HHS is ‘slowing’, not stopping, the Medicare appeals backlog

HHS will not be able to clear the backlog of Medicare appeals by its December 30, 2020, deadline, the agency said in a report to the U.S. District Court for the District of Columbia. HHS informed the court that due to a higher number of pending appeals than anticipated, without more money or resources, the agency will not be able to meet the deadline without violating its statutory requirement to decide appeals on the merits. Richard P. Kusserow, former HHS Inspector General (IG) and current CEO of Strategic Management, LLC, noted that the HHS position is not new. He said, “They have been making that argument from the beginning of the case.”


In February 2016, the D.C. Court of Appeals revived a 2014 case brought by the American Hospital Association (AHA) and three hospitals asking the court to issue a writ of mandamus to compel HHS to process their long-pending Medicare claim-reimbursement appeals in accordance with statutory timelines. On remand, the district court determined that because backlog numbers were unacceptably high, there were equitable grounds for mandamus. Accordingly, the court imposed a timetable, imposing increasing backlog reduction expectations, with elimination of the backlog of cases pending at the ALJ level by December 31, 2020 (see Court sets a timeline for Medicare claims backlog, December 6, 2016).


The order granting a writ of mandamus instructed HHS to file status reports with the court every 90 days. The most recent report indicates that as of March 5, 2017, there are 667,326 pending appeals at the Office of Medicare Hearings and Appeals (OMHA). HHS projections put the number of expected pending appeals at 1,009,768 by the end of FY 2021, higher numbers than those found in previous HHS estimates. Because the backlog is not a static obstacle, despite some resolution through settlement or formal adjudication, the agency has struggled to keep appeals numbers from growing. Kusserow said, “The best that they have been able to accomplish to date has been slowing the backlog development.” According to HHS, the revised projections are the result of setbacks from lower than expected provider interest in the agency’s settlement initiatives and stalled settlement discussions.

High Court won’t hear case alleging discriminatory Medicare claims denial scheme

The U.S. Supreme Court declined to hear a case alleging that HHS participated in a racially discriminatory scheme of Medicare claims denials. The Fifth Circuit dismissed Edwards v. Burwell for lack of subject matter jurisdiction and failure to state a claim due to untimely filing, failure to specify improperly denied claims, and sovereign immunity. The High Court denied certiorari without comment.

A Texas physician was subject to a Medicare review process between 1997 and 2001 that resulted in denial of most of his claims. Most of those denials were successfully overturned on appeal, but the physician claimed that he was forced to close his practice in 2001 as a result of the initial denials. He filed a lawsuit against HHS, the HHS Secretary, and other unknown agents in 2014, alleging that his claims were initially denied as a result of racial profiling.

In affirming the district court’s dismissal of the doctor’s claims, the Fifth Circuit stated that the claims were filed outside of the 60-day window for judicial review required by 42 U.S.C. § 405(g) and were barred under § 405(h), which holds that a suit against the government or its officers or employees cannot be brought for Medicare actions. Furthermore, the physician failed to specify those claims that were not reversed on appeal (see No jurisdiction for discrimination suit based on reversed claim denials, Health Law Daily, August 3, 2016). He then filed his ultimately-denied petition for certiorari.

Kusserow on Compliance: Court will not reconsider order to clear Medicare claims appeals backlog

On December 15, 2016, HHS asked the U.S. District Court for the District of Columbia to reconsider its December 5 order requiring the agency to clear the Medicare appeals within four years, stating it would not be able to meet the requirements under the schedule recently ordered without “substantial new resources and authorities.”  The court rejected this argument, as it had already been presented by HHS and considered by the court in reaching its order.  Unless HHS appeals the Court’s decision in American Hospital Association v. Burwell (U.S. District Court for the District of Columbia, January 4, 2017), this will conclude the 2.5 year litigation initiated by the American Hospital Association (AHA) and several hospitals.   Plaintiffs challenged the failure of HHS to meet statutory timeframes related to adjudication of Medicare claims appeals. The Court adopted the plaintiffs’ proposed timetable for clearing the backlog, requiring a 30% reduction of the current backlog of cases pending at the administrative law judge (ALJ) level by December 31, 2017, a 60% reduction by December 31, 2018, a 90% reduction by December 31, 2019, and a 100% reduction by December 31, 2020.

