Kusserow’s Corner: American Hospital Association Files Lawsuit Over Delay in ALJ Hearings

Going back to October of last year, I have posted six blogs on the emerging problem of the growing backlog of cases before the HHS Administrative Law Judges (ALJs). The ALJ represents level 3 of the five-step Medicare claims appeals process. On May 22, the American Hospital Association (AHA) weighed in heavily on the issue by filing a lawsuit against HHS to ensure that its ALJs meet the statutory 90-day timeline requirement for deciding Medicare claim appeals. The lawsuit seeks a “declaratory judgment that HHS’ delay in adjudication of Medicare appeals violates federal law” and asks the court to compel HHS’ compliance with providing timely ALJ reviews within the statutory limit.

The crisis was brought to a head last February when Nancy Griswold, Chief ALJ, announced that “due to the rapid and overwhelming increase in claims appeals, effective July 15, 2013, OMHA temporarily suspended the assignment of most new requests for an Administrative Law Judge hearing.” This suspension is anticipated to remain in effect for at least two years, in order to allow OMHA to catch up on almost 375,000 claims already backlogged in its docketing system. OMHA then followed this up by hosting a Forum on Medicare Appeals with stated objectives to provide an update on OMHA operations, explain initiatives to mitigate the growing backlog of cases, provide information on how providers can assist in making the process more efficient, and provide answers to appellant questions. OMHA reported that its workload has been skyrocketing over the last several years, growing now at a rate of 40 percent per year. It now stands at 437,000 cases. They have been steadily, and at an increasing rate, falling behind in the adjudication process to 2013, when they received about 350,000 cases and the approximately 65 ALJs were able to adjudicate only 79,000. This is in addition to the carryover from prior periods. This led to the decision to have a moratorium on assigning new cases until the backlog could be addressed. It should be noted that the average ALJ appeal processing time continues to grow and, as of April 2014, increased to 418.7 days. There are a variety of appeals handled by OMHA included in the backlog:

  • Medicare eligibility and entitlement
  • Part B and D income-related premiums
  • Part A and B pre- and post-payment claims (MACs, RACs, PSC/ZPICs)
  • Continuation of care (QIOs)
  • Part C managed care coverage (Medicare Advantage programs)
  • Part D prescription drug coverage (Prescription Drug Plans)

In order to clear up this mess, more resources are being requested to add ALJs and assist in building new systems. Also, what is needed is a more effective case management system to:

  • Provide electronic messaging to appellants on regarding case status and proceedings
  • Identify and flag potentially duplicate appeals
  • Acknowledge receipt of appeals
  • Give accessibility to appeals via electronic filing
  • Allow electronic submission of evidence to support appeals, including the viewing of documents already in an appeals file
  • Ensure integration of claims data with MACs and QICs to support files necessary for appeals
  • Respond to questions
  • Support transmission of information electronically during the closing process

This problem has drawn Congressional attention following the actions of OMHA. A bipartisan group of 111 House members signed a letter to the HHS Secretary calling for a fix of the Medicare fee-for-service RAC, including strengthening oversight and reducing the RAC appeals backlog. They cited the OIG report of November 2012 that noted 72 percent of hospital Part A appeals that reach the ALJ are ruled in favor of the provider and against the RACs. They took particular note of the OMHA backlog and suspension of assignment of new cases to ALJs while they try to catch up. The lawmakers called for reforms that included more oversight by CMS of the RAC program because of the heavy administrative burdens for hospitals to defend legitimate claims denied by the RACs. They also stated that this resulted in higher costs for Medicare beneficiaries whose inpatient stays are improperly denied by RACs. The steps they said was needed to ensure the RAC process is fair includes:

  1. CMS to dedicate more resources to help resolve the backlog issue.
  2. Considering an alternative payment arrangement with RACs to remove improper incentives.
  3. CMS’ adoption of the commonsense reports supported by 184 bipartisan Members of Congress included in the Medicare Audit Improvement Act of 2013.

On the Senate side, the Appropriations Committee has expressed concerns about both the growing backlog of cases at OMHA and the high rate of claims overturned by the Office and urged CMS to work with providers at the early stages of the audit process so that only a small number of cases are ultimately appealed and the loss of provider time, energy, and resources due to incorrect audit results are limited. They recommended additional funding for OMHA to hire more administrative law judge teams and increase its capacity to process its rising caseload.

This definitely is an issue area that won’t go away for some time.

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.