Kusserow’s Corner: Medicare Appeals Backlog Update—New Suit Filed by Beneficiaries

Over the last year, I have blogged many more than eight times on the “saga” of the backlog in the Medicare claims appeals process. Last year at this time, Nancy Griswold, Chief Administrative Law Judge (ALJ) in an open memorandum to Office of Medicare Hearings and Appeals (OMHA) Medicare Appellants, stated effective July 15, 2013, they were suspending the assignment of most new requests for an ALJ hearing for at least two years. This was to allow time to catch up on almost a half million claims that are backlogged. They simply have not been able to keep pace with the rising caseload and have been falling further and further behind. Also, last year the American Hospital Association and three hospital and healthcare systems sued HHS over the long backlog in Medicare claim denial appeals. Now patients are joining in with a nationwide class action suit.

Now on August 26, 2014, in the U.S. District Court in Connecticut, the Center for Medicare Advocacy filed a class action suit on the behalf of five named Medicare beneficiary plaintiffs that had waited more than three months for a hearing and decision by an ALJ on their Medicare appeals, even though the law says an appeal decision must be issued within 90 days (Lessler v Burwell, 3:14-CV-1230, D. Conn.). In the suit, the beneficiaries argue that this failure to receive an ALJ decision within that 90-day period is a “defective administrative review process” that violates the Medicare statute and the Due Process Clause of the Fifth Amendment. According to the filing, the current average wait time between when a request for a hearing is filed and when a decision is issued is, on average, 489 days, or five times as long as the maximum amount of time it is supposed to take under the law. The suit seeks a declaratory, injunctive, and mandamus relief to compel the HHS Secretary to meet statutory deadlines for reviewing Medicare claim denials. The American Hospital Association suit also calls for HHS to ensure that its ALJs meet the statutory 90-day timeline requirement for deciding Medicare claim appeals. The suit also asks the Court to issue a “declaratory judgment that HHS’s delay in adjudication of Medicare appeals violates federal law” and to also compel HHS to comply with providing timely ALJ reviews within the statutory limit.

There are now several lawsuits in play that impact on a variety of appeals handled by OMHA that are part of the backlog, including:

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

As if the lawsuits are not enough, this problem has drawn Congressional attention following OMHA’s actions. A bipartisan group of 111 House members signed a letter to the HHS Secretary earlier this year calling for a fix to this problem and an easing of the backlog, as well as a continued effort to make sure beneficiaries’ appeals are handled first. Stay tuned; more is sure to follow in this messy situation.

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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