Kusserow on Compliance: Court rules against HHS and orders end of Medicare claims appeal backlog

The U.S. District Court for the District of Columbia has ordered HHS to eliminate pending Medicare claims appeals and outlined a schedule for reducing the backlog. Failure to meet these deadlines will permit claimants to move for default judgment in their favor. This would apply to Medicare appeals that have been pending at the administrative law judge (ALJ) level without a hearing for more than a year. DHHS is obligated to submit a progress report every 90 days on reducing the backlog. This action is the latest in the 2.5 year pending litigation initiated by the American Hospital Association (AHA) and several hospitals.  The Office of Medicare Hearings and Appeals (OMHA) has been unable to comply with the 90-day statutory deadline for appeals, resulting in a backlog of almost 1 million pending appeals.  Last June, the Government Accountability Office (GAO) reported the failure to meet statutory deadlines for the resolution of appeals, noting they had fallen years behind in the backlog. Following this, the OMHA placed a moratorium on accepting new appeals requests in order to catch up on pending appeals, which did little to reduce the backlog.

Dr. Cornelia Dorfschmid is a leading expert on dealing with Medicare claims appeals and has been assisting clients with these kinds of issues for 25 years. She noted that as a result of the actions by the Federal Court, the appeal process may begin to function again as it was expected to do. If a provider has a concern about demand letters coming from government agencies or their contractors, she offers the following advice on how to deal with them:

  1. Correct interpretation of the projected estimate. The first step in assessing the exposure to a demand letter is to determine whether the estimate was projected from a random sample that was based on the correct interpretation and application of the various medical documentation requirements and payer coverage rules. If the medical review, the application of coverage criteria, and case-by-case review findings can be challenged in an appeal or a quality assurance process, the overpayment estimate derived from the sample would not be tenable.
  2. Statistically valid random sample. A demand for overpayments must be generated from a statistically valid random sample; and if it not then the validity of the projection of the total overpayment estimate is difficult to defend.
  3. Confidence and precision.   If each sampled case was reviewed correctly and the sample was a statistically valid random sample, acceptable confidence (i.e, degree of certainty that the sample correctly depicts the universe) and precision (i.e., range of accuracy) are the third piece needed for a quality estimate of the total overpayment in the universe.

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.