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.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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

Kusserow on Compliance: GAO issues report critical of Medicare appeals process

The Backlog Saga Continues

The Government Accountability Office (GAO) conducted a review of the appeals process for Medicare fee-for-service (FFS) claims and issued a report in June 2016 that was highly critical of the Medicare appeals process. The process consists of four administrative levels of review within HHS, and a fifth level in which appeals are reviewed by federal courts. Appeals are generally reviewed by each level sequentially, as appellants may appeal a decision to the next level depending on the prior outcome. Under the administrative process, separate appeals bodies review appeals and issue decisions under time limits established by law, which can vary by level. They have not been meeting those deadlines for years. In fact, they have 700,000 pending appeals that would take years to clear up, even if new appeals were not filed.

The GAO found that CMS and two other components within HHS that are part of the Medicare appeals process have not made available full-use data collected in three appeal data systems to monitor the Medicare appeals process. It also found variations in how appeals bodies record decisions across the three systems, including the use of different categories to track the type of Medicare service at issue in the appeal. Absent more complete and consistent appeals data, the ability to monitor emerging trends in appeals is limited and is inconsistent with federal internal control standards that require agencies to run and control agency operations using relevant, reliable, and timely information. The GAO recommended that HHS take four actions, including improving the completeness and consistency of the data used by HHS to monitor appeals and implementing a more efficient method of handling appeals associated with repetitious claims.

Following the release of this report Nancy Griswold, Chief Administrative Law Judge, Office of Medicare Hearings and Appeals (OMHA), and Constance B. Tobias, Chair, Departmental Appeals Board (DAB), reported submitting 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 at the OMHA and the DAB. The proposed changes designed to reduce the number of pending appeals and streamline the Medicare appeals process. They also sought increases in the budget for FY 2017 to add resources to work on the backlog problem.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

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