A failure to meet the deadlines would mean that claimants may move for default judgment in their favor. HHS is further obligated to submit a report every 90 days on its “progress in reducing the backlog and includ[ing] updated figures for the current and projected backlog, as well as a description of any significant administrative and legislative actions that will affect the backlog.” The HHS Secretary argued that the timetable would require her to “make payment on Medicare claims regardless of the merit of those claims.”  The Court responded by noting that HHS has already violated Medicare statute by not complying with statutory deadlines for Medicare appeals and the timetable provides a reasonable period for “proper claim substantiation.”  “If the Secretary fails to meet the [court ordered] deadlines, plaintiffs may move for default judgment or otherwise enforce the writ of mandamus.”

Tom Herrmann, JD, who served over twenty years as a former ALJ and executive in the Office of Counsel to the Inspector General, observed that health care providers and suppliers with pending appeals will welcome the court action requiring HHS to take steps to comply with the statutory deadlines for resolution of appeals.  He explained that governing law and regulations require an ALJ to hold a hearing and render a decision within 90 days of a party’s filing of an appeal with Office of Medicare Hearings and Appeals (OMHA).  However, they have been unable to meet this deadline, resulting in a backlog of 1 million pending appeals.  A Government Accountability Office (GAO) report last June was highly critical of the HHS appeals process and the failure to meet deadlines, and the OMHA moratorium on accepting new appeals requests in order to catch up has not worked.

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 © 2017 Strategic Management Services, LLC. Published with permission.

‘Don’t wait, facilitate!’ HCCA webinar encourages Medicare settlement

Providers should rely on settlement and facilitation processes when resolving Medicare audit appeals, according to a Health Care Compliance Association (HCCA) webinar presented by health care attorney Andrew Wachler of Wachler & Associates, P.C. In addition to providing advice regarding appeal processes and strategy, Wachler encouraged providers to rely on the newly reopened hospital appeals settlement process and the Settlement Conference Facilitation (SCF) Pilot.

Settlement process

CMS reopened the hospital appeals settlement process, allowing eligible hospitals to settle inpatient status claim appeals in exchange for timely partial payments (66 percent of net allowable amount). The settlement process is available, as of December 1, 2016, and the deadline for hospitals to submit an expression of interest is January 31, 2017. Eligible claims include claims denied by CMS on the basis that services may have been reasonable and necessary while treatment on an inpatients basis was not. Additionally, the settlement applies to claims with dates of admission prior to October 1, 2013.


In his discussion of the SCF pilot process, Wachler admonished listeners: “don’t wait, facilitate.” The SCF pilot was designed to bring CMS and an appellant together to discuss the potential for settlement of claims appealed to an administrative law judge (ALJ). When a settlement cannot be reached under the process, claims return to the ALJ level. Under Phase I of the program, which began in June 2014, the pilot facilitated settlements of Medicare Part B claim appeals, for ALJ hearing requests filed in 2013. In Phase I, the pilot resolved over 2,600 unassigned Part B ALJ Appeals. Phase II expanded the pilot in October 2015 for additional Part B claims and the program was further expanded for Part A claims in February 2016. However, each phase imposed specific claim eligibility requirements, regarding the kinds of claims at issue and the amount in controversy. Wachler noted, unlike the hospital settlement process, which mandates a 66 percent settlement rate, the SCF pilot allows providers to reach an agreement regarding the amount of the settlement.

ALJ appeals

In circumstances where settlement or facilitation is not available, providers may be forced to resolve claims before an ALJ. Wachler offered the following best practices for ALJ appeals:

  • prominently list Medicare Appeal Number on the request;
  • ensure beneficiary information matches Medicare Appeal Number;
  • list beneficiary’s full identification number;
  • include first page of the qualified independent contractor (QIC) decision or prominently list full name of the QIC;
  • document proof of service to other parties;
  • do not submit a courtesy copy to the QIC
  • submit only one request per Medicare Appeal Number;
  • mail requests via tracked mail to the Office of Medicare Hearings and Appeals (OMHA) Central Operations;
  • do not submit evidence already submitted at a lower level;
  • do not attach evidentiary submissions or submit additional filings to OMHA Central Operations; and
  • submit directly to the ALJ when an ALJ is assigned.

Additionally, Wachler recommended the OMHA case-processing manual as an important resource regarding ALJ process for any parties appealing to the ALJ level.