Kusserow on Compliance: The Medicare Appeals Process: Update

An estimated 1.2 billion fee-for-service claims are processed each year on behalf of about 34 million Medicare beneficiaries. When beneficiaries or providers disagree with a coverage or payment decision made by Medicare, they have the right to appeal. Of the 1.2 billion claims filed in 2015, 123 million or about 10 percent, were denied, and 3.7 million of those (about 3 percent of total claims) were appealed. These appeals have been growing at a rate of 40 percent per year and by end of 2015 had grown to a 900,000-case backlog. This would take 11 years to clear, even if there were no new appeals.

There has been growing criticism of CMS’ inability to speed up appeals and reduce the backlog. Recently the Government Accountability Office (GAO) issued another report critical of the management of the process. Among their findings was that the third level appeals decided at the administrative law judge stage increased 37-fold from 2010 through 2014, compared to only 1.5 times for appeals of other kinds of claims. The following outlines the five levels to the Medicare appeals process:

  1. Redetermination by a Medicare Administrative Contractor (MAC). There is no minimum amount in controversy to appeal and there is a 60-day target to complete the process. CMS is currently meeting its statutory time-frames to process appeals and is not experiencing a backlog.
  2. Reconsideration by a Qualified Independent Contractor (QIC). There is also no minimum amount in controversy to appeal, but there is a filing deadline 180 days from issuance of a MAC redetermination and a 60-day target to complete the process. CMS is currently meeting its statutory time-frames to process appeals and is not experiencing a backlog.
  3. Administrative Law Judge hearing at the Office of Medicare Hearings and Appeals (OMHA). There is a minimum amount for a hearing that currently stands are $150. The filing deadline is 60 days from date of receipt of QIC determination with a 90-day target to complete the process. The OMHA is currently receiving more than a year’s worth of appeals every 18 weeks and by the end of 2015 had a pending workload of about 900,000 appeals while annual adjudication capacity with current level of resources was approximately 75,000 appeals.
  4. Medicare Appeals Council (Council) Review. The minimum amount for a hearing is currently at $150 with a filing deadline 60 days from date of receipt of OMHA determination. There is a 90-day target to complete the process. At Level 4, the Council is currently receiving more than a year’s worth of appeals every 11 weeks. At the end of 2015, there were 14,000 appeals pending which is six times their annual adjudication capacity.
  5. Judicial Review in U.S. District Court. The minimum required for a hearing by statute is currently $1,500 with a filing deadline 60 days from date of receipt of Council determination. A judicial review by the federal court may be requested if the Council does not render an action within 90 days of appeal filing.

The reasons for the backlog problems have been attributed by HHS to the following factors:

  1. Increases in the number of beneficiaries;
  2. Updates and changes to Medicare and Medicaid coverage and payment rules;
  3. Growth in appeals from State Medicaid Agencies; and
  4. National implementation of the Medicare Fee-for Service Recovery Audit Program.

On June 28, OMHA and the DAB office reported issuing a Notice of Proposed Rulemaking (NPRM) on changes to the Medicare claims appeal process as part efforts to eliminate the backlog of appeals currently pending with them. It includes a series of administrative actions designed to reduce the number of pending appeals and encourage resolution of cases earlier in the Medicare appeals process. HHS is proposing additional administrative action to:

  • expand the pool of available OMHA adjudicators;
  • increase decision making consistency among the levels of appeal;
  • streamline the appeals process so less time is spent by adjudicators and parties on repetitive issues and procedural matters by using MAC precedents;
  • have senior attorneys handle some of the procedural matters that come before the ALJ;
  • revise how the minimum amount necessary to lodge an appeal is determined; and
  • eliminate some steps in the appeals process to simplify the system.

In addition, the FY 2017 President’s Budget seeks additional funding to increase the capacity for processing and resolving appeals and also includes a comprehensive legislative package aimed at both helping the process of a greater number of appeals and encouraging resolution of appeals earlier in the process before they reach the OMHA and the DAB. With these changes, it is estimated by HHS that the backlog of appeals could be eliminated by FY 2021.

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 © 2016 Strategic Management Services, LLC. Published with permission.