming increase in claims appeals, OMHA has suspended the assignment of most new requests for an Administrative Law Judge hearing.” This suspension of assigning cases will stay in effect for at least two years, in order to allow OMHA to catch up on almost 375,000 claims already backlogged to its 65 ALJs. Now the American Hospital Association (AHA) has weighed in on the issue with a letter to CMS Administrator Marilyn Tavenner that pleads for immediate relief where it states that “Delays of at least two years in granting an ALJ hearing for an appealed claim are not only unacceptable, they are a direct violation of Medicare statute that requires ALJs to issue a decision within 90 days of receiving the request for hearing”.

The AHA notes that this is not a new problem, and that prior to OMHA’s suspension of appeals assignments, the ALJs were not adhering to their statutory deadline. It stated that “Excessive inappropriate denials by Medicare Recovery Audit Contractors (RACs) are a direct driver of the ALJ backlog. Hospitals have been put in an untenable position in which the nearly unfettered ability of RACs to churn out erroneous denials forces them to pursue appeals in order to receive payment for medically necessary care, while the inability of OMHA to manage the appeals process within the timeframes required by the Social Security Act holds that payment hostage”.

The AHA explained that they have seen a nearly 30-fold increase in RAC denials since 2010 and the average appeals per hospital increased from around 17 in 2010 to more than 300 in 2013. This has led to an increasing diversion of resources to the appeals process. Furthermore, the delays have resulted in more than a billion dollars of hospital money being tied up by RAC actions awaiting appeal. This is money that has been held back from hospitals pending the outcome of appeals. The AHA further notes that hospitals have won nearly 70 percent of the claims for which the appeals process has been completed, resulting in the return of a very large portion of the denied payments. The current backlog means that hospitals will be denied large sums of money for years that will add to their financial burden. It is AHA’s position that the RAC program and the resulting volume of inappropriate claim denials are putting significant strain on the appeals process and causing the huge backlog.

In order to address the problem, the AHA wants CMS to:

  • Suspend RAC audits until all levels of the determination and appeals process catch up with their current workloads.
  • Not recoup the disputed funds until after the hospital has received an ALJ determination.
  • Enforce the statutory timeframes within which appeals determinations must be made by entering a default judgment in favor of the provider if an appeal has not been heard within the required time period.
  • Address systemic issues with the RACs that lead to avoidable claim denials and appeals and provide a mechanism for erroneous denials to be reversed outside the appeals process.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.