Congressman’s Letter Challenges CMS Authority to Settle Administrative Backlog

A letter challenging the authority of CMS to continue with its Medicare appeals settlements was sent from Chairman of the Ways and Means Committee and U.S. Representative Kevin Brady (R-TX) to HSS Secretary Sylvia Burwell. The letter criticizes HHS for its quiet handling of the manner and urges HHS to provide an explanation for its authority to engage in an “all or nothing” settlement process to wipe out some of the agency’s backlog of administrative appeals at a set 68 percent reimbursement rate.


Following concerns about a growing backlog of cases awaiting administrative hearings before an Administrative Law Judge (ALJ), CMS announced its intention to offer to pay hospital’s 68 percent of the amount of the claims they have pending in the appeal process (see, Consumer class action challenges “broken” Medicare appeals system, August 27, 2014). CMS indicated that the settlement process would relieve some of the backlog of appeals, many of which related to recovery audit contractor (RAC) decisions that inpatient claims were not reasonable or necessary (see, CMS offers partial payments for certain Part A hospital claims under appeal, September 3, 2014).


Referring to the HHS announcement of the settlement process as an “audacious rollout,” the letter criticizes the manner in which HHS reached its decision. Expressing concern that the decision was not well thought out, the letter indicates disappointment that HHS did not consult more information or the Ways and Means committee when reaching its decisions.


Brady’s critique rests heavily on a concern regarding the authority of HHS to engage in the settlements at all. Although the letter recognizes that HHS states the Federal Claims Collection Act (31 U.S.C. sec. 3711) authorizes the settlements, the letter expresses doubt that either federal statute or federal regulation, under 42 C.F.R. sec. 405.376, provide authority for HHS to settle claims for overpayments that arise from a determination that the services were not covered due to a lack of medical necessity.


The letter also criticizes the settlement process chosen by CMS. Specifically, Brady questions the “all or nothing” approach because, the letter contends, each appeal is unique and the “circumstances that apply pertaining to medical necessity do not necessarily transfer to all cases.” Additionally, Brady questions how CMS arrived at the 68 percent figure because CMS has not provided the empirical analysis that led to that percentage. Pointing to a Medicare Payment Advisory Commission (MedPac) Report, Brady indicates that Medicare data suggests the settlement figure could reasonably have been closer to 36 percent than to 68 percent.In light of the lack of information, the letter urges CMS to reveal the data analysis used to reach the 68 percent settlement figure.

The letter closes by urging HHS to retract the proposed settlement process.In place of the settlement process, Brady asked HHS to work with him to reach a “transparent and conclusive” alternative.