Washington Congressman Weighs in on the Backlog of Medicare Appeals

Representative Jim McDermott (D-Wash.) has written to HHS Secretary Kathleen Sebelius offering some suggestions for dealing with the backlog of nearly 357,000 appeals pending before the Office of Medicare Hearings and Appeals (OMHA). McDermott’s letter addresses two primary concerns: (1) ensuring that beneficiary appeals come first, and (2) the identification of recovery auditors (RAs) as the cause of much of the additional backlog.

Making Sure Beneficiary Appeals Come First

McDermott stresses that there needs to be continued vigilance and, if necessary, new processes to ensure that beneficiary appeals are moved to the front of the line. He points out that hospitals can absorb losses due to denials of payment but beneficiaries on fixed incomes cannot. He recommends that HHS put specific staff in charge of ensuring that beneficiary appeals are identified and moved to the front of the line.

Are RAs Causing the Backlog?

McDermott indicates he is troubled by the identification of RAs as the cause of the additional backlog. He recommends the following administrative steps:

  • Modify the two midnights policy. McDermott asks CMS to reexamine and modify the RA program instead of implementing the two midnights policy. Under the two midnights policy, Medicare Administrative Contractors and RAs, absent evidence of systematic gaming or abuse, may not review claims spanning two or more midnights after admission for a determination of whether the inpatient hospital admission and patient status was appropriate. McDermott notes that while CMS is still in the process of determining exactly how certain issues will be addressed in the two midnights policy, the important issue of hospital transfers has not been fully addressed. As such, he asks Sebelius to reconsider whether the two midnights policy is ready for enforcement.
  • Require enhanced RA accountability. McDermott suggests that there should be (1) a financial penalty on the RA if it collects money from a provider and the decision is overturned on appeal, and (2) RA contracts whichcontain performance standards for accuracy of collections from providers.
  • Make sure the “pause” in document requests actually works. While he is pleased that in a February 18, 2014 update, CMS announced a “pause” in document requests in the RA program, McDermott expressed concern that, due to the lookback period, these claims could still be audited. He suggests that CMS consider limiting the lookback period and that the “pause” be continued until a plan is in place to modify the RA program and address the existing backlog.
  • Monitor the impact of Change Request 8425. McDermott recommends that CMS subject matter experts be on high alert for interactions between the increase in appeals and the expanded authority of CR 8425, which permits RAs and other audit contractors to automatically deny related claims.

In sum, McDermott believes that for CMS to solve the appeals backlog problem it must address the two principle drivers of the backlog, the flawed two midnights policy and the RA program.